CLASSES fixed in

OF the
SHARES articles of
IN incorporati
GENERAL on and
1. Par appearing
value on the
shares. certificate
One in of
which a stock.
specific The par
amount is value is
the
minimum stock may
issue price be issued
of the only as
shares. par
Section 6 value
of the shares.
Code CLASSES
states OF
that SHARES
preference IN
(or GENERAL
preferred) 1. Par
shares of value
shares. certificate
One in of
which a stock.
specific The par
amount is value is
fixed in the
the minimum
articles of issue price
incorporati of the
on and shares.
appearing Section 6
on the of the
Code
states CLASSES
that OF
preference SHARES
(or IN
preferred) GENERAL
shares of 1. Par
stock may value
be issued shares.
only as One in
par which a
value specific
shares. amount is
fixed in minimum
the issue price
articles of of the
incorporati shares.
on and Section 6
appearing of the
on the Code
certificate states
of that
stock. preference
The par (or
value is preferred)
the shares of
stock may shares.
be issued One in
only as which a
par specific
value amount is
shares. fixed in
CLASSES the
OF articles of
SHARES incorporati
IN on and
GENERAL appearing
1. Par on the
value
certificate states
of that
stock. preference
The par (or
value is preferred)
the shares of
minimum stock may
issue price be issued
of the only as
shares. par
Section 6 value
of the shares.
Code
CLASSES fixed in
OF the
SHARES articles of
IN incorporati
GENERAL on and
1. Par appearing
value on the
shares. certificate
One in of
which a stock.
specific The par
amount is value is
the
minimum stock may
issue price be issued
of the only as
shares. par
Section 6 value
of the shares.
Code CLASSES
states OF
that SHARES
preference IN
(or GENERAL
preferred) 1. Par
shares of value
shares. certificate
One in of
which a stock.
specific The par
amount is value is
fixed in the
the minimum
articles of issue price
incorporati of the
on and shares.
appearing Section 6
on the of the
Code
states CLASSES
that OF
preference SHARES
(or IN
preferred) GENERAL
shares of 1. Par
stock may value
be issued shares.
only as One in
par which a
value specific
shares. amount is
fixed in minimum
the issue price
articles of of the
incorporati shares.
on and Section 6
appearing of the
on the Code
certificate states
of that
stock. preference
The par (or
value is preferred)
the shares of
stock may shares.
be issued One in
only as which a
par specific
value amount is
shares. fixed in
CLASSES the
OF articles of
SHARES incorporati
IN on and
GENERAL appearing
1. Par on the
value
certificate states
of that
stock. preference
The par (or
value is preferred)
the shares of
minimum stock may
issue price be issued
of the only as
shares. par
Section 6 value
of the shares.
Code
CLASSES OF SHARES IN
GENERAL
1. Par value shares. One in which a
 These
specific amount is fixed in the
articles of incorporation and
appearing on the certificate of
stock. The par value is the

shares
minimum issue price of the shares.
Section 6 of the Code states that
preference (or preferred) shares of

entitle the
stock may be issued only as par
value shares.

2. Non-par value shares. One without

holder to an
any value appearing on the face of
the certificate of stock. A no-par
value share may have a stated value

equal pro-
which may be fixed in the articles
of incorporation or by the board of
directors or the stockholders. Thus,
the issue price may vary from time

rata division
to time as it is usually fixed based
on the book value of the
corporation’s shares.

3. However, the minimum stated

value of a no-par value share is five
pesos (P5.00) per share (Sec. 6). In
of profits
without any
addition, shares issued without par
value are deemed fully paid.

preference.
Banks, trust companies, insurance
companies, public utilities, and
building and loan associations are
not permitted to issue no-par value

7.
shares of stock.

4. Voting shares. Those issued with

Preference
the right to vote.

5. Non-voting shares. Those issued

without the right to vote.

6. Ordinary shares.
shares.
These shares.
shares Those
entitle the issued to
holder to promoters
certain as
advantages compensatio
or benefits n in
over the promoting
holders of the
ordinary incorporatio
shares. n of a
8.
Promotion
corporation,
rendered in launching or promoting
the welfare of the corporation.

9. Treasury shares. A stock that has

or for
been issued by the corporation as
fully paid and later reacquired but
not retired.

services 10.Convertible shares. A stock which

is convertible or changeable from
one class to another class.

rendered in MINIMUM SUBSCRIPTION AND

PAID-IN CAPITAL

launching or
 25% subscription or share capital
 25% paid in capital
 Not less than 5,000 paid in
capital

promoting  These requirements are

mandatory.
Illustration: Assume that the

the welfare
authorized share capital is
P2,000,000 divided into 20,000
shares with a par value of P100 per
share. The subscribed share capital

of the must be P500,000 which is 25%

of the authorized share capital of
P2,000,000. The paid-in capital

corporation.
should be P125,000
which is 25% of the subscribed
share capital of P500,000.
6. Ordinary shares. These shares
entitle the holder to an equal pro- Suppose that the authorized share
rata division of profits without any capital
preference. is P60,000 divided into 6,000 P10
par value shares. Applying the
7. Preference shares. These 25%-25% rule, the paid-in capital will
shares only amount to P3,750. The
entitle the holder to certain incorporators must pay P5,000
advantages or benefits over the because this is the minimum paid-
holders of ordinary shares. in capital required by law. In case of
no-par value shares, the 25%
8. Promotion shares. Those issued to requirement will be based on the
promoters as compensation in authorized number of shares. If
promoting the incorporation of a the authorized capital is pegged at
corporation, or for services 2,000 no-par value shares, then at least
 manufacturi
500 no-par value shares must be
subscribed

BASIC CORPORATE

ng,
ORGANIZATIONAL STRUCTURE
 The ultimate control of the
corporation rests with the

accounting,
shareholders. They are the
owners of the corporation.
The shareholders elect the
top governing body of the
corporation, the members of the
board of directors.
 The board of directors is
finance,
administrati
responsible for the formulation
of the overall policies for the
corporation and for the exercise
of corporate powers. The
board also elects a
chairman of the board.
 The election of the
on and
other key
professional management team
or the administrative officers is
entrusted to the board. This
team may include the president;
executive vice-president;
areas;
vice-
secretary;
presidents
treasurer;
in charge
and
of sales,
controller.
These a
officers corporation
implement holds the
the policies shareholders
of the board ’ meeting
of directors during
and actively which the
manage the shareholders
day-to-day ’ elect
affairs of their
the directors
corporation. and make
Annually, other
decisions.
being a director or officer of two
or more corporations.
vice-  The Corporation Code does
presidents in charge of sales,
manufacturing, accounting, finance,
administration and other key;
secretary; treasurer; and controller.
These officers implement the policies of
the board of directors and actively
manage the day-to-day affairs of the
corporation. Annually, a corporation
holds the shareholders’ meeting during
not prohibit a corporate officer
which the shareholders’ elect their
from occupying the same
directors and make other decisions.
position in another corporation
organized for the same purpose.
 Sec. 25 of the Corporation Code
of the Philippines, states that
However, such situation may
the president of a corporation
be prohibited by special law, the
must be a director of the
articles of incorporation or the
corporation, but cannot act as
corporate by-laws.
president and secretary or
as president and treasurer at
There is a particular case
the same time. The president is
involving a business tycoon who
the only officer required by law to
wanted to become a San Miguel
be a director.
Corporation director although he was
 The corporate secretary must
already occupying the same post in two
be a resident and a citizen corporations directly competing with the
of the Philippines. He need not food and beverage giant. At that time,
be a director unless required by San Miguel amended its by-laws
the corporate by-laws. to provide for the disqualification of
 It is generally the duty of the a shareholder from being a director of
secretary to make and keep the corporation if the former already
records and to make proper occupies the same position in a
entries of the votes, resolutions competing firm. The Supreme Court
and proceedings of the later upheld the decision of the
shareholders and directors in the San Miguel. Thus a corporation is
management of the corporation. authorized to prescribe qualifications
 The corporate treasurer is the for its directors (Gokongwei vs. SEC, 89
proper officer entrusted with the SCRA 336).
authority to receive and keep
the money of the corporation CORPORATE BOOKS ANDRECORDS
and to disburse them as he may Every private corporation, stock or non-
be authorized. The treasurer stock, is required to keep books
may or may not be a director. and records at its principal office
 There is no prohibition in of the following:
the law against a shareholder
1. Minute book. It contains the
minutes of the meetings of the
directors and stockholders.

2. Stock and transfer book. It is are

cord of the names of the
shareholders, installments paid and
unpaid by the shareholders and
dates of payment, any transfer of
stock and dates thereof, by whom
and to whom made.

3. Books of accounts. These

represent the record of all business
transactions. The books of accounts
normally include the journal and the
ledger.

4. Subscription book. It is a book of

printed blank subscription.

5. Shareholders’ ledger. It is a ledger

which details the number of shares
issued to each shareholder.

6. Stock certificate. It is a book of

printed blank certificates of stock.