Corporation Basic Considerations PDF

Corporation: Basic Considerations incompatible and conflicting Corporation elements - An artificial being created by operation of law, having the right of Classes of corporations: succession and the powers,...

Corporation: Basic Considerations incompatible and conflicting Corporation elements - An artificial being created by operation of law, having the right of Classes of corporations: succession and the powers, ○ Stock corporation attributes and properties expressly - corporations which authorized by law or incident to its have share capital exercise divided into shares and are authorized to ★ Advantages: distribute to the ○ Has the legal capacity to act holders of such as a legal entity shares dividends or ○ Shareholders have limited allotments of the liability surplus profits on the ○ Has continuity of existence basis of the shares ○ Shares of stock can be held transferred without the consent of the other ○ Non-stock shareholders corporation ○ Its management is - one where no part of centralized in the board of its income is directors distributed as ○ Shareholders are not general dividends to its agents of the business members, trustees or ○ Greater ability to acquire officers. funds Other Classes of Corporations: ★ Disadvantages: ➔ According to the number of ○ Relatively complicated persons: information and management ◆ Corporation aggregate ○ Greater degree of - consisting of more than one government control and corporator. supervision ○ Requires relatively high cost ◆ Corporation sole of formation and operation - a special form of corporation ○ Subject to heavier taxation usually associated with the ○ Minority shareholders are clergy. subservient to the wishes of majority ➔ According to nationality: ○ Management and control ◆ Domestic corporation may be separated from - organized under Philippine ownership laws ○ Transferability of shares permits the uniting of  ◆ Foreign corporation ◆ Subsidiary corporation - organized under foreign laws - controlled by another corporation known as parent ➔ According to whether for public corporation or private purpose ◆ Public corporation - formed or organized for the ➔ According to legal right to government of a portion of corporate existence: the state ◆ De jure corporation - existing in fact and in law ◆ Private corporation - a corporation created for ◆ De facto corporation private aim, benefit or - existing in fact but not in law purpose ➔ According to the degree of public Other Classifications of participation with regard to share Corporations: ownership: ➔ According to whether for ◆ Close corporation charitable purpose or not: - whose share ownership is ◆ Ecclesiastical limited to selected persons or - organized for religious members of a family not purposes exceeding 20 persons ◆ Eleemosynary ◆ Open corporation - established for public charity - where the share is available for subscription or purchase ◆ Civil by any person - established for business or profit ◆ Publicly-held corporation - a corporation with a class of ➔ According to their relation to equity securities listed on an another corporation: exchange or with assets in ◆ Parent or holding excess of P50,000,000 and corporation having 200 or more holders. - related to another corporation that it has the Steps In The Creation Of A power to either directly or Corporation indirectly elect the majority of 1. Promotion the directors of a subsidiary 2. Incorporation corporation 3. Formal organization and commencement of business operations  Rights Of A Shareholder ○ Shareholders ○ Right to be issued certificate - or stockholders are of stock or other evidence of corporators in a stock share ownership corporation, maybe natural or ○ Right to attend and vote in juridical person person or by proxy at shareholders’ meetings ○ Members ○ Right to elect and remove - corporators of a non-stock directors corporation ○ Right to adopt, amend, or repeal by-laws ○ Subscribers ○ Right to purchase a portion - persons who have agreed to of any new shares issued to take and pay for original, maintain the same unissued shares of a percentage of stock corporation formed or to be ownership. This right is formed. All incorporators are known as a pre-emptive subscribers right. However, this right is not absolute and may be ○ Promoters denied. - persons who bring about or ○ Right to receive dividends cause to bring about the when declared formation and organization of ○ Right to inspect corporate a corporation books and records and to receive financial reports ○ Underwriters ○ Right to participate in - are usually investment distribution of corporate bankers assets upon dissolution ○ Independent director Components of a Corporation: - a person who apart from his ○ Corporators fees and shareholdings is - those who compose a independent of management corporation whether as and free from any business shareholder or as member or other relationship which could, or could reasonably be ○ Incorporators perceived to, materially - shareholders or members interfere with his exercise of mentioned in the articles of independent judgment in incorporation carrying out the responsibilities of a director.  Classes Of Shares In General: 8. Treasury shares 1. Par value shares - a stock that has been issued - one in which a specific by the corporation as fully amount is fixed in the articles paid and later reacquired but of incorporation and not retired appearing in the certificate of stocks 9. Convertible shares - a stock which Is convertible 2. No-par value shares or changeable from one - one without any value, but class to another class may have a stated value which may be fixed in the Minimum Subscription and articles of incorporation or by Paid-In Capital the board of directors or the ○ At the time of incorporation, shareholders. However, the at least twenty-five (25%) minimum stated value per of the authorized capital share is P5 per share stock as stated in the articles of incorporation must 3. Voting shares be subscribed and at least - those issued with the right to twenty-five percent (25%) vote of the total subscription must be paid upon 4. Non-voting shares subscription, the balance to - without right to vote be payable on a date or dates fixed in the contract of 5. Ordinary shares subscription without need of - shares entitled to an equal a call, or in the absence of a pro-rata division of profit fixed date or dates, upon call without any preference for payment by the Board of Directors. 6. Preference shares - shares entitle the holder to Basic Corporate Organizational certain advantages or Structure benefits over the holders of ○ The ultimate control of the ordinary shares corporation rests with the shareholders. They are the 7. Promotion shares owners of the corporation. - those issued to promoters as compensation in promoting ○ The shareholders elect the the incorporation of the top governing body of the corporation corporation, the members of the board of directors  ○ The board of directors is paid and unpaid by responsible for the shareholders and dates of formulation of the overall payment, any transfer of policies for the corporation stock and dates thereof, by and for the exercise of whom and to whom made. corporate powers. 3. Books of accounts ○ The board also elects a - these represent the record of chairman of the board. The all business transactions. It election of the professional include the journal and the management team or the ledger. administrative officers is entrusted to the board. 4. Subscription book - a book of printed blank ○ The president must be a subscription. director of the corporation, but he cannot act as 5. Shareholder’s ledger president and secretary or as - a ledger which details the president and treasurer at number of shares issued to the same time each shareholder ○ The corporate secretary 6. Subscriber’s ledger must be a resident and a - it is a subsidiary ledger for citizen of the Philippines. He the subscriptions receivable need not be a director unless account; it reports the required by the corporate individual subscriptions of the by-laws subscribers. ○ The corporate treasurer is 7. Stock certificate book the proper officer entrusted - it is a book of printed blank with the authority to receive certificates of stock and keep the money of the corporation and to disburse them as may be authorized Corporate Books and Records 1. Minutes book - it contains the minutes of the meetings of the directors and shareholders. 2. Stock and transfer book - it is a record of the names of shareholders, installments