The corporation is a body of individuals united as a single separate entity. The corporate powers are vested in them collectively, as a body, not as individuals. They have no power to act as or for the corporation except at a corporate meeting called and conducted according to law. Action by the stockholders is not the action of the corporation (Fletcher, Cyclopedia Corporations, Vol. 5, p. 4). On the other hand, the general authority to manage the affairs of the corporation is vested in the directors, not individually, but also collectively as a board, and they can act so as to bind the corporation only when they act as a board (Fletcher, ibid., Vol. 2, p. 168).
The foregoing principles point to the essence and significance of corporate meetings in corporations, which are composed of two classes – the stockholders meetings and the board of directors meetings. The Revised Corporation Code further classifies these meetings into two – the regular meetings and the special meetings. For stockholders meetings, regular meetings are those held annually as provided in the bylaws; and special meetings are those held at any time deemed necessary or as provided in the bylaws. For the boards of directors, regular meetings are those held monthly, unless the bylaws provide otherwise; and special meetings are those held anytime upon the call of the president or as provided in the bylaws.
In actual practice, however, there is a third category of meetings which, although not expressly mentioned in the Revised Corporation Code, can be necessarily implied from the provisions thereof. This category would refer to organizational meetings which are likewise indispensable in the commencement of the operations of a corporation. To be more specific, for newly established corporations, the stockholders as a matter of necessity and in a meeting duly called for the purpose, have to approve and adopt the corporate bylaws.
It has been said that the bylaws of a corporation are the rules of its life, and that until the bylaws have been adopted, the corporation may not be able to act for the purposes of its creation, and that the first and most important duty of the members is to adopt them. This would seem to follow as a matter of principle from the office and function of bylaws. Their adoption is a matter of practice, if not one of legal, necessity (De Leon, The Corporation Code, p. 442). There is an exception to this rule however. Under Section 45 of the Revised Corporation Code, the bylaws may be adopted prior to incorporation, through the approval and signature of all the incorporators. In such instance, the organizational meeting of the stockholders for the adoption of bylaws shall be dispensed with.
In the case of the board of directors, an organizational meeting is also necessary upon the commencement of its functions so as to elect the officers who will operate the corporation and implement the actions approved by the board. It may be noted that the articles of incorporation merely designates the incorporators, directors and the treasurer of the corporations. Consequently, Section 24 of the Revised Corporation Code states that immediately after their election, the directors must formally organize and elect a president, a treasurer, a secretary and such other officers as may be provided in the bylaws. If the corporation is vested with public interest, the board shall also elect a compliance officer. These officers shall manage the corporation, constituting the management thereof.
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The above comments are the personal views of the writer. His email address is [email protected]