Stocks and Stockholders 2.

Subscribed capital
3. Paid up capital
60. SUBSCRIPTION CONTRACT 4. Debt
Subscription Purchase Creditors
Can be made before or after incorporation Only after incorporation a. Commercial short term
If no agreement when to pay, pay upon call Under deed of absolute sale,b.fullyInvestment
paid
before transfer bonds/debentures
Cannot be released from obligation Obligation can be condoned
Statute of Frauds not applicable 61. PRE-INCORPORATION
Statute of Frauds applicable if price isSUBSCRIPTION
500++ Irrevocable
Corporate records > GIS May only be revoked in the following cases:
Since shares are property, succession is a 1. All others consent before 6-mo
mode of transfer period
Subscription contract: contract by which a 2. Upon expiration of 6-mo period,
subscriber agrees to take a certain number before filing of AOI, even without
of shares of the capital stock and consent (may be longer period
pay/promise to pay for it. according to agreement)
o Made by an offer of the corporation
or subscriber + acceptance 62. CONSIDERATION
Stock Option: privilege to subscribe within a Any or combination of any:
period under terms and conditions, 1. Actual cash
exercisable anytime within period 2. Property at fair value = par/ issued
Warrant: security which entitles holder to the value
right to subscribe to unissued capital stock 3. Labor performed/service actually
or purchase issued capital stock, detachable rendered
or not, for 1-5 years. 4. Previously incurred indebtedness
Parties: subscriber, corporation, other 5. Amounts transferred from URE to
subscribers stated capital
Nominee: person in whose name a stock is 6. In reclassification/conversion,
registered but is not the actual owner. outstanding shares in exchange for
Violation of Trust Fund Doctrine: stocks
1. Condonation of unpaid Restrictions on consideration
subscription/refund; 1. Not less than par/issued value
2. Payment of dividends without URE; 2. No PN or future services
3. Fraudulent transfer of property; 3. If property, valuation is determined
4. Disposition in insolvency with undue by incorporators/BOD, subject to
preference to some creditors; and SEC approval
5. Decrease of capital stock 4. If intellectual property, Certification
Distribution of capital assets: of Registration + Appraisal report +
1. AOI amendment to reduce AUCS Deed of Assignment
2. Purchase of redeemable shares by 5. If co-owned: property is necessary +
the corporation, w or w/o URE value may be ascertained + right is
3. Dissolution and liquidation actually transferred to corporation +
Sources of Funds no creditors prejudiced + waiver of
1. ACS
 rights by all other co-owners (notice
+ redemption period of 30d)
Art 1350 v Sec 62: not stipulated value, but
property or right or service actually
exchanged
Conversion: single prop/partnership -> corp,
must be consented to by creditors
Watered Stocks: consideration is less than
issued/par value
Issued Price: fixed in either AOI or
Resolution, may be higher than par value
Deposit on Subscription: Applied to future
issuance of capital stock, depositor is not
stockholder
63. CERTIFICATE
Quasi-negotiable
Street Certificate: endorsed in blank, void if
stolen/spurious/forged
If no certificate, transfer can be made by
deed of assignment, duly recorded + SPA to
demand registration
Lao v. Lao: absent written document, prove
possession in name of alleged seller +
delivery
If no indorsement, file action to compel
transferor to indorse (not intra-corporate
dispute)
Upon death, heirs do not automatically
become stockholders, only equitable owners
o There must be estate proceedings +
transfer + recording
o In the interim, administrator
exercises rights
No prescription
DST must be paid before transfer, it
attaches upon acceptance of subscription
AOI may provide for the right of first refusal
64. ISSUANCE OF STOCK CERTIFICATE
Only until payment of full amount + interest
+ expenses
Issuance requirements:
1. Signed by P/VP, countersigned by S
2. Sealed
3. Delivered
4. Fully paid
5. Original is surrendered
Cannot be to bearer
Once issued, is a continuing affirmation of
legal issuance
Certificate is not a condition precedent to
being a stockholder
Remedies for non-issuance
1. Action for Specific Performance
2. Damages
3. Mandamus
4. Rescission
65. LIABILITY OF DIRECTORS FOR WATERED
STOCKS
Those consenting/having knowledge thereof
but does not object in writing and file with S
shall be SOLIDARILY LIABLE for difference
Applies to Bonus Stocks
66. INTEREST ON UNPAID SUBSCRIPTION
67. PAYMENT OF BALANCE
Subscription is a subsisting liability from
time of subscription
May be subject of garnishment
Call = cause of action, but not necessary if:
1. Payment date is specified
2. Corporation is insolvent
No set-off
68. DELINQUENCY SALE
69. WHEN MAY SALE BE QUESTIONED
70. COURT ACTION TO RECOVER UNPAID
SUBSCRIPTION
Upon Resolution, notice: amount + interest
+ date/place/time
30-60 days from delinquency
Reso -> Notice -> Publication -> Sale ->
Transfer -> Credit Remainder