You are on page 1of 1

A.

Minimum Capital Stock and Subscription requirements


Section 12. Minimum capital stock required of stock corporations. Stock corporations incorporated
under this Code shall not be required to have any minimum authorized capital stock except as
otherwise specifically provided for by special law, and subject to the provisions of the following
section.
Section 13. Amount of capital stock to be subscribed and paid for the purposes of incorporation.
At least twenty-five percent (25%) of the authorized capital stock as stated in the articles of
incorporation must be subscribed at the time of incorporation, and at least twenty-five (25%) per cent
of the total subscription must be paid upon subscription, the balance to be payable on a date or
dates fixed in the contract of subscription without need of call, or in the absence of a fixed date or
dates, upon call for payment by the board of directors: Provided, however, That in no case shall the
paid-up capital be less than five Thousand (P5,000.00) pesos.

1. Incorporation and Organization


a. Promoter
Is a person who brings about or cause to bring about the formation and organization of a corporation
by:
1. bringing together the incorporators or the persons interested in the enterprise,
2. procuring subscriptions or capital for the corporation and
3. setting in motion the machinery which leads to the incorporation of the corporation itself.
Q: Are promoters agents of a corporation?
A: No. Promoters are not agents of the corporation before it comes into existence.
Upon incorporation, the practice is for the BOD to pass a resolution ratifying the contracts entered into
by the incorporators with the promoter. Then, they become agents of the corporation.

a.1 Liability of Promoter


All promoter(s) have joint personal liability for a corporation that was never formed. He remains liable
on contracts even after incorporation even though corporation adopts the contract.

a.2 Liability of Corporation for Promoters Contracts


1. Before Incorporation and Organization
- it is not liable upon any contract which a promoter attempts to make for it
Exception: it is expressly or impliedly adopted or ratified by it after organization is completer
Or liability is imposed by statute
2. After Incorporation and Organization
- Corporation is liable provided that the contract is one which the corporation can itself make

2. Subscription contract
It is a contract for the acquisition of unissued stock in an existing corporation or a corporation still to
be formed. It is considered as such notwithstanding the fact that the parties refer to it as purchase or
some other contract.