Stock v.

Non-Stock Corporations
Stock
Definition

Non-Stock

Corporations which have capital

stock divided into shares and
are authorized to distribute to the
holders of shares dividends or
allotments of the surplus profits on
the basis of the shares (3)

All other private corporations (3)

Purpose

Primarily to make profits for its

shareholders

May be formed or organized for

charitable, religious, educational,
professional, cultural, fraternal,
literary, scientific, social, civic
service, or similar purposes like
trade, industry, agricultural and like
chambers, or any combination
thereof. (88)

Distribution of Profits

Profit is distributed to shareholders

Whatever incidental profit made is

not distributed among its members
but is used for furtherance of its
purpose. AOI or by-laws may
provide for the distribution of its
assets among its members upon its
dissolution. Before then, no profit
may be made by members.

Composition

Stockholders

Members

Scope of right to vote

Each stockholder votes according to

the proportion of his shares in the
corporation. No shares may be
deprived of voting rights except
those classified and issued as
"preferred" or "redeemable" shares,
and as otherwise provided by the
Code. (Sec. 6)

Each member, regardless of class,

is entitled to one (1) vote UNLESS
such right to vote has been limited,
broadened, or denied in the AOI or
by-laws. (Sec. 89)

Voting by proxy

May be denied by the AOI or the bylaws. (Sec. 89)

Cannot be denied. (Sec. 58)

Voting by mail

May be authorized by the by-laws,

with the approval of and under the
conditions prescribed by the SEC.
(Sec. 89)

Not possible.

Who exercises Corporate

Powers 23

Board of Directors or Trustees

Members of the corporation

One where no part of its income is

distributable as dividends to its
members, trustees or officers. (87)

Governing Board

Board of Directors or Trustees,

consisting of 5-15 directors /
trustees.

Board of Trustees, which may

consist of more than 15 trustees
unless otherwise provided by the
AOI or by-laws. (Sec, 92)

Directors / trustees shall hold office

for 1 year and until their successors
are elected and qualified (Sec. 23).

Board classified in such a way that

the term of office of 1/3 of their
number shall expire every year.
Subsequent elections of trustees
comprising 1/3 of the board shall be
held annually, and trustees so
elected shall have a term of 3 years.
(Sec. 92)

Election of officers

Officers are elected by the Board of

Directors (Sec. 25), except in close
corporations where the stockholders
themselves may elect the officers.
(Sec. 97)

Officers may be elected directly by

the members UNLESS the AOI or
by-laws provide otherwise. (Sec.
92)

Place of meetings

Generally, the meetings must be

held at the principal office of the
corporation, if practicable. If not,
then anyplace in the city or
municipality where the principal
office of the corporation is located.
(Sec. 51)

Any place within the Philippines, if

provided for by the by-laws (Sec.
93)

Transferability of interest
or membership

Transferable.

Generally non-transferable since

membership and all rights arising
there from are personal. However,
the AOI or by-laws can provide
otherwise. (Sec. 90)

Term of
trustees

directors

or

Distribution of assets in
case of dissolution

See Sec. 94.