Corporators vs.

Incorporators

As we try to learn about a corporation, there are cases of it that we confusingly,

mistakenly or failed to know about these people especially about their true nature --
position, roles and responsibilities in an enterprise. These people that I am referring to
is what we called, corporators and incorporators. We often heard of these but who
REALLY are they in a corporation?

Even though they belong to high positions in an enterprise but apparently,

corporators and incorporators differs a lot. In a way that, incorporators are typically the
actual owners of the business which shall not be less than five (5) nor more than fifteen
(15) natural persons, but may also be employees or members of the law firm handling
the incorporation process -- also referred to as dummy incorporators. The primary role
of the incorporator is to prepare and sign the articles of incorporation before filing the
form with the state. The articles of incorporation form specifies the name of the
corporation, its core purpose, a list of all those who work on behalf of the corporation --
together with their addresses -- and the total number of common shares that the
corporation will issue. The incorporator also dates and signs the form. The primary role
of the incorporator is to prepare and sign the articles of incorporation before filing the
form with the state. The articles of incorporation form specifies the name of the
corporation, its core purpose, a list of all those who work on behalf of the corporation --
together with their addresses -- and the total number of common shares that the
corporation will issue. The incorporator also dates and signs the form. Another thing, an
incorporator could be a promoter, an individual, corporation or association who is
responsible for the process; the business will not be fully incorporated until the
incorporator signs and files the articles of incorporation. Incorporators play a minor role
in the overall business, and their involvement typically ceases after the corporation is
established. Examples are Adobe Systems Incorporated, Amazon.com, Inc.and
Benchmark Electronics, Inc.

On the other hand, corporators, these are the people who are the stockholders
of a stock corporation or member of a non-stock corporation and no limit required in
forming or joining it. In general, a corporator is entitled to enjoy all the benefits and
rights which belong to any other member of the corporation as such. But in some
corporations, where the rights are of a pecuniary nature, each corporator is entitled to
those rights in proportion to his interest; he will therefore be entitled to vote only in
proportion to the amount of his stock, and be entitled to dividends in the same
proportion. A corporator is not in general liable personally for any act of the corporation,
unless he has been made so by the charter creating the corporation.Examples are
Google, Microsoft Corporation, Ford Motor Company and Burger King.

Public Corporation vs. Private Corporation

As we all know, a corporation is 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. It may be public or private. According to
Section 3, Chapter I in General Provisions as to Corporations, it stated there public
corporations are those formed or organized for the government of a portion of the
state. Private corporations are those formed for some private purpose, benefit, aim, or
end, as distinguished from public corporations, which have for their purpose the general
good and welfare. Private corporations are divided into stock corporations and nonstock
corporations. Corporations which have a capital stock divided into shares and are
authorized to distribute to the holders of such shares dividends or allotments of the
surplus profits on the basis of the shares held are stock corporations. All other private
corporations are nonstock corporations. But let us expand more on public corporation
for better understanding, as mentioned above it is formed by the state with a purpose to
carry out public missions and services. A public corporation participates in activities or
provides services that are also provided by private enterprise. A public corporation is
granted increased operating flexibility in order to best ensure its success, while retaining
principles of public accountability and fundamental public policy. The board of directors
of a public corporation is appointed by the Governor and confirmed by the Senate but is
otherwise delegated the authority to set policy and manage the operations of the public
corporation. One example of public corporation that can be found in the Philippines is
Aboitiz Power Corp. – sector: Energy & Utilities. Nevertheless, a private corporation,
also called a closely-held company, is a business that is generally owned by a small
group of investors. This type of business still has to satisfy the same requirements to
operate its company as a regular corporation.It has to file paperwork with their state
government agencies, which includes Articles of Incorporation, business name, and any
other licenses and permits needed to operate the business. There are fees associated
with these filings and the amounts vary by state. Owners must also create bylaws,
appoint and hold meetings with directors, and offer initial stock to shareholders. An
example of this that can be found in the Philippines is Huylian Development
Corporation, Inc.
 Open and Close Corporation

Corporation can be characterized as open and close. We may not often heard of
these but it has the same concepts with public and private corporation. An open
corporation is a corporation whose ownership shares are available for exchange on a
public market. The market on which the shares are traded may be an organized market
such as the New York Stock Exchange (NYSE), the American Stock Exchange (AMEX),
or the NASDAQ electronic marketplace (which is technically not an exchange, but
serves a similar function). Alternatively, the shares might be exchanged in private, so-
called “over-the-counter” (OTC) transactions. These transactions involve the shares of
companies that are not listed on an exchange, but whose shares are still available for
public trading. Examples are Microsoft Corporation and Coca-Cola Company. In
contrary with open corporation, a close corporation is a corporation whose ownership
interests, i.e., the shares of the corporation, are not available for exchange on any
public market. Shares of a close corporation may still be exchanged in private
transactions, if such transactions are allowed. While the corporation may thus change
hands, there is not much liquidity in the corporation. In close companies, the directors,
officers, and majority shareholders are obliged to proceed with complete fairness in any
transaction that affects the other shareholders. A privately held company is called a
“close” company because its shares are “closely held”. In other words, they are held
under the total control of the shareholder, without the ease of exchange provided by a
public market. Examples are Koch Industries, Inc, Albertsons Companies LLC and
Mars, Inc.