CORPORATION
ADVATAGES
2. As to Purpose
- Continuous existence because of power a. Public Corporation
of succession - Organized to govern a
- Strong credit line portion of the state.
- Large business scales are possible b. Quasi- Public
- Liability of investors is limited to their - Given a franchise to perform
investment of a public character
- Transfer of shares can be effected - Public utility corporations:
without consent MERALCO and PLDT
- Smooth operation because of centralized
management 3. As to Compliance of Law
c. De jure corporation
- Both law and fact
DISADVANTAGES - Exists in law: comply legal
papers
- - not ease to form- complicated legal
- Fact: operates as a
requirements and high costs
corporation
- -limited liability may weaken credit
capacity
d. De facto
- Subject to governmental control
- Exists only in fact but not in
- More taxes
law
- Centralized management restricts a
- Non-compliance with legal
more active participation by
papers
shareholders in conduct of corporate
affairs
4. As to Law of Creation
a. Domestic
CLASSES - Organized under Philippine
Law
- According to PURPOSE, MEMBERSHIP b. Foreign Corporation
HOLDINGS, COMPLIANCE OF LAW, LAW - Under laws of other country
OF CREATION…
- Profit oriented corporations are OPEN, 5. As to Extent of Membership
PRIVATE and STOCK CORPORATIONS a. Open
- Non-profit- PUBLIC AND PRIVATE non- - Ownership is widely held by
stock corporations many investors- private stock
corporation
LIST OF CLASSES b. Closely-held corporation/ family
- 50% or more its stock is
1. As to Membership owned by 5 person or less
a. Stock Corporation
i. private, CAPITAL is
DIVIDED into share of COMPONENTS
stock
ii. Authorized to distribute Incorporator- originally formed the
corporate earnings to corporation and names appear in Articles.
holders basis of shares Natural as distinguished from artificial
held. persons
iii. Owners are called Corporators- persons who compose the
SHARE/STOCKHOLDERS operation- shareholders/members
b. Non- stock Stockholders/Shareholders- corporators of
i. CAPITAL comes from FEES a stock corporation
paid by individuals Members- corporators of a stock
composing it. corporation
ii. Owners are called Promoters- undertake: (a) form a company
MEMBERS based on a given project (b) set is going (c)
take steps to accomplish the purpose of
corporation
Subscribers- agreed to take original, SHARE CAPITAL
unissued shares but will pay later date.
Underwriters- undertake to dispose the - Capital stock
shares to general public. - Amount of fixed by the corporate charter to
be subscribed and paid in or secured to paid
by shareholders either money, property,
ORGANIZING A CORPORATION labor
3 STAGES
CLASSES OF SHARE CAPITAL
1. PROMOTION
- Preliminary arrangements to set 1. Ordinary share capital ( COMMON STOCK)
up organization and solicit - Single class is issued
subscriptions to raise sufficient - Equal or pro-rata division of profits without
capital any preference over any class of shares
2. INCORPORATION 2. Preference share capital (PREFERED
- Formalizing corporation STOCK)
a. Drafting the articles of incorporation - Entitles the holder to enjoy priority as to
b. Filing with SEC with statement distribution of dividends
showing that at least 25% of total - Distribution of assets upon corporate
shared capital has been subscribed liquidation
and paid
c. SEC issues a certificate of
BASIC RIGHTS OF SHAREHOLDERS
incorporation.
a. Share in distribution of corporate
3. COMMENCEMET OF THE BUSINESS profit
- Business should start operation b. Share distribution of assets upon
within two years from the date of corporate liquidation
incorporation. If fail- dissolve c. Vote in shareholders meeting
corporation without hearing d. Maintain one’s ownership interest
through purchase of additional
*COST INCURRED IN FILING FEES, COST OF PRINTING
shares when a new share capital
STOCK CERTIFICATES, LEGAL FEES CALLED
issued- CALLED PREEMPTIVE
ORGANIZATION COSTS/ PRE-OPERATING COSTS.-(PAS RIGHT
38 Intangible Assets)
*charged to expense in period incurred
CORPORATE RECORDS
- Maintain records to keep track of
various transaction
a. Record all business transactions
(journals, ledgers, vouchers)
b. Minutes of all meetings of directors
c. Minutes of all meetings of
shareholders
d. Stock and transfer book
i. Shareholder/stockholders
journal- chronological and
numerical record of stock
certificates issued
ii. Shareholders ledger-
alphabetical record of
individual shareholders
iii. Subscribers ledger-
alphabetical record
