CORPORATION AND
CORPORATE
GOVERNANCE
CORPORATION
○ An artificial being created by operation
of law, having the right to succession
and the powers, attributes and
properties expressly authorized by law
or incident to its existence (The
Corporation Code of the Philippines,
Sec. 2)
Characteristics of Corporation:
○Artificial Being
○Created by operation of Law
○Right of succession
○Powers, Attributes and Properties
PURPOSES OF CORPORATION:
○Early Stage Survival
○To increase Profit
○To offer Vital Services to the General Public
○To offer Goods and Services to the General
Public
○To offer Goods and Services to the Mass
Market
STAKEHOLDERS
○A group of individual who can
affect or is affected by the
achievement of the organization’s
objective.
STAKEHOLDERS OF A
CORPORATION
MANAGEMENT
○Refers to the party given the
authority to implement the
policies as determined by the
Board in directing the
course/business activities of the
corporation.
CREDITORS
○This refers to the party who
lend to the corporation goods,
services or money.
SHAREHOLDERS
○This refers to people who invest
their capital in the corporation.
EMPLOYEES
○ These are the people who contribute
their skills, abilities, and ingenuity to
the corporation.
CUSTOMERS
○They are the buyers of the
corporations products and services.
SUPPLIERS
○They are providers of products and
services used in the end product
for the customer.
GOVERNMENT
○ It is the duty and responsibility of the
government to provide the people the
basic ways and means to survive and
the government gets the biggest help
from the corporation.
THE LOCAL COMMUNITY
○The company has a responsibility to
give back the community that
supports it by providing labor force. It
should also contribute volunteers,
money or something to support a
community event.
CLASSIFICATION OF
STAKEHOLDERS
○Internal vs External
○Voluntary vs Involuntary
MULTIPLE STAKEHOLDING
○A stakeholder belongs to several
stakeholder groups at the same time.
THE STAKEHOLDER THEORY
○States that the purpose of a business
is to create value for stakeholders not
just shareholders.
CORPORATE LEGAL
STRUCTURE
SHAREHOLDERS
○Shareholders or Stockholders are
artificial or natural persons that are
legally regarded as owners of the
corporation
STOCKHOLDERS OR
SHAREHOLDERS RIGHT
○ The right to vote on matters such as
elections of the board of directors
○ The right to propose the shareholder
resolution
○ The right to received dividends.
STOCKHOLDERS OR
SHAREHOLDERS RIGHT
○ Pre-emption right which is right to
purchase new shares issued by the
company
○ The right to liquidating dividends
BONDHOLDERS
○Person or entity that is the holder
of a currently outstanding bond
BOARD OF DIRECTORS
○Refers to a collegial body that
exercises the corporate powers of
all corporations formed under the
Corporation Code.
DUTIES OF THE BOARD OF
DIRECTORS
○Establishing Policies and Objectives
○Selecting, appointing, supporting and
receiving the performance of the chief
executive
DUTIES OF THE BOARD OF
DIRECTORS
○Ensuring the availability of adequate
financial resources
○Approving annual budget
○Accounting to the stakeholders the
organizations performance
AGENCY THEORY
• The agency theory is a supposition
that explains the relationship
between principals and agents in
business. Agency theory is concerned
with resolving problems that can exist
in agency relationships due to
unaligned goals or different aversion
levels to risk.
