Corporation code

Business judgment rule

---all corporations can only act
through its board of directors or
trustees
Board of directors
---Every director must own at least one
share of capital stock of the
corporation of which he is a director,
which share shall stand in his name on
the books of the corporation.
---A majority of the directors or
trustees of all corporations organized
under this Code must be residents of
the Philippines.
“Hold-over doctrine”
---Directors shall hold office for one
year and UNTIL their successors are
elected and qualified.
Election of directors or trustees
(Sec.24)

1. Straight voting
2. Cumulative voting for one candidate
3. Cumulative voting by distribution
Corporation officers
--- Immediately after their election, the
directors of a corporation must formally
organize by the election of President---who
shall be a director, a treasurer who may or
may not be a director, a secretary who shall
be a resident and citizen of the Philippines,
and such other offices as may be provided
by the law.
---Any two or more positions may be
held concurrently by the same person,
except that no one shall act as a
President and Secretary or President
and treasurer at the same time.
QUORUM
--- A majority of the number of directors or
trustees shall constitute a quorum for the
transaction of corporate business and every
decision of at least a majority of the
directors or trustees present at a meeting at
which there is a quorum shall be valid as a
corporate act.
Proxy not allowed
---Directors or trustees cannot validly act by
proxy.
Disqualification of directors,
trustees or officers

---- No person convicted by final judgment

of an offense punishable by imprisonment
for a period exceeding 6 years, or a
violation of this Code, committed within 5
years prior to the date of his election or
appointment, shall qualify as a director,
trustee or officer of any corporation.
Removal of directors or trustees
---The removal must take place either at a regular
meeting of the corporation or at a special meeting
called for the purpose.

---There must be a previous notice to the

stockholders or members of the corporation of the
intention to propose such removal at the meeting.
---The removal must be by a vote of the
stockholders holding or representing 2/3 of
the outstanding capital stock, or if the
corporation be a non-stock corporation by a
vote of 2/3 of the members entitled to vote.
Filling of vacancies in the office
of director or trustee
--- A vacancy in the office of director or trustee
may be filled as follows;

1.By the stockholders or members

(a) If the vacancy results from the removal by the
stockholders or members or the expiration of the
term;
(b) If the vacancy occurs other than by
removal or by expiration of term such
as death, resignation, abandonment, or
disqualification, if the remaining
directors or trustees do not constitute a
quorum for the purpose of filling the
vacancy;
(c) If the vacancy may be filled by the
remaining directors or trustees but the
board refers the matter to the
stockholders or members.
(d) If the vacancy is created by reason of an
increase in the number of directors or
trustees
2.By the members of the board

---If still constituting a quorum, at least a majority

of them are empowered to fill any vacancy
occuring in the board other than by removal by
the stockholders or members or by expiration of
term.
---The board has no power to fill any directorship
or trusteeship by reason of an increase in the
number of directors or trustees.
Compensation of directors
--- In the absence of any provision in the
by-laws fixing their compensation, the
directors shall not receive any
compensation, except for reasonable per
diems.
---Any such compensation (other than per
diems) may be granted to directors by the
vote of the stockholders representing a
majority of the OCS.
---In no case shall the total yearly
compensation exceed 10 % of the net
income before the income tax of the
corporation during the preceding year.