5. Merger or consolidation 1. It is an artificial being 6. Investment of corporate fund in another corporation 2. Created by operation of law 7. Dissolution of the corporation 3. Has right of succession 4. It has only the powers, attributes, properties CAPITAL VS. CAPITAL STOCK expressly authorized by law or incident to its existence Actual corporate property; An amount; abstract concrete INSTANCES WHERE FICTION DISREGARDED Varies from day to day Fixed Belongs to the corporation Belongs to the 1. Corporation functions for the benefit of a single stockholders person 2. Corporation is a mere instrumentality of the individual stockholders CERTIFICATE OF STOCK VS. STOCK 3. Domestic Corporation is controlled by aliens Tangible Intangible 4. Corporation is organized by an insolvent debtor to Written evidence Equity/interest defraud his creditors Issuance: NO Issuance: YES 5. Subsidiary company is created by the parent company as the agent of the latter 6. Corporation is formed by a single person for the STATUTORY RESTRICTIONS REGARDING ISSUANCE OF NO purpose of evading his individual contract PAR SHARES 7. Corporation is dissolved and its assets are 1. Banks, trust companies, insurance companies, etc. transferred to another corporation to avoid a 2. Preferred shares of stock financial liability to its employees 3. Shares issued without par value deemed to be fully PARTNERSHIP VS. CORPORATION paid and non-assessable and the holder of the share not be liable to the corporation/creditors Mere agreement Created by law 4. Shares without par may not be issued for a May be organized by two Requires atleast 5 consideration of less than P5.00 persons incorporators 5. Consideration received shall be treated as capital Every partner is an agent BOD or trustees No right of succession Has right of succession ADVANTAGES & DISADVANTAGES OF PAR VALUE SHARES Delectus personarum Does not based on the principle of delectus ADVANTAGES DISADVANTAGES personarum Can be easily sold Subscribers are liable to The name has the word “Ltd” May adopt any corporate corporate creditors name as long as it is not Greater protection to Face value is not an identical to other existing creditors accurate criterion of its true corporation value Unlikelihood of sale of subsequently issued shares SIMILARITIES OF PARTNERSHIP AND CORPORATION at a lower price ADVANTAGES & DISADVANTAGES OF NO PAR VALUE 1. Has a juridical personality SHARES 2. Can act only through agents 3. Composed of aggregate individuals ADVANTAGES DISADVANTAGES 4. Distribute profits to those who contributed capital Deemed fully paid and non- Issuance of watered stock 5. Subject to income tax assessable Flexible price Lesser protection to CHARACTERISTICS OF CLOSE CORPORATION creditors 1. Stockholders is less than 20 Low-priced stocks enjoy Conceal the real value of wider distribution money 2. Shares can’t be sold No untruth concerning the Legalize large issues of 3. Restrictions of transfer value stock for property INCORPORATION OF A PRIVATE CORPORATION BY A Can be easily issued SPECIAL ACT DISADVANTAGES OF TREASURY SHARES
GENEREAL INC. LAW (BP 68) 1. NO voting rights
2. NOT outstanding SPECIAL INC. LAW (SPECIAL CHARTER) 3. NOT entitled to dividends COMPONENTS OF CORPORATION REDEEMABLE VS. TREASURY SHARES 1. Members stipulation no stipulation 2. Incorporators URE is not needed URE is needed 3. Corporators STEPS IN THE CREATION OF CORPORATION 4. Stockholders 1. Promotion DOCTRINE OF EQUALITY OF SHARES – all shares are 2. Incorporation presumed to be equal 3. Formal organization and commencement of business operations INSTANCES WHEN ALL MAY EXERCISE THE POWER TO VOTE MANDATORY AFTER CREATION 1. Amendment of the articles of incorporation 1. Election of BOD 2. Adoption and amendment of by-laws 2. Election of officers 3. Sales, lease, exchange, mortgage, etc 3. Filing of by-laws QUALIFICATIONS OF INCORPORATORS 1. Must not be less than 5 2. Must be natural persons 3. Must have the capacity to contract 4. Majority must be residents of the Philippines 5. Citizens of the Philippines 6. Must own or subscribe to atleast one share CONTENT OF ARTICLES OF INCORPORATION 1. Name of corporation 2. Specific purpose 3. Principal office of the corporation 4. Term of the corporation (not exceeding 50years) 5. Names, nationalities, and residences of the incorporators 6. Number of directors which shall not be less than 5 nor more than 15 7. Names, nationalities, and residences of the persons who shall act as directors or trustees
ARTICLE OF INCORPORATION OF STOCK CORPO MUST
INCLUDE:
1. Amount of authorized capital stock
2. Number of shares into which it is divided 3. Par value in pesos of each share 4. Names, nationalities, and residences of original subscribers 5. Amount of capital stock subscribed and paid
ARTICLE OF INCORPORATION OF NON-STOCK CORPO
MUST INCLUDE:
1. Capital amount 2. Names, nationalities, and residences of the donors or contributors 3. Respective amount contributed by each