Corporations in the Philippines

• A corporation is a juridical person, distinct from its owners, able to own property, enter contracts, and exist perpetually.
• Corporations register with the Securities and Exchange Commission (SEC) and must operate within the law.

Types of Corporations

• Stock Corporations: Issue shares representing ownership, enabling stockholders to earn dividends and vote.
• Non-Stock Corporations: Organized for charity, education, or religious work without issuing shares and members contribute without expecting financial returns.
• One Person Corporations (OPC): Has only one stockholder who serves as both owner and director, and must appoint a nominee.
• Close Corporations: Limited to a maximum of 20 stockholders and do not offer shares publicly.
• Foreign Corporations: Companies from other countries register with the SEC to conduct business in the Philippines.
• Educational Corporations: Schools and universities that must comply with regulations, including appointing a Board of Trustees.
• Publicly-Listed Corporations: Large corporations trading shares on the Philippine Stock Exchange (PSE) which requires independent directors and strict reporting.

Incorporation Process

• Corporate Name: Must be unique and SEC-approved.
• Articles of Incorporation: Document defining the corporation's purpose, capital structure, stockholders, and other details.
• Bylaws: Internal rules that govern corporate operations, including meetings, decision-making, and officer roles.
• SEC Registration: Corporations file their Articles of Incorporation, Bylaws, and other documents for legal approval.

Corporate Governance

• Stockholders or Members: Corporation owners with voting rights who may receive dividends.
• Board of Directors/Board of Trustees: Stock corporations have Directors, while non-stock corporations have Trustees, responsible for setting policies and major decisions.
• Corporate Officers: Include the President, Treasurer, and Corporate Secretary, overseeing daily operations which requires publicly-listed corporations to have a Compliance Officer.

Corporate Shares & Capital

• Authorized Capital Stock: The maximum number of shares a corporation can issue.
• Subscribed Capital Stock: Shares that investors agree to purchase.
• Paid-up Capital: The actual money paid by stockholders for their shares.
• Treasury Shares: Previously issued shares that the corporation repurchased.
• Delinquent Shares: Shares unpaid by a stockholder, allowing the corporation to sell them.

Corporate Powers & Responsibilities

• Legal Personality: Corporations have the right to own assets, enter contracts, and engage in legal proceedings.
• Merger & Consolidation: Merging combines two corporations, while consolidation creates a new entity from multiple corporations.
• Ultra Vires Acts: Actions beyond the powers defined in the Articles of Incorporation, and are often considered invalid.

Corporate Dissolution & Rehabilitation

• Voluntary Dissolution: Stockholders vote to close the corporation and liquidate assets.
• Involuntary Dissolution: The SEC or courts dissolve a corporation due to legal violations.
• Liquidation: Assets are sold off in order to pay off debts before any remaining money is distributed to stockholders.
• Corporate Rehabilitation: Corporations may restructure finances to avoid closure when struggling.

Corporate Compliance & Regulation

• Annual Reports: Corporations must submit General Information Sheets (GIS) and Financial Statements to the SEC.
• Electronic Filing: The SEC allows online submission of corporate documents for efficiency.
• SEC Oversight: The SEC may inspect records for compliance and issue Cease and Desist Orders.

Corporate Meetings & Decision-Making

• Annual Stockholders' Meeting: Meeting where financial performance is discussed and directors are elected.
• Quorum: The minimum number of required attendees for valid decision-making.
• Proxy Voting: Stockholders may authorize another person to vote on their behalf.
• Remote Participation: Remote meetings and voting are allowed if SEC regulations are followed.