Chapter 6

Forms of Business Organization

Partnership

Sole Corporation
Proprietorship

Cooperative
Sole Proprietorship

A form of business
owned by a single
person, known as the
proprietor
Partnership
 Association of two or
more partners who agree
to place money, property
or industry in a common
fund with the aim of
sharing profits among
themselves
Types of partners
A.) Based on contribution

Capitalist
Partner • Provides assets

Industrial • Provides
Partner services

Capitalist- • Provides assets

Industrial
Partner and services
Types of partners
B.) Based on liability

General • Liability extends to

his personal
Partner property

Limited • Liability is limited

to the extent of his
Partner capital contribution
Corporation
 An artificial being
created by operation of
law having the right of
succession and the
powers, attributes and
properties expressly
authorized by law or
incident to its existence
Classification of corporations
A.) Based on nature of capital

• Capital is in the
Stock
form of shares of
Corporation stock

• Corporation where
Non-stock no dividend is
Corporation distributed to its
members
Classification of corporations
B.) Based on purpose

• Owned, formed,
Public
and organized by
Corporation the government

• Owned, formed,
Private and organized by
Corporation private owners
and businesses
Classification of corporations
C.) Based on relation to
other corporations

• One who has

Parent controlling interest
Corporation on another
corporation

Subsidiary • One which is

controlled by
Corporation another corporation
Classification of corporations
D.) Based on situs

Domestic • Created under

Corporation Philippine laws

• Formed, organized
Foreign or existing under
Corporation the laws of
another country
Classification of corporations
E.) Based on whether open
or not

Close • Limited to selected

persons or members
Corporation of the family

• Open to any person

Open who may wish to
Corporation become a stockholder
or member
Categories of Stocks
Common Stock • Represents the basic issue of shares

Preferred Stock • Stock having certain preferences over common stock

Class A Shares • Stocks offered to Filipino shareholders

Class B Shares • Stocks offered to foreign investors

Par Value Shares • Shares that have been assigned a fixed value

No Par Value Shares • Shares which have not been assigned a fixed value

• Given to incorporators and may be given rights and

Founders’ Shares privileges not enjoyed by other stockholders
Dividends
 Distributed profits of the
corporation

 Represents the
corporation’s profit, which
are distributed to the
stockholders according to
the proportionate interest
of their shareholding
Kinds of dividends
Cash Dividend • Paid in cash to the stockholders

Property Dividend • In the form of non-cash assets of the corporation

Stock Dividend • In the form of stocks issued by the corporation

• In the form of promissory notes indicating the kind

Scrip Dividend of benefit the stockholder will receive in the future

Bond Dividend • In the form of bonds of the company

Liquidating Dividend • Refers to return of capital by a corporation

Cooperative
 Organizations composed
primarily of small
producers and
consumers who
voluntarily join together
to form business
enterprises which they
themselves own, control
and patronize
Principles of cooperatives
Open and voluntary membership

Democratic control

Limited interest on capital

Division of net surplus

Cooperative education

Cooperation among cooperatives