Corp.pdf - LAW ON CORPORATIONS DEFINITION A corporation is...

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LAW ON CORPORATIONS
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DEFINITION 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.
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ATTRIBUTES CREATED BY OPERATION OF LAW the formal requirement of the State’s consent through compliance with the requirements imposed by law is necessary for its creation such that the mere agreement of the persons composing it or intending to organize it does not warrant the grant of its independent existence as a juridical entity; ARTIFICIAL BEING it has a juridical personality, separate and distinct from the persons composing it. This is also known as the Doctrine of Separate Juridical Personality. RIGHT OF SUCCESSION unlike in a partnership, the death, incapacity or civil interdiction of one or more of its stockholder does not result in its dissolution;
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ATTRIBUTES POWERS, ATTRIBUTES AND PROPERTIES EXPRESSLY AUTDHORIZED BY LAW it can exercise only such powers and can hold only such properties as are granted to it by the enabling statutes unlike natural persons who can do anything as they please. This is also called the Doctrine of Limited Capacity. Powers of a corporation: 1. Express Powers those expressly authorized by the Corporation Code and other laws, and its Articles of Incorporation. 2. Implied Powers Those that can be inferred from or necessary for the exercise of EXPRESS powers; 3. Incidental Powers those that are incidental to the existence of the corporation
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ULTRA VIRES ACT ULTRA VIRES ACTS are those which cannot be executed or performed by a corporation because they are not within its express, inherent, or implied powers as defined by its charter or Articles of Incorporation. Accordingly, it may be subject to a collateral attack questioning the authority of the corporation to engage in such particular endeavor.
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ULTRA VIRES ACT Consequences: 1. On the Corporation itself: The proper forum may suspend or revoke, after proper notice and hearing, the franchise or certificate of registration of the corporation for serious misrepresentation as to what the corporation can do or is doing to the great damage or prejudice of the general public. 2. On the rights of the Stockholders: A stockholder may bring either an individual or derivative suit to enjoin a threatened ultra-vires act or contract. If already performed, a derivative suit against the directors may be filed, but their liability will depend on whether they acted in good faith and with reasonable diligence in entering into the contract.
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ULTRA VIRES ACT Consequences: 3. On the immediate parties: a. If the contract is fully executed in both sides, the contract is effective and the courts will not interfere to deprive either party of what has been acquired under it; b. If the contract is executory on both sides, as a rule, neither party can maintain an action for its non-performance; and c. Where the contract is executory on one side only, and has
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