Corporate PowersKinds1. Express those that are expressly authorized in the Corpo Code, other laws, Art of Incorpo or Charter

2. Incidental those that are incidental to its existence

3. Implied necessarily implied from the exercise of their expressed powers

a. acts in the usual course of business

b. acts to protect debts owing to the corpo

c. embarking on a different buss usually to collect debts out of profits

d. acts to protect or aid employees

e. act to increase business

General Powers and Capacity (Sec. 36) 1. To sue and be sued

2. Of succession

3. To adopt and use a corporate seal

4. To merger and consolidation

5. For stock corp: to sell and issue stocks and treasury shares; non-stock: admit members

6. To sell, purchase, MG, pledge, deal with personal and real props

7. To exercise powers incidental to carrying out its purposes8. To amend its AoI

9. To create bylaws

10. To make reasonable donations to charitable, civic, cultural institutions and the like except to pol candidates, parties or activities of partisan politics

11. To establish pension, retirement plans for dir, officers, trustees, employees

Other Powers1. Extension or shortening of corporate term (Sec. 37)a. Approval by majority of the board of dir/trustees

b. Notice to each stockholder of the proposed action, time and place of meetingc. Ratification by stockholders representing 2/3 of the outstanding capital stock; if non-stock 2/3 of the members2. Power to decrease or increase capital stock (Sec. 38)a. By increasing or decreasing the number of shares but retaining the par value

b. By increasing or decreasing the par value but retaining the number of shares

c. By increasing or decreasing both

REQ: a,b,c of No. 1 plus:

Duplicate certificate signed by majority of the board, countersigned by the chairman and sec of the stockholders

If increase: 25% of increased cptl must be subscribed, 25% of w/c paid in cash or prop

If decrease: must not prejudice the creditors

Filing of cert to and approval by the SEC

3. Power to incur, create or increase bonded indebtedness (Sec. 38) Corporate bond refers to the obligation to pay an amount of money at a fixed rate of interest on at a future time, whether secured or not, evidenced by a written instrument called debenture (serial obli or notes issued on the basis of the corpo general credit) or bonded indebtedness (secured by a MG on corporate property)

4. Sell, dispose, lease, encumber all or substantially all corporate assets (Sec. 40) REQ: a,b,c of No. 1 plus:

Sale of assets shall be subject to laws on illegal combinations and monopolies

Any dissenting stockholder may exercise right to appraisal In a non-stock corpo w/o voting rights among members, majority vote of board of trustees enough to enter into any transaction authorized by Sec 40

Sale or disposition shall be deemed to cover substantially all assets if:

Corpo will not be able to continue its business

Corpo will not be able to carry out the purposes for w/c it was incorpo

No need for ratificatory vote of stockholders/members if:

Proceeds to be used for the conduct of the remaining business Necessaryin the usual and regular course of business

5. Power to acquire own shares (Sec. 41) Provided the corpo has unrestricted reatined earnings

Instances:

a. To eliminate fractional shares from stock dividends

b. To collect or compromise indebtedness to the corporation, arising out of unpaid subscription, in a delinquency sale and to purchase delinquent shares soldc. To pay dissenting or w/drawing stockholders entitled to payment

6. Invest corporate funds in another corpo or business engaged in purpose other than primary purpose (Sec. 42) May invest corpo prop in buss engaged in purposes other than primary purpose PROV one of the secondary purposes in Sec. 42

Investment of money or prop PROV it complies with SEC requirements

Prop not used by corpo or lease is not on a reg basis

More useful as investment rather than to remain idle No express restrictions in the by-laws or AoI

Not a scheme to prejudice creditors or not resulting to infringement of Trust Fund Doctrine Compliance w/Sec. 42

REQ:

a. Reso by majority of the board

b. Reso by 2/3 controlling interest of stockholders

c. Prior notice

d. Ratification to be made in a meeting duly called for the purpose

e. Dissenting stockholder may exercise right to appraisal

f. Corpo not allowed to engage in a buss not enumerated in the AoI unless amended to conform

7. Power to declare dividends out of unrestricted retained earnings

Retained Earnings

Assets - Liabilities and Legal Capital

Unrestricted If retained earnings not set aside by the board for corpo purpose

Dividends Corpo profits set aside and declared by the board to be distributed among shareholders at a fixed time

Forms: cash, prop, stock

Corporations are prohibited from retaining surplus profits in excess of 100% of their paid-in capital EXC:

a. When justified by definite corporate expansion approved by the board

b. When prohibited under any contract w/financial insti or creditor to declare dividends w/o its consent and consent not yet securedc. When clearly seen under the special circumstances that there is a need to reserve such as for probable contingencies

8. Power to enter into management contract (Sec. 44)Management Contracts whereby the corpo enters into a contract to manage or operate all or substantially all of the buss of another corpo

Sec. 44 refers to mngt contracts w/other corpo not natural persons

REQ:

a. Approval by the majority of the quorum of the boardb. Ratification by stockholders representing majority of outstanding capital stock or members of both managed and managing corpo

c. Approval by 2/3 stockholders of the managed corpo when:i. Stockholder/s representing interest of both the managed and managing corpo owns 1/3 of the total outstanding capital stock of the managing corpo

ii. Majority of members of the managed also compose majority of the members of the managed