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Powers of corporation
182
The right or capacity of a corporation to perform all acts or things, except only those forbidden by law and its articles of incorporation in furtherance of its purpose/s.
Classification of Corporate Power
Power to extend or shorten corporate term
Power to increase or decrease capital stock
Power to incur, create or increase bonded indebtedness requisites for the exercise of power
The right of existing stockholders to purchase or subscribe to all issuances or disposition of shares of any class, in proportion to their respective stockholdings, before such share are offered to the pubic
- The authorization must be done at the stockholders' or members' meeting duly called for that purpose after written notice.
End.
Powers of corporation
- Subscription and paid -in capital requirements in case of increase
- In case of decrease, the same should not prejudice the rights of corporate creditors. Must not violate the Trust Fund Doctrine.
Section 38
Trust Fund Doctrine- Capital stock and assets of corporation are held in trust for creditors.
- The increase or decrease of capital stock must approved the SEC.
Section 39
Ways of increasing and decreasing capital stock
Power to deny pre-emptive right
A. Increase of Capital Stock
- Increasing the number of shares without increasing the par value.
- Increasing the par value without increasing the number of shares.
- Increasing both the number of shares and the par value.
Shares covered by the exercise of the pre-emptive right
- Shares issued as a result of increase in capital stock.
- Shares issued out of the unsubscribed portion of the authorized capital stock.
- Other shares that may be disposed by the corporation including treasury shares.
Exercise of appraisal right
Section 36
Any stockholder who dissents from the act to extend or shorten the corporate term may exercise his appraisal right.
Appraisal right- the right of a stockholder to demand payment of fair value of his shares when he dissents from certain corporate acts.
Section 37
- Express Powers- powers expressly granted to corporation by its charter.
- Implied Powers- powers which are necessary to carry into effect powers which are expressly granted and which must therefore be presumed to have been the intention in the grant of the franchise.
- Incidental or inherent power- powers that a corporation may exercise by reason of its very existence as a corporation.
Requisites for the exercise of the power
- Vote required:
a. Majority vote of the board of directors or trustees
b. 2/3 of the outstanding capital stock; 2/3 of the members in a meeting called for the purpose.
- The articles of incorporation are amended to effect such extension or shortening of corporate term.
Requisites:
- Vote Required
a. Majority vote of the board of directors
b. 2/3 of the outstanding capital stock in a meeting called a purpose.
- The increase or decrease of capital stock must be certified to in a certificate duly signed by a majority of the directors and countersigned by the chairman and the secretary of the stockholders' meeting.
Section 40
Sale or other disposition of assets
Power to sell, lease, exchange, mortgage, pledge, or otherwise spose of all or substantially all of corporate property including goodwill.
Requisites:
- The sale must be approved by the board of directors or trustees.
- The action of the board of directors or trustees must be authorized by the vote of stockholders representing 2/3 of the outstanding capital stock or 2/3 of the members, as the case maybe.
B. Decrease of Capital Stock
- Decreasing the number of shares without decreasing the par value.
- Decreasing the par value without decreasing the number of shares
- Decreasing both the number of shares and the par value.