Untitled

• Corporation


  An artificial being created by operation of law, having the right of succession, and the powers, attributes, and properties expressly authorized by law or incidental to its existence
• Classes of Corporation


  • Stock corporations
  • Nonstock corporations
• Stock corporations


  Corporations which have capital stock divided into shares and are authorized to distribute dividends or allotments of the surplus profits to the holders of such shares
• Nonstock corporations


  All other corporations that are not stock corporations
• Corporations formed or organized under this Code may be stock or nonstock corporations
• Corporation created by Special Laws or Charters


  Shall be governed primarily by the provisions of the special law or charter creating them or applicable to them, supplemented by the provisions of the Code, insofar as they are applicable
• Components of a corporation

  • Corporators
  • Incorporators
  • Stockholders
  • Members
  • Board of Directors/Board of Trustees
  • Corporate Officers
  • Subscriber
  • Underwriter
  • Promoter
• Corporators


  Compose a corporation, whether stockholders or members
• Incorporators


  Stockholders or members mentioned in the articles of incorporation as originally forming the corporation and are signatories thereof
• Stockholders


  Owners of shares of stock in a stock corporation
• Members


  Corporators of a non-stock corporation
• Board of Directors/Board of Trustees


  Governing body in a stock corporation/Governing body in a nonstock corporation
• Corporate Officers


  President (director), treasurer (may or may not be a director), secretary (resident citizen of the Philippines), and other officers provided for in the by-laws. If the corporation is vested with public interest, the board shall also elect a compliance officer
• Subscriber


  Agreed to take and pay for original, unused shares of a corporation formed or to be formed
• Underwriter


  Guarantees on a firm commitment and/or declared best effort basis the distribution and sale of securities of any kind by another company; person/entity/ investment banker who guarantees the sale of newly issued securities by purchasing all or part of the shares for resale to the public
• Promoter


  Cause to bring about the formation and organization of a corporation by bringing together incorporators, procuring subscriptions/capital for the corporation, and setting in motion the machinery
• Classification of Shares


  • Voting and Non-voting shares
  • Par Value and No-par value shares
  • Common and Preferred Shares
  • Promotion Shares
  • Shares of Escrow
  • Founder's Shares
  • Redeemable "Callable" Shares
  • Treasury Shares
  • Other shares classified to comply with constitutional or legal requirements
• Doctrine of Equality Shares

  No share may be deprived of voting rights except those classified and issued as "preferred" or "redeemable" shares, unless otherwise provided in this Code: Provided, that there shall always be a class or series of shares with complete voting rights
• Founder's Shares


  Generally common stock, are given to the founders or promoters of a corporation in payment of money expended or services rendered in the promotion of it
• Redeemable "Callable" Shares


  Usually preferred are frequently issued subject to redemption at the option of either the corporation, the stockholder, or both, at a definite price representing premium above the amount originally paid
• Treasury Shares


  Owned by the corporation having been reacquired by the issuing corporation by "purchase, redemption, donation or through some other lawful means." It has no voting rights or rights as to dividends or distributions
• Who can be incorporators


  • Any natural person of legal age
  • Any juridical person such as partnership, association or corporation, singly or jointly with others
  • Only a natural person of legal age, trust or estate can form a One-Person Corporation (OPC), means a corporation with one stockholder
• Incorporators


  Allowed not more than 15, and must own or a subscriber of at least 1 share
• Corporate Term


  Perpetual Existence unless a specific period is provided in the Articles of Incorporation
• Corporations Existing Prior to RCC

  Perpetual Existence unless the corporation notifies SEC to retain its specific corporate term
• Voting Requirement to Retain Specific Corporate Law


  Vote of stockholders representing a majority of its outstanding capital stock without prejudice to appraisal right
• Stock Corporations are not required to have a minimum capital stock
• Contents of the Articles of Incorporation


  • Name of the corporation
  • Specific purposes (primary and secondary)
  • Principal Office of the corporation which must be within the Philippines
  • The specific term if the corporation has not elected perpetual existence
  • The names, nationalities, and residence address of the incorporators
  • The number of directors, which shall not be more than fifteen (15) or the number of trustees which way be more than fifteen (15)
  • The names, nationalities, and residence address of persons who shall act as directors or trustees until the first regular directors or trustees are duly elected and qualified in accordance with this Code
• Unless otherwise prescribed by special law, the articles of incorporation of all domestic corporations shall comply substantially with the form
• Amendment of Articles of Incorporation


  Unless otherwise prescribed by this Code or by special law, and for legitimate purposes, any provision or matter stated in the articles of incorporation may be amended by a majority vote of the board of directors or trustees and the vote or written assent of the stockholders representing at least two-thirds (2/3) of the outstanding capital stock, without prejudice to the appraisal right of dissenting stockholders in accordance with the provisions of this Code. The articles of incorporation of a nonstock corporation may be amended by the vote or written assent of majority of the trustees and at least two-thirds (2/3) of the members
• Grounds when articles of Incorporation or Amendment May be Disapproved

  • The articles of incorporation or any amendment thereto is not substantially in accordance with the form prescribed herein
  • The purpose or purposes of the corporation are patently unconstitutional, illegal, immoral or contrary to government rules and regulations
  • The certification concerning the amount of capital stock subscribed and/or paid is false
  • The required percentage of Filipino ownership of the capital stock under existing laws or the Constitution has not been complied with
• Corporate Name


  No corporate name shall be allowed by the Commission if it is not distinguishable from that already reserved or registered for the use of another corporation, or if such name is already protected by law, or when its use is contrary to existing law, rules and regulations
• A name is not distinguishable even if it contains one or more of the following: the word "corporation", "company", "incorporated", "limited", "limited liability", or an abbreviation of one of such words; and punctuations, articles, conjunctions, contractions, prepositions, abbreviations, different tenses, spacing, or number of the same word or phrase
• Registration, Incorporation and Commencement of Corporate Existence


  A person or group of persons desiring to incorporate shall submit the intended corporate name to the Commission for verification. If the Commission finds that the name is distinguishable from a name already reserved or registered for the use of another corporation, not protected by law and is not contrary to law, rules and regulations, the name shall be reserved in favor of the incorporators. The incorporators shall then submit their articles of incorporation and bylaws to the Commission
• De Facto Corporations

  A corporation claiming in good faith to be a corporation under the Corporation Code, where there exists a flaw in its incorporation, it falls short of the requirements of law. It is the result of an attempt to incorporate under an existing law coupled with the exercise of corporate power. A de facto corporation will incur the same obligation, have the same powers and rights as a de jure corporation
• Elements of a De Facto Corporation

  • A valid law under which incorporated
  • Attempt in good faith to incorporate of "colorable compliance"
  • Assumption of corporate powers
  • Issuance of certificate of incorporation
• De Jure Corporation


  Created in strict or substantial conformity with the statutory requirements for incorporation. The right to exist cannot be successfully attacked even in a direct proceeding by the State
• Corporation by Estoppel

  All persons who assume to act as a corporation knowing it to be without authority to do so shall be liable as general partners for all debts, liabilities and damages incurred or arising as a result thereof. Where a group of persons misrepresent themselves as a corporation (ostensible corporation), they are subsequently estopped from claiming lack of corporate life in order to avoid liability
• Differences between De Facto and Corporation by Estoppel

  • Existence by law (De Facto)
  • Dealings among parties on a corporate basis (Corporation by Estoppel)
  • Effect of lack of requisites (De Facto could be a corporation by estoppel, Corporation by Estoppel is not a corporation in any shape or form)
• Effects of Non-use of Corporate Charter and Continuous Inoperation

  If a corporation does not formally organize and commence its business within five (5) years from the date of its incorporation, its certificate of incorporation shall be deemed revoked as of the day following the end of the five (5)-year period. However, if a corporation has commenced its business but subsequently becomes inoperative for a period of at least five (5) consecutive years, the Commission may, after due notice and hearing, place the corporation under delinquent status