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Corporation Lecture Notes
Corporation Lecture Notes
SEC 5 Corporators and incorporations Stated in the face With issued price
Advantages Advantages
Components of corporation - Easily sold - Price is flexible
1. Corporators – originally forming - Corporate creditors - Fully paid
2. Incorporators – compose the corporations are protected Disadvantages
3. Stockholders – owners of shares of stock Disadvantage - Promotes watered
4. Members – corporators of a corporation which as - Liable to corporate stock – void
creditors - Conceals the true
no capital stock
amount of the sahre
5. Subscribers – paid for the original unissued shares
6. Promoters – convinces the incorporators to form
Statutory/Legal restriction on no par shares
the corporation
1. OLD Banks, insurance, trust, building and loan
7. Underwriter – buys shares at stated terms
associations, public utilities cannot issue NEW pre-
need, and other corporation
Incorporators Corporators
2. Preferred shares always have stated value
Originally forming the Generic
3. Always fully paid, nonassessable, not liable for
corporation
corporate creditors
OLD: 5-15 No limit
NEW: 1- 15 4. Minimum amount – P5.00
Permanent in character Cease to be such 5. Entire consideration shall be treated as capital and
OLD: Legal capacity is a cannot be distributed as dividends
requisite
Voting Non-voting
SEC 6 Classifications of shares May elect BOD Instances when nonvoting
shares can vote: A2SI2MID
Amendment of AOI
Doctrine of equality of shares Adoption of bylaws
- All shares are presumed to be common and Sale of corporate assets
equal Investment of corporate
funds
Incurring of corporate
OLD: indebtedness
Capital stock – total number of shares Inc/Dec of capital stock
Authorized capital stock – total number of shares Merger
approved by the SEC Dissolution
Subscribed capital stock – 25% of the authorized
capital stock Common Preferred
Paid up capital stock – 25% of the subscribed Presumption; doctrine of Preference as to assets,
capital stock equality of shares dividends
Unissued capital stock – portion not yet sold to the
public Limitations on issuance of preferred shares
Outstanding capital stock – Total number of shares 1. Nonvoting (preferred, redeemable, treasury)
issued, whether fully paid or not except treasury 2. BOD determines preference
shares (Sec 137) 3. All preferred shares have stated par value
Upon issuance of COI – primary franchise – right Appraisal right – right to withdraw
to exist 2 kinds of stockholder that votes
Formal org and commencement of business 1. Concurring “Yes”
operation - secondary franchise – right to operate 2. Dissenting “No” exercise appraisal right – will
Bank – BSP receive fair value of the shares
Insurance – Insurance commission
Land transport – LTFRB SEC 12 Minimum capital stock required of stock
Water transport – MARINA corporation
Minimum Capital stock – none (REPEALED by RA
Theory of general capacity – corporation can 11232)
do anything except those prohibited Minimum paid up – P5,000.00 (P15,000.00 for
Theory of special capacity – corporation cannot coop) (REPEALED by RA 11232)
do anything except those allowed XPN: Percentage of PH citizenship
In the Ph – we follow doctrine of limited
capacity – it can only exercise the express,
implied and inherent powers
CORPORATION LECTURE NOTES