Professional Documents
Culture Documents
What is a Corporation?
Artificial being created by
operation of law, having the
right of succession and the
powers, attributes and
properties expressly authorized
by law or incident to its
existence. (Section 1 BP Blg. 68)
Classes of Corporation
As to Profit:
a.) Stock Corporation (Sec. 3 BP Blg. 68)
Classes of Corporation
c. Close Corporations
Articles of Incorporation provides that
(1) Issued stock of all classes (Exclusive of
Treasury Shares) shall be held record by not more
than a specified number of persons not exceeding
20
(2) Issued stock of all classes subject to one or
more specified restrictions
(3) Not listed in any stock exchange
(Section 96 of BP Blg 68)
Classes of Corporation
d. Special Corporations (Title XIII)
(1) Educational Corporations
(2) Religious Corporations
e. Foreign Corporations (Title XV)
formed, organized or existing under any laws
other than those of the Philippines and
whose laws allow Filipino citizens and
corporations to do business in its own
country or state.
Classification of Shares
Classification of Shares
Treasury Shares
Issued and fully paid for but
subsequently re-acquired by the issuing
corporation by purchase, redemption,
donation or through some other lawful
means. (Sec. 9)
Classification of Shares
Pre-emptive Right
Whenever the capital stock of a
corporation is increased and new shares
of stocks are issued, the new issue must
be offered first to the stockholders,
unless such right is denied by the
articles of incorporation or any
amendment thereto (Section 39)
Disadvantages of a
Corporation
Not easy to organize
High Cost of Formation &
Operation
Credit is weakened by the limited
liability of the stockholders;
Ordinarily lack of personal element
in view of the transferability of
shares
Disadvantages of a
Corporation
Greater degree of governmental
control and supervision than in
any other forms of business
organization
Stockholders voting rights have
become theoretical particularly in
large corporations because of the
use of proxies
Disadvantages of a
Corporation
Stockholders have little voice in
the conduct of business and
In large corporations,
management and control are
separate from ownership.
Advantages of a
Corporation
Legal Capacity to act as a legal
unit
Continuity of existence because
of its non-dependence on the
lives of those who compose it
Credit is strengthened by such
continuity of existence
Advantages of a
Corporation
Its management is centralized in the
board of directors
Its creation, organization, management
and dissolution are standardized as they
are governed under one general
incorporation law
Feasible gigantic financial enterprises
since it enables many individuals to invest
their separate funds in the Enterprise
Advantages of a
Corporation
Shareholders have limited liability
Shares of stock can be transferred
without the consent of other
stockholders
Effective means of raising money
capital for its operations
Capable of getting the most
efficient management
Documentation requirements
(b) By Laws
(c) The Articles of Incorporation, Treasurers
Affidavit, Certificate of Bank Deposit must be
subscribed before a notary public (signed by at
least two instrumental witnesses who must not
be incorporators)
(d) Stock & Transfer Book of the Corporation
must be registered at SEC within 1 month from
the time a Certificate of Incorporation has been
issued by the SEC.
Annexes:
(a) Articles of IncorporationArticles of Incorporation.doc