Implied Powers Of Corporation Essay Paper

The powers and control of any organization are divided between three stakeholders involved in the organization. The three parties involved in splitting the powers and control are the organization’s directors, the management category who manages the office functions of the management, and the organization’s shareholders. The powers and control are split within these three parties and shall never be split outside these sections unless agreed otherwise mutually in the initial stages. Directors are the administrators who executive the daily functioning of the organization. Their main activities include supporting the mid-management with their decisions, acting in line with the organization’s interest, avoiding any conflict of thoughts between the parties involved in the organization, and carrying out their prescribed responsibilities with diligence. The management categories are at mid-level and play an active role in planning, leading, coordinating, budgeting, and organizing in line with the organization’s needs. Shareholders are the investors in the organization who play a major role in declaring dividends basis on the net earnings, approving the organization’s financial statements, and recommending changes that are required in the organization. The directors of the organization and the management category execute efforts closely with the workers to ensure the results are achieved. The shareholders are considered to be the head of the corporation and are left with limited decision-making privileges. Though a corporation is not a physical person, it has powers and controls certain activities. The powers of the corporation include the Express Powers and Implied Powers.

When a corporation exceeds its legal authority, it is considered to be acting supra vires. When a business engages in illegal actions, such as criminal conduct, it engages in ultra vires acts. A company has two sorts of authority: express authority and implied authority.

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Express Powers: The Corporation may carry out all the powers already listed down as per the articles of incorporation. Express powers include the actions to be performed by the organization.

The corporation can sue and be sued under the registered corporate name,

The corporation can make purchases of properties and dispose of the assets as similar to a physical person,

The corporation can make use of the purchased property as similar to a physical person,

The corporation can enter into contracts,

The corporation can borrow money for carrying the functioning of the organization,

The corporation can issue bonds for the general public to attract investment,

The corporation can lend funds to the public and attract interest,

The corporation can invest the money in other property, contracts, or corporation,

The corporation can offer donations to the welfare program,

The corporation can establish pension plans to benefit their employees,

The corporation can join in new partnerships and amalgamations,

The corporation can join in as trusts,

The corporation can extend or reduce the term of the corporation – While starting a corporation, the duration of operation can be chosen as perpetual. If the duration is not mentioned in the articles of incorporation, it is default and understood that duration would be perpetual. Under perpetual duration, the corporation does not have a fixed duration for the corporation’s lifetime. As perpetual duration is a default duration that shall reflect in the articles of incorporation for corporate entities, if the corporate entities desire to have a limit on the duration of the corporation, corresponding clauses have to be identified in the articles of incorporation. Perpetual duration of incorporation means the corporation may last indefinitely forever.

The corporation can increase or decrease the capital stock.

Implied powers of the corporation: The Corporation is required to carry out the purpose for which it was established. The purpose of the corporation is agreed upon and accepted during the inception. However, during the process, the corporation’s purpose can be altered by amending the articles of incorporation. All corporation activities should be reasonable and are required to be carried out to achieve corporate purposes. Implied powers are powers beyond the express powers of the corporation.

The corporation can borrow funds and lend funds,

The corporation can extend the credit which has been accepted initially,

The corporation can enter into contracts that are associated with the business aspects of the enterprise,

Corporation has to open a bank account to manage their transactions.

Corporation has the power to reimburse the expenses incurred by the employees. Example: Communication expenses, Fuel expenses, Travel expenses, etc.


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