Quiz 2 Flashcards
legal entity created by an individual or group of shareholders.
Corporation
Are legal entities and are sometimes defined as ___________
Legal persons
Corporations are allowed to
perform functions that humans make such as:
• Buying and selling properties
• Owning copyrights
• Patents
• Trademarks
• And engaging in any business activities
• It has indefinite life span that can survive from generation to generation
responsible being in the eyes of the law
Legal entity
company or organization that has legal rights and responsibilities.
Legal entity
In Philippines There is no minimum number of?
incorporators( directors)
But shall not have more than?
20 incorporators
Each of the incorporators must have _____ share of stocks.
one
Granted a perpetual corporate term( previously ___ year term)
50
paid-up capital and residency of incorporators to keep with global standards.
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allows a single person to form a corporation without board of directors or shareholders
One Person Corporation (OPC)
system of rules ,practices and processes by which a firm is directed and controlled.
Corporate governance
essentially involves balancing the interests of a
company’s many stakeholders.
Corporate governance
help guide a company’s decisions and play a big
part in deciding if the business will be successful
Business aims and objectives
are the broad, general goals that summarize what a company
wants to achieve
Business aims
are specific, measurable targets that help a company
achieve its aims.
Business objectives
defines the organization’s business, its objectives and how it will reach these objectives
Mission statement
outlines the company’s long-term goals and aspirations
Vision statement
This can motivate the employees
Business objectives
Business objectives (Main Objectives)
• Survival
• Profit Maximization
• Profit satisficing
• Sales growth
short-term object short-trembly for a small business just
starting out, or when a new firm enters the market or at a time of crisis
Survival
try to make the most profit possible – most like to be
the aim of the owners and shareholders.
Profit Maximization
try to make enough profit to keep the owners
comfortable – probably the aim of smaller businesses whose owners do
not want to work longer hours.
Profit Satisficing
where the business tries to make as many sales as possible.
This may be because the managers believe that the survival of the business
depends on being large. Large businesses can also benefit from economies
of scale.
Sales Growth
Alternative Aims and Objectives
• Ethical and socially responsible objectives
• Public sector corporations
• Public sector organizations
• Health care and education establishments
• Charities and voluntary organization
organizations like the Co-op or the Body Shop
have objectives that are based on their beliefs on how one should treat the environment
and people who are less fortunate.
Ethical and socially responsible objectives
are run to not only generate a profit but provide a service to
the public. This service will need to meet the needs of the less well-off in society or help
improve the ability of the economy to function: e.g. cheap and accessible transport
service.
Public sector corporations
their objectives are to provide a service –
most private schools for instance have charitable status. Their aim is the enhancement of
their pupils through education.
Health care and education establishments
their aims and objectives are led by the beliefs
they stand for.
Charities and voluntary organizations
Importance of business aims and objectives
• clarity of direction
• measure company’s success
• increases motivation
• improves decision-making
KEY PLAYERS IN CORPORATE GOVERNANCE
•CEO
•CHAIRMAN OF THE BOARD
•BOARD OF DIRECTOR
•SHAREHOLDERS
•STAKEHOLDERS
the person responsible for leading and managing the entire organization in achieving its organizational goals.
CEO
It is the duty of the _______ to collaborate with the board for the overall direction of the company.
CEO
should not only provide leadership of the board but also play an important role in the governance practices of the company.
Chairman of the Board
This is the best entity in steering the company’s strategic direction and evaluating its performance
Board of Directors
As a _________, questions must be asked during board meetings to make sure decisions made by the company will be for the best interest of the company in the long term.
Director
Considered owners of the company through their ownership/ holdings of stock shares, this group actively seeks to maximize stock price increase over a period of time.
Shareholder
Any group of people who are affected by how a corporation operates
Stakeholder
DIRECTORS CLASSIFICATION
• Independent director
• Non-executive director
• Executive director
individuals who have no connection with the company and are free from any relationship which may be considered a conflict of interest
Independent director
individuals who are not part of the management but related to a certain aspect of the compan
Non-executive director
Hold a particular executive position inside the organization,
Executive director
A corporation is managed by?
directors and officers
Directors act as a group known as?
board of directors
Corporations also have officers who are appointed by and receive their powers from the?
Board
DUTIES OF DIRECTORS
• Act in the best interest of those they serve
• Owe a duty of care to their corporation. Stays informed about corporate developments and makes informed decisions
• Be loyal to the corporation.
• Manage the corporation’s business and affairs and has the authority to exercise all of the corporation’s powers
• Responsible for making major business and policy decisions, and the officers are responsible for carrying out the board’s policies and for making the day-to-day decisions
CORPORATE OFFICERS & THEIR DUTIES
PRESIDENT
VICE PRESIDENT
SECRETARY
TREASURER
usually makes decisions on corporate policy and operations.
PRESIDENT
assumes the president’s function in his or her absence. Also often be responsible for running part of the corporation’s business or operations.
VICE PRESIDENT
makes and keeps the corporate books and records. This includes keeping the records of directors’ and shareholders’ meetings and the corporation’s stock record book.
SECRETARY
also has the authority to send out notices to corporate meetings and keep a register of the names and addresses of the stakeholders. also keeps the corporate seal
SECRETARY
keeps the corporation’s money and is responsible for taxes, financial reports
TREASURER
are formed because board work can be done effectively. By focusing and discussing particular issues separately from general board meetings, the time management of directors is optimized.
Committees
DIFFERENT COMMITEES
• AUDIT COMMITTEE
• REMUNERATION COMMITTEE
• NOMINATION COMMITTEE
as a result of corporate meltdowns, this
committee has become a nonnegotiable aspect of good governance.
• AUDIT COMMITTEE
oversee accounting and financial reporting processes and results. They make sure that internal and external audits are carried out with integrity.
• AUDIT COMMITTEE
responsible for identifying compensation and benefit plans for directors and senior executives through performance appraisals.
REMUNERATION COMMITTEE
Excessive compensation packages during economic downturns or financial crises warrant a closer investigation of the rationale behind said compensation.
• REMUNERATION COMMITTEE
to assure an effective working board, the directors on board must be independent thinkers, including executive directors.
• NOMINATION COMMITTEE
should nominate the right mix of board members to ensure objectivity, independence, and expertise.
nomination committee
allows you to check your corporation’s
compliance with your rule book and the law.
The healthy corporation checklist
contains a list of questions to ask about your corporation.
The healthy corporation checklist
Each question has a tick box to record your corporation’s compliance, helping you to identify the areas that need attention
The healthy corporation checklist
