Formation and Organization of a Corporation

Promotion

Preliminary arrangements to set up a tentative working organization.

Incorporation

Formalizing the corporation: (1) drafting of articles of incorporation (2) filing of the artificial of incorporation (3) approval

Commencement

Business should start its operations within five years from the date of incorporation.

Stock Corporations

Are those which have capital stock divided into shares and are authorized to distribute to the holders of such shares, dividends, or allotments of the surplus profits on the basis of the shares held.

Nonstock Corporation

One where no part of its income is distributed as dividends to its members, trustees, or officers. Any profit obtained incidental to its operations shall be used for the furtherance of the purpose or purposes for which the corporation was organized.

Corporators

Are those who compose a corporation, whether as stockholders or shareholders in a stock corporation or as members in a nonstock corporation.

Incorporators

Are those stockholders or members mentioned inthe articles of incorporation as originally forming and composing the corporation and who are signatories thereof.

Subscribers

Are persons who have agreed to take and pay for original, unissued shares of a corporation formed or to be formed. Note: All incorporators are subscribers but a subscriber need not to be an incorporator.

Par value shares

One in which a specific amount is fixed in the articles of incorporation and appears on the certificate of stock. This is the minimum issue price of the shares.

No-par value shares

One without any value appearing on the face of the certificate of stock. This may have a stated value which may be fixed in the articles of incorporation or by the board of directors or the shareholders.

Voting shares

Those issued with the right to vote.

Non-voting shares

Those issued without the right to vote.

Ordinary shares

These shares entitle the holder to an equal pro-rata division of profits without any preference.

Preference shares

These shares entitle the holder to certain advantages or benefits over the holders of ordinary shares.

Promotion shares

Those issued to promoters as compensation in promoting the incorporation of a corporation, of for services rendered in launching or promoting the welfare of the corporation.

Treasury shares

A stock that has been issued by the corporation as fully paid and later reacquired but not retired.

Convertible shares

A stock which is convertible or changeable from one class to another class.

Minutes book

It contains the minutes of the meetings of the directors and shareholders.

Stock and transfer book

It is a record of the names of shareholders, installments paid and unpaid by shareholders and dates of payment, and any transfer of stock and dates thereof, by whom and to whom made.

Books of accounts

These represent the record of all business transactions. This normally include the journal and the ledger.

Subscription book

It is a book with a printed blank subscription.

Shareholder’s ledger

It is a ledger which details the number ofshares issued ot each shareholder.

Subscriber’s ledger

It is a subsidiary ledger for the subscriptions receivable account; it reports the individual subscriptions of the subscribers.

Stock certificate book

It is a book of printed blank certificates of stocks.

Authorized Capital Stock

The maximum number of shares that the entity can issue.