[ACTBFAR] Unit 3 (Part 1 & 2): Corporations (Introduction & Formation)

Artificial being
Created by law
Right of succession
Authorized by law
Ownership in shares

5 Key characteristics of corporations

Limited liability
Continued existence
Transferability
Ease of raising capital

4 Advantages of corporations

Difficulty of formation
More regulations
More taxes

3 Disadvantages of corporations

Stock Corporations

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

Non-Stock Corporations

corporations other than stock corporations

Par value share

face value; nominal value; value indicated on the Articles of Incorporation

No-par value share

no fixed value or no definite value indicated on the Articles of Incorporation

No-par value share

must be issued for a consideration of at least Five pesos (P5.00) per share

No-par value share

shall not be available for distribution as dividends

Ordinary share

available if a corporation only issues one class of shares

Ordinary share

possesses voting rights and pre-emptive rights

Preference share

given preference in the distribution of dividends and corporate assets in case of liquidation

Preference share

may be issued only with a stated par value

Preference share

generally, has no voting rights

Domestic Corporations

organized or existing under laws of the Philippines

Foreign Corporations

formed, organized or existing under laws other than those of the Philippines’

Multi-national Corporations

with operations in at least one country other than its domicile country

Government Corporations

public corporations; for public purpose

Privately-owned Corporations

for private purpose

Quasi-public Corporations

private corporation that provides service for public purpose

De jure Corporations

by law; has complied with all the legal requirements for its existence

De facto Corporations

in fact; has not complied with all the legal requirements for its existence

Open Corporations

publicly-listed; ownership is distributed among the general public via the free trade of shares of stock on exchanges

Close Corporations

closely-held; ownership is held by a select few individuals who are usually closely associated with the business

Corporators

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

Incorporators

stockholders or members mentioned in the articles of incorporation as originally forming and composing the corporation and who are signatories thereof

Ordinary Shareholders

Right to attend and vote in shareholders’ meetings

Ordinary Shareholders

has a right to purchase additional company shares in any future issuance before becoming available to the general public

Ordinary Shareholders

has a right to dividends or share in corporate profits

Ordinary Shareholders

has a right to share in the net assets of a corporation upon liquidation

Preference Shareholders

has preference as to dividends

Preference Shareholders

has preference as to assets in the event of liquidation

Directors

shall not be more than fifteen (15)

Trustees

may be more than fifteen (15)

Organization Costs

expenses incurred in forming or starting a corporation should be treated as expenses of the corporation

Incorporators

each must own or be a subscriber to at least one (1) share of the capital stock

One Person Corporation

corporation with a single stockholder