Group 6

Definition
Par Value: a share of stock that is given a definite or fixed value in the articles of incorporation.

No par value a share of stock that has no fixed value; it may not be issued for less than P5.00.

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Par value share capital has a nominal or face value stated of the stock certificate and in the articles of incorporation.

 No-par but with stated value share capital has a nominal value stated in the articles of the incorporation but not on the face of the stock certificate.

 No-par but, no stated value share capital has no nominal value stated in the articles of the incorporation nor on the face of the stock certificate.

Class of Stocks
Common Stock (Ordinary Share Capital) Preferred Stock (Preference Share Capital)

Common Stock
Entitles the owner to a share of the corporation's profits and a share of the voting power in shareholder elections.

Rights of a Common Stock Holder

Right to vote in stockholders meeting; Right to share in corporate profits (dividends); Right to share in corporate profits upon liquidation; Right to purchase additional shares of stocks in the event that the corporation increases its capital stock (pre-emptive right).

Preferred Stock

- entitles the holder to

some specific preferences over the common stock

Rights of a Preferred Stock Holder

Preference as to payment of dividends; Preference as to distribution of assets upon liquidation.

Types of Preference Share

Cumulative preference shares Non-cumulative preference shares Participating preference shares Non-participating preference shares Convertible preference shares Redeemable preference shares

AUTHORIZED SHARE CAPITAL

Authorized shares refer to the maximum number of shares which may be issued by a corporation as set forth in the articles of incorporation.

Authorized Share

Par

Ex: The Joyful Company was organized on January 1, 2012 with authorized share capital as follows: -10,000 shares of 10% preference share capital with a par value of P100 per share -200,000 shares of ordinary share capital with a par value of P10 per share.

MEMORANDUM and JOURNAL ENTRY METHOD

Transaction
Authorization

Memo Entry Method

Journal Entry Method

Authorized to issue _____ shares Unissued capital stock xxx of ____ share capital with a par Authorized capital stock xxx value of P___.

MEMORANDUM ENTRY METHOD Journal

2010 Jan. 1 Authorized to issue 10,000 shares of 10% preference share capital with a value of P100 per share Authorized to issue 200,000 shares of ordinary share capital with a value of P10 per share

JOURNAL ENTRY METHOD Journal

2010
Jan. 1 Unissued Preference Share Capital Authorized Preference Share Capital 1,000,000 1,000,000

Unissued Preference Share Capital 2,000,000 Authorized Preference Share Capital 2,000,000

ISSUANCE OF SHARE CAPITAL

- May be issued in exchange for cash, non-cash assets, services, liability or other form of securities. - May be sold on subscription basis - The following topics are focused on the issuance of various classes of shares in exchange for various considerations:

 ISSUANCE OF PAR VALUE SHARE

ISSUANCE OF NO-PAR, BUT WITH STATED VALUE SHARE CAPITAL

ISSUANCE OF NO-PAR, NO STATED VALUE SHARE CAPITAL

Questions:

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