ATTRIBUTES OF A CORPORATION 4.

Incurring bond indebtedness

5. Merger or consolidation
1. It is an artificial being 6. Investment of corporate fund in another corporation
2. Created by operation of law 7. Dissolution of the corporation
3. Has right of succession
4. It has only the powers, attributes, properties CAPITAL VS. CAPITAL STOCK
expressly authorized by law or incident to its
existence Actual corporate property; An amount; abstract
concrete
INSTANCES WHERE FICTION DISREGARDED Varies from day to day Fixed
Belongs to the corporation Belongs to the
1. Corporation functions for the benefit of a single stockholders
person
2. Corporation is a mere instrumentality of the
individual stockholders CERTIFICATE OF STOCK VS. STOCK
3. Domestic Corporation is controlled by aliens
Tangible Intangible
4. Corporation is organized by an insolvent debtor to Written evidence Equity/interest
defraud his creditors Issuance: NO Issuance: YES
5. Subsidiary company is created by the parent
company as the agent of the latter
6. Corporation is formed by a single person for the STATUTORY RESTRICTIONS REGARDING ISSUANCE OF NO
purpose of evading his individual contract PAR SHARES
7. Corporation is dissolved and its assets are
1. Banks, trust companies, insurance companies, etc.
transferred to another corporation to avoid a
2. Preferred shares of stock
financial liability to its employees
3. Shares issued without par value deemed to be fully
PARTNERSHIP VS. CORPORATION paid and non-assessable and the holder of the share
not be liable to the corporation/creditors
Mere agreement Created by law 4. Shares without par may not be issued for a
May be organized by two Requires atleast 5 consideration of less than P5.00
persons incorporators 5. Consideration received shall be treated as capital
Every partner is an agent BOD or trustees
No right of succession Has right of succession ADVANTAGES & DISADVANTAGES OF PAR VALUE SHARES
Delectus personarum Does not based on the
principle of delectus ADVANTAGES DISADVANTAGES
personarum Can be easily sold Subscribers are liable to
The name has the word “Ltd” May adopt any corporate corporate creditors
name as long as it is not Greater protection to Face value is not an
identical to other existing creditors accurate criterion of its true
corporation value
Unlikelihood of sale of
subsequently issued shares
SIMILARITIES OF PARTNERSHIP AND CORPORATION at a lower price
ADVANTAGES & DISADVANTAGES OF NO PAR VALUE
1. Has a juridical personality
SHARES
2. Can act only through agents
3. Composed of aggregate individuals ADVANTAGES DISADVANTAGES
4. Distribute profits to those who contributed capital Deemed fully paid and non- Issuance of watered stock
5. Subject to income tax assessable
Flexible price Lesser protection to
CHARACTERISTICS OF CLOSE CORPORATION creditors
1. Stockholders is less than 20 Low-priced stocks enjoy Conceal the real value of
wider distribution money
2. Shares can’t be sold
No untruth concerning the Legalize large issues of
3. Restrictions of transfer
value stock for property
INCORPORATION OF A PRIVATE CORPORATION BY A Can be easily issued
SPECIAL ACT DISADVANTAGES OF TREASURY SHARES

GENEREAL INC. LAW (BP 68) 1. NO voting rights

2. NOT outstanding
SPECIAL INC. LAW (SPECIAL CHARTER) 3. NOT entitled to dividends
COMPONENTS OF CORPORATION REDEEMABLE VS. TREASURY SHARES
1. Members stipulation no stipulation
2. Incorporators URE is not needed URE is needed
3. Corporators STEPS IN THE CREATION OF CORPORATION
4. Stockholders
1. Promotion
DOCTRINE OF EQUALITY OF SHARES – all shares are 2. Incorporation
presumed to be equal 3. Formal organization and commencement of
business operations
INSTANCES WHEN ALL MAY EXERCISE THE POWER TO
VOTE MANDATORY AFTER CREATION
1. Amendment of the articles of incorporation 1. Election of BOD
2. Adoption and amendment of by-laws 2. Election of officers
3. Sales, lease, exchange, mortgage, etc 3. Filing of by-laws
QUALIFICATIONS OF INCORPORATORS
1. Must not be less than 5
2. Must be natural persons
3. Must have the capacity to contract
4. Majority must be residents of the Philippines
5. Citizens of the Philippines
6. Must own or subscribe to atleast one share
CONTENT OF ARTICLES OF INCORPORATION
1. Name of corporation
2. Specific purpose
3. Principal office of the corporation
4. Term of the corporation (not exceeding 50years)
5. Names, nationalities, and residences of the
incorporators
6. Number of directors which shall not be less than 5
nor more than 15
7. Names, nationalities, and residences of the persons
who shall act as directors or trustees

ARTICLE OF INCORPORATION OF STOCK CORPO MUST

INCLUDE:

1. Amount of authorized capital stock

2. Number of shares into which it is divided
3. Par value in pesos of each share
4. Names, nationalities, and residences of original
subscribers
5. Amount of capital stock subscribed and paid

ARTICLE OF INCORPORATION OF NON-STOCK CORPO

MUST INCLUDE:

1. Capital amount
2. Names, nationalities, and residences of the donors
or contributors
3. Respective amount contributed by each

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