Candilasa, Sarah Mae G.

Law on Business Organizations

1. What is a Corporation under RA capital stock divided into shares

11232? and are authorized to distribute to
- A corporation is an artificial being the holders of such shares,
created by operation of law, having dividends, or allotments of the
the right of succession and the surplus profits on the basis of the
powers, attributes, and properties shares held. All other corporations
expressly authorized by law or are nonstock corporations.
incidental to its existence.
4. Differentiate Corporates from
2. Discuss succession of a Incorporators.
corporation. - Corporators are those who compose
- A corporation has the capacity for a corporation, whether as
continued existence regardless of stockholders or shareholders in a
the death, withdrawal, insolvency stock corporation or as members in
or incapacity of the individual a nonstock corporation.
shareholders or members. The Incorporators are those
transfer of ownership of shares of stockholders or members
stock does not dissolve the mentioned in the articles of
corporation. incorporation as originally forming
- This does not strictly refer to and composing the corporation and
succession which is one of the who are signatories thereof.
modes of acquiring ownership of
property. This simply means that 5. What are the classification of
the continued existence of a shares?
corporation is NOT affected by any - The classification of shares, their
change in the members or corresponding rights, privileges, or
stockholders or by any transfer of restrictions, and their stated par
shares by a stockholder to a third value, if any, must be indicated in
person. This is different from the the articles of incorporation.
rule in partnership where any - These are: Nonvoting Shares, Par
change (death, incapacity, etc). in Value Shares, no-par value,
the parties will dissolve the preferred shares, founders shares,
partnership by operation of law. redeemable shares, and treasury
shares
3. What are the classes of a
corporation? 6. Enumerate the different kinds of
- Corporations formed or organized corporation.
under this Code may be stock or - There are four major
nonstock corporations. Stock classifications of corporations:
corporations are those which have - (1) nonprofit,
 - (2) municipal, capital and shall not be available
- (3) professional, and; - (4) for distribution as dividends.
business. o Business corporations
are divided into two types, publicly - PREFERRED SHARES
held and closely held corporations. Preferred shares of stock
issued by a
7. Enumerate the classes of shares. -
The classes of shares are: corporation may be given preference in
- NONVOTING SHARES the distribution of dividends and in the
Certain distribution of corporate assets in case
shares may be deprived of of liquidation, or such other
voting rights, provided that preferences. Preferred shares must
there shall always be a class or always be issued with a stated par
series of shares with complete value.
voting rights. Nonvoting shares
may nevertheless vote in certain - FOUNDERS’ SHARES
instances. Founders’ shares may be given
- PAR VALUE The shares or certain rights and privileges not
series of shares may or may not enjoyed by the owners of other
have a par value. However, the stocks. Where the exclusive
following shall not be permitted to right to vote and be voted for in
issue no-par value shares of the election of directors is
stocks: granted, it must be for a limited
• banks period not to exceed five (5)
• trust years from the date of
• insurance incorporation: Provided, That
• pre-need companies such exclusive right shall not
• public utilities be allowed if its exercise will
• building and loan associations, violate Commonwealth Act No.
and 108, otherwise known as the
• other corporations authorized to “AntiDummy Law”; Republic Act No.
obtain or access funds from the 7042, otherwise known as the “Foreign
public, whether publicly listed or Investments Act of 1991”; and other
not pertinent laws.
- NO-PAR VALUE No-par value
shares must be issued for a
consideration of at least Five
pesos - REDEEMABLE SHARES
(P5) per share. The Redeemable shares may be issued by
entire consideration received the corporation when expressly
by the corporation for its no-par provided in the articles of
value shares shall be treated as incorporation. They are shares which
may be purchased by the corporation
 from the holders of such shares upon
the expiration of a fixed period, 9. What are treasury shares?
regardless of the existence of - Treasury shares are shares of stock
unrestricted retained earnings in the which have been issued and fully
books of the corporation, and upon paid for, but subsequently
such other terms and conditions stated reacquired by the issuing
in the articles of incorporation and the corporation through purchase,
certificate of stock representing the redemption, donation, or some
shares, subject to rules and other lawful means. Such shares
regulations issued by the Securities may again be disposed of for a
and Exchange Commission (SEC). reasonable price fixed by the board
of directors.
- TREASURY SHARES
Treasury shares are shares of 10. Differentiate Corporation vs
stock which have been issued Partnership.
and fully paid for, but - a. Creation
subsequently reacquired by the Partnership: Voluntary Agreement
issuing corporation through of Partners
purchase, redemption, Corporation: Created by Operation
donation, or some other lawful of Law
means. Such shares may
again be disposed of for a - b. Number of Organizers
reasonable price fixed by the Partnership: 2 or more
board of directors. Corporation: not more than 15

8. What are redeemable shares? - c. Existence

- Redeemable shares may be issued Partnership: No Limit except will of
by the corporation when expressly the parties Corporation: Perpetual
provided in the articles of Life
incorporation. They are shares
which may be purchased by the
- d. Liability
corporation from the holders of
Partnership: May extend to private
such shares upon the expiration of
property
a fixed period, regardless of the
Corporation: Up to their capital
existence of unrestricted retained
contribution only
earnings in the books of the
corporation, and upon such other
terms and conditions stated in the 11. How many incorporators are
articles of incorporation and the required by law?
certificate of stock representing the - Any person, partnership,
shares, subject to rules and association or corporation, singly or
regulations issued by the jointly with others but not more than
Commission. fifteen (15) in number, may
organize a corporation for any
 lawful purpose or purposes:
Provided, That natural persons who
are licensed to practice a 13. What is the corporate term?
profession, and partnerships or - A corporation shall have perpetual
associations organized for the existence unless its articles of
purpose of practicing a profession, incorporation provides otherwise.
shall not be allowed to organize as Corporations with certificates of
a corporation unless otherwise incorporation issued prior to the
provided under special laws. effectivity of this Code, and which
Incorporators who are natural continue to exist, shall have
persons must be of legal age. Each perpetual existence, unless the
incorporator of a stock corporation corporation, upon a vote of its
must own or be a subscriber to at stockholders representing a
least one (1) share of the capital majority of its outstanding capital
stock. A corporation with a single stock, notifies the Commission that
stockholder is considered a One it elects to retain its specific
Person Corporation as described in corporate term pursuant to its
Title XIII, Chapter III of this Code. articles of incorporation: Provided,
That any change in the corporate
12. What are the steps in the creation of term under this section is without
corporation? prejudice to the appraisal right of
- The steps are: dissenting stockholders in
o Step 1: Reservation of accordance with the provisions of
Securities and Exchange this Code.
Commission (SEC)
o Step 2: Submission of 14. May an existence of a corporation
Documents to SEC o exceed 50 years?
Step 3: Registration with - Yes. A corporation shall have
Local Government Units perpetual existence unless its
(LGUs) of the location articles of incorporation provide
where you want to establish otherwise. A corporation whose
term has expired may apply for a
your business
revival of its corporate existence,
o Step 4: Registration with
together with all the rights and
the
privileges under its certificate of
Bureau of Internal Revenue incorporation and subject to all of
(BIR) for corporate taxation its duties, debts and liabilities
o Step 5: Registration existing prior to its revival. Upon
Business Name with the approval by the Commission, the
o with other Government corporation shall be deemed
Agencies (for employer revived and a certificate of revival
registration if employing of corporate existence shall be
individuals) issued, giving it perpetual
 existence, unless its application for
revival provides otherwise.
15. What is the minimum capital stock?
- Stock corporations shall not be
required to have a minimum capital
stock, except as otherwise
specifically provided by special law.