Private Corporation Flashcards
Its purpose was to revise and consolidate the laws governing private corporations in the Philippines, aiming to modernize corporate governance and align it with contemporary business practices.
Historical background of the Corporation Code
The Corporation Code of the Philippines, also known as Batas Pambansa Blg. 68, was enacted on
May 1, 1980
Section 1. Title of the Code:
“This Code shall be known as
“The Corporate Code of the Philippines”
Sec. 2 Corporation defined
“A corporation is an artificial being created by operation of law, having the right of succession and the powers, attributes, and properties expressly authorized by law or incident to its existence.”
Attributes of a corporation
- Artificial being
- Created by operation of law
- It has the right of succession
- Has only power, attributes, and properties expressly authorized by law or incident to its existence
Power, attributes, and properties of a corporation
- These include the ability to enter into contracts,
- own property,
- sue and be sued, and
- perform other acts necessary to achieve its purpose.
Distinction between a partnership and a corporation
- Manner of creation (Agreement & operation of law)
- Number of incorporators ( 2 or more & atleast 5 incorporators)
- Powers (any power authorized by the partners & expressly granted by law)
- Management ( partner is an agent & BOD)
- Right of succession ( no right & has right)
- Term if existence ( time stipulated by the partners & excess of 50 years not more than)
- Dissolution (any time by will if partners & with the consent of state)
Similarities between a partnership and a corporation
- Juridical personality
- Can act only through agents
- Composed of aggregate individuals
- Distributes profits to those who contribute capital
- There is law authorizing its organization
- Subject to income tax
Advantages of a business corporation
- Easier to raise capital
- Legal capacity to act as a legal unit
- Has continuity existence (because it does not depend on the lives of those who compose it)
- Management is centralized in the BOD
- Credit is strengthened by continuity of existence
- Creation, organization, management, and dissolution are standardized
- makes feasible gigantic financial enterprises
- Shareholders have limited liability
- Shareholders not a general agent of the business
- Shares of stock can be transferred without the consent of the other stockholders
Disadvantages of a business corporation
- Complicated in formation and management
- High cost of formation and operation
- Credit is weakened by limited liability of shareholders
- Ordinarily lack of personal element in transferability of shares
- Greater degree of governmental control
- Voting rights has become theoretical (because of proxies and widespread ownership)
- Stockholders have little voice in the business
- In large corporations, management and control are separate from ownership
