CORPORATION

PRESENTED BY: DEBBIE ANGELES

BSENM- 4B
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.
EXAMPLES:
CAPITAL STOCK

Is divided into units to facilitate the transfer

of ownership and distribution of profits.
SHARES OF STOCK
Referred as each of the units of capital
stock
STOCK CERTIFICATE
Is the tangible written document evidencing
ownership in a corporation
CHARACTERISTICS OF A CORPORATION
1.Separate Legal Existence
2.Created by Operation of Law
3.Transferable Units of Ownership
4.Limited Liability of Stockholders
5.Continuity of Existence
6.Centralized Management by the Board of
Directors
ADVANTAGES OF CORPORATION
1.Legal Capacity to Act as a Legal Entity (Artificial
Being)
2.Limited Liability of Shareholders
3.Transferability of Shares
4.Continuity of Life of the Corporation
5.Greater Ability to Acquire Funding
6.Greater Ability to Acquire Talents, Skills and
Expertise
PARTIES TO A CORPORATION
1.Corporators- are those who compose the
corporation whether they are stockholders(for a
stock operation) or members ( for non-stock
corporation).They include incorporators,
stockholders, or members.
2. Incorporators- referred as founders of the corporation who
originally organized corporation.
3. Stockholders/Shareholders- are owners of shares of stocks in a
stock corporation.
4. Members- are corporators of a non-stock corporation
5. Promoters- promote or find potential incorporators or
shareholders who may be interested in the formation of the
corporation. Generally, the incorporators act as promoters.
6. Board of Directors- shall not be less than five nor more than
fifteen members. They are responsible for the formulation of the
overall policies for the corporation and for the exercise of
corporate powers.
 INCORPORATION AND ORGANIZATION OF
A CORPORATION
Three steps in organization of a corporation:
1.Promotion
refers to the bringing together of the
incorporators and persons interested in
forming a corporation and procuring
subscriptions or capital for the corporation.
2. Incorporation
is the process of formally organizing the
corporation.
• Registration of business name with SEC
• Drafting and execution of the articles of incorporators
• Execution of sworn affidavits and bank deposit
certificate
• Filing of the articles of incorporation with the Securities
and Exchange Commission
• Issuance by the Securities and Exchange Commission of
the Certificate of Incorporation
3. FORMAL ORGANIZATION AND COMMENCEMENT
OF BUSINESS OPERATIONS
Consist of following steps:
•Adoption of By-laws
•Election of board of directors
•Election of officers
•Commencement of business operations
ARTICLES OF INCORPORATION
Contain the following matters required by Section 14 of
Corporation Code of the Philippines:
1. Name of Corporation
2. Specific purpose/s for which the corporation is formed
3. Location or principal place of business which should be in the
Philippines
4. Term which the corporation is to exist, not exceeding fifty years
5. Names, nationalities, and residences of the incorporators.
6. Names, nationalities, and residences of the persons who
shall act as directors or trustees until the first regular directors
or trustees are duly elected and qualified in accordance with
the code.
7. In case of stock corporations, the amount of its authorized
capital stock, the number of shares into which it is divided,
and the par value of each share (in case of par value shares)
8. In case of stock corporations, the names, nationalities, and
residences of the original subscribers and the amount
subscribed and paid by each on his subscription
9. In case of stock corporation whose shares are no par value
shares, the authorized capital stock amount and the number
of shares into which share capital is divided.
10. In case of non-stock corporations, the amount of its
capital, the names, nationalities, and residences of the
contributors and the amount contributed by each
11. Such other matters as are not inconsistent with the
law and which the incorporators may deem necessary
and convenient
BY-LAWS
•Refer to the rules of action adopted by the
corporation for its internal government and
for the government of its officers,
stockholders, and members.
Section 47 of the corporation code of the Philippines suggest the
inclusion of the following matters in the by-laws of a corporation:
1. Time, place, and manner of calling and conducting regular or
special meetings of directors or trustees
2. Time and manner of calling and conducting regular or special
meetings of stockholders or members
3. Required quorum in meetings of stockholders or members and
the manner of voting thereto
4. Form of proxies of stockholders and members and the manner
of voting them
5. Qualifications, duties, and compensations of directors, trustees,
officers, and employees
6. Time for holding the annual election of directors or
trustees and the mode or manner of giving notice
thereof
7. Manner of election or appointment and the term of
office of all officers other that directors or trustees
8. Penalties for violation of the by-laws
9. In case of stock corporations, the manner of issuing
certificates
10. Such other matters may be necessary for the proper
or convenient transaction of its corporate business an
affairs.
CLASSIFICATIONS OF CORPORATION
1.PUBLIC CORPORATIONS
formed or organized for the government of a
portion of the state. Also called as municipal
corporations or local governments
Examples: Barangay, Cities, Municipalities and
Provinces
2. PRIVATE CORPORATIONS
Formed other than for the government of a portions
of the state. They are formed for private purpose,
benefit, or end.
Generally classified as:
A. As to purpose
• For profit
• Non- profit
• Charitable
a. Ecclesiastical/Religious
b. Eleemosynary/Public Charity
• Foundation
Is a non-profit organization that donates funds and gives
support to other organization, or provides the source of funding for
its own charitable purposes, like youth and the community
Examples:
ABS-CBN foundation, Inc.
Bagong Kulturang Pinoy, Inc.
Being Human Foundation
Consuelo Zobel Alger Foundation
Dominic Savio Scholarship Foundation, Inc.
Ramon Aboitiz Foundation, Inc.
OTHER PRIVATE CORPORATIONS
1. QUASI- PUBLIC CORPORATIONS
Are private corporations, which, in addition to their
private aim, render public service such as transportation,
light, water, telephone and telegraph corporations.
Examples:
Meralco, PLDT, Philippines Airlines
2. GOVERNMENT-OWNED OR CONTROLLED
CORPORATIONS (GOCC)
are private corporations created or organized by
the government, or of which the government is the
majority stockholder.
Examples:
Government Service Insurance System (GSIS)
Social Security System (SSS)
National Power Corporation (NPC)
Philippine Gambling Corporation (PAGCOR)
Philippine National Railways
3. WASTING ASSETS CORPORATION
are those engaged in the extraction of
minerals or natural resources like gold
mining companies and cement companies.
As to How Membership is Represented:
1. Stock corporation
these are corporations of which membership is represented
by shares of stock, i.e., they issue stock and are authorized to
distribute to the holders of such dividends or allotments of the
surplus profits on the basis of the shares held.
Can also be classified as to admission of members:
• Open corporations- stock are available for purchase by the
general public.
• Closed corporations- ownership of which is limited to selected
persons or members of s family, i.e., shares are not available for
purchase by the general public
2. Non-stock corporations
these are corporations other than stock
corporations. They do not issue stock and
are not created for profit but for public
good and welfare.
•As To The State Of Incorporation
1.Domestic corporations
a corporation is considered domestic in the
state/country from which it obtains its charter. A
corporation incorporated under Philippine laws is
considered domestic as far as the Philippines is
concerned.
EXAMPLES
2. Foreign corporations
a corporation is considered foreign in all countries other
than one from which it obtains its charter. A corporation is
considered domestic in the Philippines but foreign in any other
country. Similarly, any corporation incorporated in the country,
except the Philippines, shall be considered foreign in the
Philippines.

Example:
A corporation incorporated in the US, Japan, or China is foreign in
the Philippines.
Examples
A FOREIGN CORPORATION MAY BE EITHER OF THE
FOLLOWING:
a.Resident Foreign Corporation – this is a foreign
corporation which establishes a branch or office
in the Philippines and operates in the Philippines.
b.Non-resident Foreign Corporation- this is a
foreign corporation deriving income from the
Philippines in the form of rent, interest, and
dividend without establishing an office or
branch in the Philippines.
3. Multinational Corporation
extend their operations in other countries.
As to Number of Persons Composing the
Corporation
1.Corporation Sole- is a legal entity consisting of a
single ("sole") incorporated office, occupied by
a single ("sole") natural person.
2.Corporation Aggregate- this is the common
form of corporation where there are several
stockholders.
As to Legal Right to Corporate Existence:
1.De Jure Corporation- is a corporation existing in
fact and in law. It is organized in conformity with
the law and recognized by the government.
2.De Facto Corporation- is a corporation in fact
but not in law. This means that it operates as a
corporation but may have not been legally
organized.
As to Relation to Other Corporations:
1. Parent or Holding Corporation- this is the original
corporation from which another corporation, called
subsidiary or sister company emanates.
2. Subsidiary or Sister Company- This is the corporation
whose shares of stock are owned in majority by the
parent or holding company.
• Pay management fees to the parent company, aside
from the dividends that the parent company receives
as dividends on the stocks of the subsidiary company
that the parent or holding company owns.
ORGANIZATION EXPENSE
-expenditures incurred in organizing a corporation
COOPERATIVE
- are organizations established by individuals, called
members, to provide themselves with goods and
services, or to produce and dispose of the products of
their labor.
Example:
• Farmers producing rice
• Farmers producing coconut
PATRONAGE REFUND
Is the profit of the cooperative or credit union
that is given back to the members in proportion to
the amount of business they do with the
cooperative or credit union. The more a member
buys from the employee cooperative or borrows
from the credit union, the more patronage refund
the members will get.
•
END