Professional Documents
Culture Documents
Powers of Corporations
Powers of Corporations
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NOTE:
Power to Increase or Decrease Capital Stock (Secs. 38) (NOT inherent in the corp.
bec. concerns item req. in AIC (Amend AIC Sec. 16) and governed by common law
doctrines: trust fund doctrine and pre-emptive rights)
-Requisites:
1.
Majority Vote of BOD; and
2.
2/3 Outstanding Capital Stock (at a stockholders' meeting duly called for
the purpose
Appraisal Right Issues - No right of appraisal
Increase
Decrease
Commercial Public Policy: those who deal in Good Faith (G.F.) with a
corporate entity must be protected in their contractual expectations
2 public policies:
Concept
1.
Contract Law
2.
Corporate Law
Business Judgment Rule
Act of issuing the checks - within the ambit of a valid corporate act, for it
was for securing a loan to finance the activities of the corporation ultra
vires act - implied
ultra vires act - committed outside the object for which a corporation is
created as defined by the law of its organization and therefore beyond the power
conferred upon it by law
1.
a. to a patently unlawful act of the corporation
b. for bad faith or gross negligence in directing its affairs
c. for conflict of interest, resulting in damages to the corporation, its
stockholders or other persons
2. He consents to the issuance of watered down stocks or who, having
knowledge thereof, does not
forthwith file with the corporate secretary his written objection thereto;
3. He agrees to hold himself personally and solidarily liable with the
corporation; or
4. He is made, by a specific provision of law, to personally answer for his
corporate action
2. Executed on behalf of the corporation WITHOUT proper authority from
the Board of Directors
BOD NOT President exercises corporate powers (Safic Alcan & Cie v.
Imperial Vegetable Oil (2001))
The plea of "ultra vires" will not be allowed to prevail, whether interposed for or
against a corporations when it will not advance justice but, on the contrary, will
accomplish a legal wrong to the prejudice of another who acted in good faith (G.F.)
(Zomer Dev. Corp. v. International Exchange Bank (2009))
Doctrine of Estoppel or Ratification of Ultra Vires Acts