QUALIFICATIONS OF DIRECTORS

 Natural person and is of legal age

 Holder of at least one (1) share or a member in case of non-stock corporations
 Majority of directors must be Philippine residents. A foreign national can be a director
only in companies where the equity of the industry isn’t limited or reserved only for
Filipinos.
 Number of directors must be at least five (5), but not more than fifteen
 Have not been charged with a criminal offence for more than six (6) years, or violates the
Code within five (5) years prior to the election.

OFFICERS OF A CORPORATION

CHIEF EXECUTIVE OFFICER OR PRESIDENT

The corporation’s CEO or president is responsible for the overall day-to-day activities of
the corporation (some of which are often delegated to other officers). The CEO signs
major contracts, stock certificates and other legal documents, as required. The CEO acts
under the direction of the board.

VICE PRESIDENT

This officer may or may not be required by your state’s corporation statute. When the
position does exist, the vice president fills in when the CEO or President is unavailable or
when the board assigns specific duties.

TREASURER

The treasurer is responsible for the financial matters of the corporation.

SECRETARY

Charge with maintaining the corporate records of the corporation and preparing the
minutes of the shareholders meeting.

*note: The same person may hold two (2) or more positions concurrently, except that no one shall act as president and secretary
or as president and treasurer at the same time, unless otherwise allowed in this Code.

COMPENSATION OF OFFICERS AND DIRECTORS

If there is no provision stating the compensation of the Directors and officers, they shall not
receive any compensation except for reasonable per diems. However, majority of outstanding
share of stocks or majority of shareholders can grant said persons compensation but with
limitations during a special meeting.
  Must not exceed ten (10%) percent of the net income before income tax of the
corporation during the preceding year of the officers annual compensation.

 They shall not participate in the determination of their own per diems or compensation.

 Corporations vested with public interest shall submit to their shareholders and the
Commission, an annual report of the total compensation of each of their directors or
trustees.

HOW MAY THE CORPORATE POWERS BE EXERCISED?

All corporate powers shall be exercised by or under the authority of, and the business and affairs
of a corporation managed under the direction of its Board of Directors.

VOTING METHODS

The following methods can be used during Board of Directors election.

STRAIGHT VOTING. The directors are elected one at a time and every share gets one vote.
Equal Vote for all candidates.

CUMULATIVE VOTING FOR ONE. All shares are voted to one person.

CUMULATIVE VOTING BY DISTRIBUTION. Unequal number of votes to Directorial

Candidate.

REMOVAL OF BOARD OF DIRECTOR

A director or trustee can be removed by the votes of Shareholders holding at least two-thirds of
the outstanding capital stock, or in a nonstock corporation, by a vote of at least two thirds of the
members entitled to vote but removal shall be done formally thru regular or special meeting.

POWERS OF CORPORATION

SEC. 35 of the Corporation the corporation code state the powers and capacity, which are the
following :

(a) To sue and be sued in its corporate name;

(b) To have perpetual existence unless the certificate of incorporation provides otherwise;

(c) To adopt and use a corporate seal;

(d) To amend its articles of incorporation in accordance with the provisions of this Code;
(e) To adopt bylaws, not contrary to law, morals or public policy, and to amend or repeal the
same in accordance with this Code;

(f) In case of stock corporations, to issue or sell stocks to subscribers and to sell treasury stocks
in accordance with the provisions of this Code; and to admit members to the corporation if it be a
nonstock corporation;

(g) To purchase, receive, take or grant, hold, convey, sell, lease, pledge, mortgage, and otherwise
deal with such real and personal property, including securities and bonds of other
corporations, as the transaction of the lawful business of the corporation may reasonably and
necessarily require, subject to the limitations prescribed by law and the Constitution;

(h) To enter into a partnership, joint venture, merger, consolidation, or any other commercial
agreement with natural and juridical persons;

(i) To make reasonable donations, including those for the public welfare or for hospital,
charitable, cultural, scientific, civic, or similar purposes: Provided, That no foreign corporation
shall give donations in aid of any political party or candidate or for purposes of partisan political
activity;

(j) To establish pension, retirement, and other plans for the benefit of its directors, trustees,
officers, and employees; and

(k) To exercise such other powers as may be essential or necessary to carry out its purpose or
purposes as stated in the articles of incorporation.

Also with the following powers:

 POWER TO EXTEND OR SHORTEN CORPORATE TERM

 POWER TO INCREASE OR DECREASE CAPITAL STOCK; INCUR, CREATE
OR INCREASE BONDED INDEBTEDNESS
 POWER TO DENY PREEMPTIVE RIGHT
 SALE OR OTHER DISPOSITION OF ASSETS
 POWER TO ACQUIRE OWN SHARES
 POWER TO INVEST CORPORATE FUNDS IN ANOTHER
CORPORATION OR BUSINESS OR FOR ANY OTHER PURPOSE
 POWER TO DECLARE DIVIDENDS
 POWER TO ENTER IN MANAGEMENT CONTRACT

CORPORATE INVESTMENT TO OTHER CORPORATIONS

Corporations can invest to other corporation but with the consensus and approval of the majority
of the Board of Directors. Ratified by the stockholders representing at least two-thirds (2/3) of
the outstanding capital stock, or by at least two thirds (2/3) of the members in the case of
nonstock corporations, at a meeting duly called for the purpose.

EFFECTS OF ULTRA VIRES ACT

A corporation must not perform or act things that are not stated in the Law or in its Charter or the
Articles of Incorporation. Purpose and action should be done in accordance with the law and its
charter except when necessary or incidental to the exercise of the power. And Ultra Vires Acts
are void.

MANAGEMENT CONTRACT CONCEPT

A person should not engage in a management contract with the other corporation except, if
contract has been approved by the Board of Directors and by the shareholders holding shares at
least majority of the capital stock in a stock corporation, and majority of the members in a non-
stock corporation of the both managing and managed corporation. Management contract shall
not be entered into for a period longer than five years for any one term.

CLASSES OF DIVIDENDS

CASH DIVIDEND. The cash dividend is by far the most common of the dividend types used.
board of directors resolves to pay a certain dividend amount in cash to those investors holding
the company's stock on a specific date.

STOCK DIVIDEND. A stock dividend is the issuance by a company of its common stock to its
common shareholders without any consideration.

PROPERTY DIVIDEND. A company may issue a non-monetary dividend to investors, rather

than making a cash or stock payment.

SCRIP DIVIDEND. A company may not have sufficient funds to issue dividends in the near
future, so instead it issues a scrip dividend, which is essentially a promissory note (which may or
may not include interest) to pay shareholders at a later date. This dividend creates a note payable.

LIQUIDATING DIVIDEND. When the board of directors wishes to return the capital
originally contributed by shareholders as a dividend, it is called a liquidating dividend, and may
be a precursor to shutting down the business.