Lecture Notes: Powers of Corporations

Introduction

• Presenter: Attorney Job Vlogger
• Topic: Powers of Corporations
• Purpose: Educational, not a substitute for legal advice.

Definition and Capacity

• Corporations are artificial beings acting through their board of directors or authorized agents.
• Powers of corporations relate to fulfilling primary or secondary purposes, excluding acts forbidden by law or articles of incorporation.

Types of Corporate Powers

Express Powers

• Definition: Powers explicitly stated in the law or articles of incorporation.
• Examples:
  • Suing and being sued.
  • Having perpetual existence.
  • Adopting a corporate seal.
  • Amending articles and bylaws.
  • Issuing stock or admitting members.
  • Dealing with property, securities, and bonds.
  • Entering partnerships, joint ventures, mergers, and other agreements.
  • Making reasonable donations (restrictions on foreign corporations).
  • Establishing pension and retirement plans.
  • Exercising other necessary powers as per articles.

Incidental Powers

• Definition: Powers inherent to corporate existence, necessary for corporate operations.
• Examples:
  • Succession.
  • Holding a corporate name.
  • Creating bylaws.
  • Entering contracts.

Implied Powers

• Definition: Powers necessary to execute express powers and achieve corporate purposes.
• Examples:
  • Usual business operations.
  • Acts to collect debts or protect employees.
  • Increasing business activities.

Tests for Corporate Actions

• Express Power: Stated in law or articles, related to main business.
• Implied Power: Related to methods of achieving corporate purposes, necessary for business.

Specific Corporate Powers

Power to Sue and Be Sued

• Applies to corporations with some color of compliance or within the winding-up period.
• Corporations cannot claim moral damages, except in specific cases (e.g., damaged reputation).

Corporate Seal

• Used to authenticate corporate documents.
• Not mandatory but commonly used.

Property Acquisition and Conveyance

• Corporations can own property for business purposes and convey it subject to legal limitations.

Partnerships and Commercial Agreements

• Corporations can now enter into partnerships and similar agreements.

Donations

• Corporations can make donations but with limitations (foreign corporations and partisan activities).

Establishing Funds

• Corporations can set up pension and retirement funds for employees.

Corporate Term

• Extension/Shortening:
  • Requires board meeting and stockholder approval.
  • Must be filed with the SEC.

Capital Stock

• Increase/Decrease:
  • Through board and stockholder votes.
  • Requires SEC and possibly PCC approval.

Bonded Indebtedness

• Similar procedures as capital stock changes.
• Register bonds with SEC.

Preemptive Rights

• Stockholders' right to maintain proportional control by first refusal on new stock issues.
• Right can be waived or denied under specific conditions.

Conclusion

• This concludes part one of the discussion on corporate powers. Further details will follow in part two.