CORPORATIONS For BSBA ABM

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CORPORATIONS-AS DEFINED IN THE CORPORATION CODE OF THE PHIL. HAS THE FF ATTRIBUTES:
1. AN ARTIFICIAL BEING
 WITH A PERSONALITY SEPARATE AND APART FROM ITS INDIVIDUAL
SHAREHOLDERS OR MEMBERS.
2. CREATED BY OPERATION OF LAW-

 CREATED NOT BY MERE AGREEMENT OF THE PARTIES LIKE IN THE THE CASE OF PARTNERSHIPS
 IT IS ALSO CALLED A JURIDICAL PERSON.
 COMPOSED OF 5 OR MORE PERSONS NOT EXCEEDING 15.
3. HAS THE RIGHT OF SUCCESSION

 HAS THE CAPACITY OF CONTINUED EXISTENCE , SUBJECT TO THE PERIOD STATED IN THE ARTICLES OF
INCORPORATION.
 IT CAN EXIST FOR A PERIOD NOT EXCEEDING 50 YRS FROM DATE OF INCORPORATION
 MAY BE EXTENDED FOR PERIODS NOT EXCEEDING 50 YRS SUBJECT TO AMENDMENTS OF THE ARTICLE (ACC.
TO SEC 11). PROVIDED THAT NO EXTENSIONS SHALL BE MADE EARLIER THAN 5 YRS BEFORE THE ORIGINAL
EXPIRY DATE.
4. HAS THE POWERS, ATTRIBUTES AND PROPERTIES

 POWERS ARE EXPRESSLY AUTHORIZED BY LAW OR
 INCIDENT TO ITS EXISTENCE.
A CORP CAN NOT ENTER INTO A CONTRACT OF PARTNERSHIP ONLY IN A JOINT VENTURE.
TYPES OF ACTS OF A CORPORATION:
1. ULTRA VIRES –CONTRACT BEYOND ITS POWERS (ILLEGAL AND VOID)

2. INTRA VIRES- WITHIN LEGITIMATE POWERS
3. ILLEGAL ACTS- CONTRARY TO LAW, MORALS, GOOD CUSTOMS,PUBLIC ORDER,POLICY,
ADVANTAGES OF A CORP.
1. LEGAL CAPACITY TO ACT AS A LEGAL ENTITY

2. SHAREHOLDERS HAVE LIMITED LIABILITY
3. CONTINUITY OF EXISTENCE
4. SHARES OF STOCKS CAN BE TRANSFERRED W/O CONSENT OF THE OTHER SHAREHOLDERS
5. MGMT CENTRALIZED TO THE BOARD OF DIRECTORS
6. SHAREHOLDERS ARE NOT GENERAL AGENTS OF BUSINESS
7. GREATER ABILITY TO ACQUIRE FUND
DISADVANTAGES OF A CORPORATION
1. COMPLICATED IN FORMATION AND MGMT.

2. GREATER DEGREE OF GOVT. CONTROL
3. HIGH COST OF FORMULATION AND OPERATION
4. HIGHER TAXATION
5. MIN. SHAREHOLDER SUBSERVIENT TO THE WISHES OF THE MAJORITY
SOURCES: FINACIAL ACCTG PART 2 – C. VALIX 2017 ED.;INTERMEDIATE ACCOUNTING PART 2, ROBLES & EMPLEO
2017; PARTNERSHIP & CORP. , R. PALMA 2014 ED; PARTNERSHIP & CORP. MADE EASY, WIN BALLADA
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6. MGMT &CONTROL SEPARATE FROM OWNERSHIP

7. TRANSFERABILITY OF SHARES PERMITTING INCOMPATIBLE AND CONFLICTING ELEMENTS IN ONE VENTURE.
MAJOR CLASSES OF CORPORATIONS:
1. STOCK CORP
 SHARE CAPITAL DIVIDED INTO SHARES AND ARE AUTHORIZED TO DISTRIBUTE TO THE HOLDERS OF SUCH
SHARES DIVIDENDS OR ALLOTMENTS OF THE SURPLUS PROFIT ON THE BASIS OF SHARES HELD.
2. NON-STOCK CORP.-
 NO PART OF INCOME IS DISTRIBUTED OR DIVIDENDS TO ITS MEMBERS, TRUSTESS OR OFFICERS.
OTHER CLASSES OF CORPORATION
ACCORDING TO:
1. NO. OF PERSONS
a. CORPORATION AGREGATE- 1 CORPORATOR
b. CORPORATION SOLE OR SPECIAL FORM –ASSOCIATED WITH THE CLERGY
2. NATIONALITY
a. DOMESTIC –ORGANIZED UNDER PHIL LAWS
b. FOREIGN – ORGANIZED UNDER FOREIGN LAWS
3. AS TO PURPOSE
a. PUBLIC CORP- ORGANIZED FOR THE CORP.
b. PRIVATE – ORGANIZED FOR A PRIVATE AIM OR OBJECTIVE
4. CHARITABLE PURPOSE OR NOT

a. ECCLESIASTICAL –RELIGIOUS PUPOSES
b. ELEEMOSYNARY – FOR PUBLIC CHARITY
c. CIVIL-FOR BUSINESS OR PROFIT
5. LEGAL RIGHT TO CORPORATE EXISTENCE
a. DE JURE- EXISTING IN FACT AND IN LAW

b. DE FACTO –EXISTING IN FACT BUT NOT IN LAW
6.DEGREE OF PUBLIC PARTICIPATION AS TO OWNERSHIP
a. CLOSED CORP.
 LIMITED TO SELECTED PERSONS OR MEMBERS, USUALLY OF A FAMILY NOT EXCEEDING 20 PERSONS.
b. OPEN CORP.
 SHARES ARE AVAILABLE FOR SUBSCRIPTION OR PURCHASE BY ANY PERSON
c. PUBLICLY-HELD CORP
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 WITH CLASS OF EQUITY SHARES LISTED ON AN EXCHANGE OR WITHASSETS IN EXCESS OF 50M AND HAVING
200 OR MORE HOLDERS OR AT LEAST 200 HOLDING AT LEAST 100 SHARES OF A CLASS OF ITS EQUITY
SECURITIES
7.ACCORDING TO RELATION TO ANOTHER PERSON-
a. PARENT OR HOLDING CORP.

 RELATED TO ANOTHER CORP. WITH THE POWER TO EITHER DIRECTLY OR INDIRECTLY ELECT THE MAJORITY OF
THE DIRECTORS OF THE SUBDIDIARIES.
b. SUBSIDIARY CORP-
 CONTROLLED BY ANOTHER CORP. KNOWN AS APARENT CORP.
8. GOVERNMENT OWNED AND CONTROLLED CORPORATIONS – CORPORATIONS CONTROLLED

BY THE GOVT. CREATED FOR SPECIFIC PUBLIC PURPOSES ( GSIS,SSS,PAG-IBIG, LBP,DBP)
STEPS IN THE CREATION OF A CORP.-
1. PROMOTION
 BRINGING TOGETHER INCORPORATORS OR PERSONS INTERESTED IN THE BUSINESS
2. INCORPORATION
 SUBMISSION OF THE ARTICLES OF INCORPORATION AND THE CORPORATION BY-LAWS
3. FORMAL ORGANIZATION AND COMMENCEMENT

 ADOPTION OF BY-LAWS AND
 THE ELECTION OF THE BOARD OF DIRECTORS AND ADMINISTRATIVE OFFICERS
 AND OTHER NECESSARY STEPSTO ENABLE THE CORP TO TRANSACT LEGITIMATE
BUSINESS FOR WHICH IT WAS CREATED
CORPORATION CODE OF THE PHILS.

 THE GENERAL LAW THAT GOVERNS THE CREATION OF PRIVATE CORP. IN THE PHILIPPINES.
WHILE GOVERNMENT OWNED AND CONTROLLED CORPORATIONS

 ARE GOVERNED BY SPECIAL LAWS
THE CORP. CODE OF THE PHIL. SEC. 14 PROVIDES THAT ALL CORP ORGANIZED UNDER THIS CODE SHALL FILE
THE ARTICLES OF INCORPORATION WHICH SPECIFIES VITAL DETAILS ABOUT THE CORP.
-NAME OF THE CORP

-PURPOSE
-PLACE OF BUS.
-TERM OF EXISTENCE –NOT EXCEEDING 50 YRS BUT CAN BE EXTENDED PROVIDED THAT THE EXTENSION
SHOULD BE FILED 5 YEARS BEFORE THE EXPIRATION OF ITS TERM.
-NAMES, NATIONALITIES AND RESIDENCE OF INCORPORATORS
-NO. OF DIRECTORS OR TRUSTEES NOT LESS THAN 5 NOR MORE THAN 15
-NAMES OF ACTING DIRECTORS UNTIL DULY ELECTED
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-STOCK OR NON-STOCK CORP.

-AMOUNT OF SHARE CAPITAL, PAR VALUE AND THE NO. OF SHARES INTO WHICH IT IS DIVIDED
IF NO PAR VALUE SHARE, STATE ONLY THE NO. OF SHARES
AUTHORIZED SHARE CAPITAL (AUTHORIZED CAPITAL STOCK)

 MAXIMUM NO. OF SHARES AS STATED IN THE ARTICLES OF INCORPORATION MULTIPLIED BY THE PAR VALUE
 AMOUNT OF SHARE CAPITAL ACTUALLY SUBSCRIBED OR THE NO. OF NO PAR SHARES SUBSCRIBED,
INCLUDING NAMES AND RESIDENCES OF THE SUBSCRIBER.
MANDATORY REQUIREMENTS ON SUBSCRIPTIONS
SUBSCRIBED CAPITAL STOCK
AT THE TIME OF INCORPORATION

 AT LEAST 25% OF THE AUTHORIZED CAPITAL STOCK OR SHARED CAPITAL AS STATED IN THE ART. OF CORP. MUST BE
SUBSCRIBED
PAID-IN CAPITAL
UPON SUBSCRIPTION-
 AT LEAST 25% OF THE TOTAL SUBSCRIPTION MUST BE
-THE BALANCE PAYABLE ON DATES FIXED IN THE CONTRACT OF SUBCRIPTION OR CALL
-OR IF W/O DATE UPON CALL OF THE BOARD OF DIRECTOR
-PAID IN CAPITAL SHALL NOT BE LESS THAN P 5,000.00 (CORP. CODE OF THE PHIL. SEC 13)
AFTER FILING OF THE ARTICLES OF INCORPORATION, THE CORP . COMMENCES TO HAVE JUDICIAL
PERSONALITY AND LEGAL EXISTENCE ONLY UPON THE ISSUANCE OF THE CERTIFICATE OF INCORPORATION BY THE
SECURITIES AND EXCHANGE COMMISSION (SEC)
THE CORP. SHOULD FORMALLY ORGANIZE AND COMMENCE OPERATIONS WITHIN 2 YEARS FROM THE
DATE OF ITS INCORPORATION.
BY-LAWS
 RULES OF ACTION ADOPTED BY THE CORPORATION FOR ITS INTERNAL GOVERNMENT AND FOR THE GOVERNMENT OF
ITS OFFICERS, SHAREHOLDERS OR MEMBERS.
 IT SHALL BE ADOPTED WITHIN ONE MONTH FROM THE ISSUANCE OF THE CERTIFICATE OF INCOPORATION BY THE
SECURITY AND EXCHANGE COMMISSION.
 FAILURE TO DO SO WILL REVOKE ITS REGISTRATION.
CONTENTS OF THE BY-LAWS

1. MEETINGS OF SHAREHOLDERS AND DIRECTORS-- TIME, PLACE, MANNER OF CALLING, RULES.
SHAREHOLDERS MEETING SHOULD BE IN THE PRINCIPAL PLACE OF BUSINESS.
2. BOARD OF DIRECTORS- NO., QUALIFICATIONS, DUTIES, POWERS AND LENGTH OF OFFICE.
HE MUST BE A REGISTERED OWNER OF AT LEAST 1 SHARE OF STOCK, AND MAJORITY SHOULD
BE RESIDENTS OF THE PHILIPPINES.
3. CORPORATE OFFICERS- APPOINTMENT, DUTIES, POWERS, COMPENSATION AND LENGTH OF
OFFICE. PRESIDENT IS USUALLY THE CHAIRMAN OF THE BOARD.
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4. SHARE CERTIFICATES- MANNER OF ISSUANCE

5. METHOD OF AMENDING THE BY-LAWS
6. OTHERS- RULES GOVERNING THE ACTS OF OFFICERS AND DIRECTORS
COMPONENTS OF A CORP.-
1. CORPORATORS
 THOSE WHO COMPOSE A CORPORATION . INCORPORATORS, SHAREHOLDERS OR MEMBERS.
2. INCORPORATORS-
 SHAREHOLDERS OR MEMBERS MENTIONED IN THE ARTICLES OF INCORPORATION, ORIGINALLY FORMING THE
ARTICLES OF INCORPORATION.
3. SHAREHOLDERS
 STOCKHOLDERS IN A STOCK CORP.
 RIGHT TO BE ISSUED A CERTIFICATE OF STOCK OR EVIDENCE SHOWING OWNERSHIP AND TRANSFER SUCH SHARES.
 RIGHT TO ATTEND AND VOTE IN PERSON OR BY PROXY IN SHAREHOLDERS MEETINGS
 RIGHT TO ELECT AND REMOVE DIRECTORS
 RIGHT TO ADOPT, AMEND AND REPEAL LAWS.
4. MEMBERS
 CORPORATORS OF A NON-STOCK CORP.
5. SUBSCRIBERS
 PERSONS WHO HAVE AGREDD TO TAKE AND PAY FOR ORIGINAL AND UNISSUED SHARESOF A CORP FORMED OR TO BE
FORMED.
6. PROMOTERS
 PERSONS WHO BRING ABOUT THE FORMATION AND ORGANIZATION OF THE CORP.
7. UNDERWRITERS
 INVESTMENT BANKERS
8. INDEPENDENT DIRECTOR
 NO OTHER BUS. RELATIONSHIPS THAT COULD INTERFERE WITH HIS INDEPENDENT JUDGEMENTNIN CARRYING HIS
RESPONSIBILITIES AS DIRECTOR
CORPORATE ORGANIZATIONAL STRUCTURE
THE SHAREHOLDERS (OWNERS).

 ULTIMATE CONTROL REST ON THE CORPORATION.
 THEY ELECT THE TOP GOVERNING BODY OF THE CORP, OR THE MEMBERS OF THE BOARD OF DIRECTORS
(THE CORP. ANNUALY HOLD A SHAREHOLDERS MEETING WHEREIN THE BOARD OF DIRECTORS ARE
ELECTED.)
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MEMBERS OF THE BOARD OF DIRECTORS

 RESPONSIBLE FOR THE FORMULATION OF THE OVER-ALL POLICIES FOR THE CORP AND FOR THE EXERCISE OF CORP.
POWERS.
 THEY ELECT AMONG THEMSELVES THE CHAIRMAN OF THE BOARD
 THEY ELECT THE OFFICERS OF THE CORP
ADM. OFFICERS OF THE CORP

 IMPLEMENT THE POLICIES OF THE BOARD OF DIRECTORS AND ACTIVELY
 MANAGE THE DAY TO DAY ACTIVITIES OF THE CORP.
 THEY HIRE THE EMPLOYEES OF THE CORP
1. PRESIDENT – HE SHOULD ALSO BE A BOARD DIRECTOR, USUALLY HE IS ALSO THE CHAIRMAN OF THE
BOARD.
2. CORP. SECRETARY- MAINTAINS AND KEEPS THE RECORDS OF THE CORP REGARDING ALL ITS AFFAIRS
3. CORPORATE TREASURER- ENTRUSTED TO RECEIVE AND KEEP THE MONEY OF THE CORP.
CORPORATE BOOKS AND RECORDS.
1. MINUTES BOOKS
 CONTAINS THE MINUTES OF THE MEETINGS
2. STOCK AND TRANSFER BOOK

 RECORD OF NAMES OF SHAREHOLDERS AND ALL STOCK TRANS.
3. BOOKS OF ACCOUNTS
 RECORD OF ALL BUSINESS TRANSACTIONS. NORMALLY THE JOURNAL AND LEDGER
4. SUBSCRIPTION BOOK
 BOOK OF PRINTED BLANK SUBSCRIPTION
5. SHAREHOLDERS LEDGER
 DETAILS THE NO OF SHARES ISSUED TO EACH SHAREHOLDER
6. SUBCRIBERS LEDGER-
 SUBSIDIARY LEDGER FOR THE SUBSCRIPTION RECEIVABLE ACCT. WHICH REPORTS THE INDIVIDUAL SUBSCRIPTION
OF THE SUBSCRIBERS
7. STOCK CERTIFICATE BOOK-

 BOOK OF PRINTED BLANK CERTIFICATE OF STOCKS
ORGANIZATION COST
 COST INCURRED IN FORMING OR ORGANIZING THE CORP.
 EXPENSED IMMEDIATELY EXCEPT FOR SHARE ISSUANCE COST
 INCLUDES THE FOLLOWING:
1. LEGAL FEES
2. INCORPORATION FEES
3. SHARE ISSUANCE COST
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“TRUST FUND DOCTRINE”

 RESOURCES ENTRUSTED TO THE CORP. BECOME THE ACCOUNTABILITY OF
THE FIRM
THE OWNER’S EQUITY SECTION IS CALLED

SHAREHOLDERS EQUITY – RESIDUAL INTEREST OF THE OWNERS IN THE NET ASSETS OF A CORP.
MEASURED BY THE EXCESS OF ASSETS OVER LIABILITIES
COMPONENTS:
1. CONTRIBUTED CAPITAL- OR PAID –IN CAPITAL REPRESENTS THE AMOUNT INVESTED BY THE
OWNERS.
A. SHARE CAPITAL –CONTRIBUTIONS EQUAL TO THE PAR OR STATED VALUE OF THE SHARES
PURCHASED BY OWNERS, OR TOTAL CONTRIBUTIONS BY OWNERS, IN
CASE OF NO PAR, NO STATED VALUE SHARE CAPITAL.
B. SHARE PREMIUM (ADDITIONAL PAID IN CAPITAL- CONTRIBUTIONS IN EXCESS OF PAR OR

STATED VALUE OF THE SHARE CAP.
2. LEGAL CAPITAL- PORTION OF PAID IN CAPITAL WHICH MUST REMAIN IN THE CORP. FOR THE
PROTECTION OF CREDITORS
WITH PAR VALUE SHARES –FIXED PER SHARE AMOUNT (PRINTED AT THE BACK OF CERT.)
A. SHARE CAPITAL –CONTRIBUTIONS EQUAL TO THE PAR VALUE OF ALL SHARES ISSUED
B. SUBSCRIBED SHARE CAPITAL(SUBSCRIBED CAPITAL STOCK) –
-SHARES NOT YET PAID IN FULL
-
WITH NO PAR VALUE SHARES-NO AMOUNT PRINTED ON STOCK CERT. (STATED VALUE)
A. SHARE CAPITAL –CONTRIBUTIONS EQUAL TO THE TOTAL CONSIDERATION RECEIVED

B. SUBSCRIBED SHARE CAPITAL(SUBSCRIBED CAPITAL STOCK) –
-SHARES NOT YET PAID IN FULL
C. SHARE PREMIUM- EXCESS OVER STATED VALUE,
SHARE DIVIDENDS DECLARED BUT NOT YET ISSUED (SHARE DIVIDENDS DISTRIBUTABLE) FORM PART
OF LEGAL CAPITAL – SOON WILL FORM PART OF SHARE CAPITAL
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CLASSES OF SHARES
1. PAR VALUE SHARES

 SPECIFIC AMOUNT IS FIXED IN THE ARTICLES OF INCORPORATION AND
 APPEARING IN THE CERTIFICATE OF STOCK.
 IT IS THE MINIMUM ISSUE PRICE.
2. NO PAR VALUE SHARES

 WITHOUT ANY VALUE APPEARING ON THE FACE OF THE CERTIFICATE OF STOCK.
 IT MAY HAVE A STATED FIXED VALUE IN THE ART. OF INCORP.
 ISSUE PRICE MAY VARY FROM TIME TO TIME W/C DEPENDS ON THE BOOK VALUE OF THE CORP. SHARES.
 MINIMUM STATED VALUE IS P 5.00 PER SHARE. THESE ARE DEEMED FULLY PAID
 NOT TO BE ISSUED BY BANKS, TRUST CO., INSURANCE CO., PUBLIC UTILITIES, BLDG. AND LOAN ASSOC.
3. ORDINARY SHARES
 ENTITLE THE HOLDER TO AN EQUAL PRO-RATA DIVISION OF PROFITS W/O ANY PREFERENCE (COMMON STOCKS).
 HAS CONTROL OVER THE CORP.

a. VOTING SHARES – WITH A RIGHT TO VOTE
b. RIGHT TO SHARE IN PROFITS AND LOSSES
c. RIGHT TO SHARE IN CORP ASSETS UPON LIQUIDATION
d. WITH PRE-EMPTIVE RIGHT –TO SHARE IN ANY NEW ISSUES OF SHARE CAPITAL OF THE SAME CLASS
4. PREFERENCE SHARES
 ENTITLE THE HOLDER TO CERTAIN ADVANTAGES OR BENEFITS OVER THE HOLDERS OF ORDINARY SHARES (PREFERRED
STOCKS).
 DIVIDENDS EXPRESSES AS % OF THE PAR VALUE
 NON-VOTING SHARES
CLASSES OF PREFERENCE SHARES:
A. CUMULATIVE – ENTITLED TO DIVIDENDS PRIOR AND CURRENT PERIODS
B. NON-CUMULATIVE-ENTITLED TO CURRENT DIVIDENDS ONLY
C. PARTICIPATING-PROVIDE ADDITIONAL DIVIDENDS PROPORTIONATE TO ORDINARY SHAREHOLDERS
D. NON-PARTICIPATING-NOT ENTITLED TO ADDITIONAL DIVIDENDS PROPORTIONATE TO ORDINARY SHARE

HOLDERS.
E. CONVERTIBLE- OPTION TO EXCHANGE THE SAME TO ORDINARY SHARES
F. CALLABLE- GIVES THE ISSUING CORP. THE RIGHT , BUT NOT THE OBLIGATION, TO REACQUIRE OR RETIRE THE
SHARE AT A FIXED DETERMINABLE CALL PRICE.
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G. REDEEMABLE PREFERENCE SHARE- MUST BE RETIRED OR REACQUIRED BY THE ISSUING CORP, EITHER AT THE
OPTION OF THE SHAREHOLDER ,AT A CERTAIN DATE.
(FINANCIAL LIABILITY OF THE CORP.)
FINANCIAL INSTRUMENT
 ANY CONTRACT THAT GIVES RISE TO
A. FINANCIAL ASSET OF ONE ENTITY

B. FINANCIAL LIABILITY OR EQUITY INSTRUMENT OF ANOTHER ENITITY
EQUITY INSTRUMENT
 CONTRACT THAT EVIDENCES A RESIDUAL INTEREST IN THE ASSETS OF AN ENTITY AFTER DEDUCTING ALL OF ITS
LIABILITIES
 CONTRACT WHEREIN THE ENTITY DELIVERS A FIXED NO. OF ITS OWN EQUITY INSTRUMENTS IN EXCHANGE FOR A
FIXED AMOUNT OF CASH OR ANOTHER FINANCIAL ASSET.
EX. PRE-EMPTIVE RIGHT OF ORDINARY SHARES.
FINANCIAL LIABILITY
 FINANCIAL INSTRUMENT THAT GIVES THE HOLDER THE RIGHT TO PUT IT BACK TO THE ISSUER FOR CASH OR ANOTHER
FINANCIAL ASSET( A PUTTABLE INSTRUMENT)
 AT A FIXED DETERMINABLE AMOUNT,
 AT A FIXED DETERMINABLE DATE.
EX. REDEEMABLE PREFERENCE SHARE.
SHARE CERTIFICATE
 INSTRUMENT OR DOCUMENT THAT EVIDENCES THE OWNERSHIP OF THE SHARES
TERMS USED IN STOCK TRANSACTIONS:
AUTHORIZED SHARES
 MAXIMUM NO. OF SHARES THAT THE CORP MAY ISSUED(AUTHORIZED SHARE CAPITAL)
ISSUED SHARES
 REPRESENTS THE NO OF SHARES (FULLY PAID FOR) THAT THE CORP HAS ISSUED TO ITS SHAREHOLDERS AS OF A
SPECIFIC DATE.
 SHARE CAPITAL ACCOUNT
OUTSTANDING SHARES
 SHARES OF STOCKS THAT HAVE BEEN ISSUED AND STILL ARE IN THE HANDS OF THE SHAREHOLDERS AS OF A SPECIFIC
DATE.
 ISSUED SHARES LESS THE TREASURY SHARES.
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TREASURY SHARES
 SHARES THAT HAVE BEEN ISSUED TO SHAREHOLDERS AND HAVE BEEN REACQUIRED, BUT NOT RETIRED, BY THE
CORPORATION, EITHER BY PURCHASE OR DONATION.
SUBSCRIBED SHARES
 SHARES OF STOCK THAT WILL BE ISSUED UPON COMPLETION OF AN INSTALLMENT PURCHASE CONTRACT WITH AN
INVESTOR.
 IF NOT DELINQUENT , IT SHALL HAVE ALL THE RIGHTS OF A SHAREHOLDER INCLUDING DIVIDENDS.
 SUBSCRIBED SHARE CAPITAL ACCCOUNT
SUBSCRIPTION
 CONTRACT W/C PROVIDES THAT THE SUBSCRIBER WILL BUY
 A CERTAIN NO OF SHARES
 AT AN AGREED PRICE
 WITH THE PAYMENT SPREAD OVER A SPECIFIED PERIOD OF TIME
ACCOUNTING FOR AUTHORIZED SHARE CAPITAL (AUTHORIZED CAPITAL STOCK)
1. MEMORANDUM METHOD
o NO ENTRY TO RECORD THE AUTHORIZED SHARE CAPITAL.
EXAMPLE: ON JULY 1, THE ARTICLES OF INCORPORATION OF ADD CORP. WAS APPROVED BY THE SEC TO ISSUE
40,000 SHARES AT PAR VALUE P100
DATE PARTICULARS DR CR
2019
JULY 1 MEMORANDUM ENTRY:
AUTHORIZED TO ISSUE SHARE CAPITAL OF P 4 MILLION DIVIDED INTO
40,000 SHARES AT PAR VALUE OF P 100
NOTE: WHEN SHARES ARE ISSUED (FULLY PAID), IT IS CREDITED TO SHARE CAPITAL.
2. JOURNAL ENTRY METHOD-
2019
JULY 1 UNISSUED SHARE CAPITAL 4,000,000
AUTHORIZED SHARE CAPITAL 4,000,000
TO RECORD AUTHORIZED SHARE CAPITAL
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NOTE: WHEN SHARE CAPITAL IS ISSUED , IT IS CREDITED TO UNISSUED SHARE CAPITAL
REMEMBER: PAR VALUE OR STATED VALUE FOR NO PAR VALUE SHARES SHOULD NOT BE LESS THAN P 5.00
SALE OF SHARES
1. SHARES ISSUED FOR CASH
CASH (# OF SHARES @MARKET VALUE OR @PAR VALUE)

SHARE CAPITAL-ORDINARY (# OF SHARES @PAR VALUE)
SHARE PREMIUM-ORDINARY ( # OF SHARE @ (MARKET VALUE - PAR VALUE)
ISSUED 10,000 SHARES @MV OF P120/SHARE

CASH 1,200,000
SHARE CAPITAL-ORDINARY 1,000,000
SHARE PREMIUM-ORDINARY 200,000
OR IF CONSIDERATION IS LESS THAN PAR OR STATED VALUE – DR. DISCOUNT ON SHARE CAP.
2. SHARES ISSUED FOR CONSIDERATION OTHER THAN CASH (BASED ON ORDER OF PRIORITY)
A. FAIR VALUE OF THE PROPERTY OR SERVICES RECEIVED

-DETERMINED BY THE INCORPORATORS AND APPROVED BY THE SEC
B. FAIR VALUE OF THE SHARE CAPITAL ISSUED
C. PAR VALUE OF SHARES ISSUED
LAND /SERVICES (FV OF PROPERTY OR SERVICE)

SHARECAPITAL –ORDINARY SHARE (# OF SHARES @ PAR V)
SHARE PREMIUM –ORDINARY SHARE ( FAIR VALUE – SHARES @ PAR V)
LAND 5,000,000
SHARE CAPITAL-ORDINARY 4,000,000
SHARE PREMIUM-ORDINARY 1,000,000
OR IF CONSIDERATION IS LESS THAN PAR OR STATED VALUE – DR. DISCOUNT ON SHARE CAP.
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3. SHARES SOLD ON SUBSCRIPTION
CASH (CONSIDERATION RECEIVED)

SUBCRIPTION RECEIVABLE
SUBSCRIBED SHARE CAPITAL-ORDINARY (# OF SHARES X PV or SV or (Total Subs.Price)
SHARE PREMIUM-ORDINARY ( # OF SHARE X (MV-PV))
PARTICULARS DR CR
CASH 5,000,000
SUBSCRIPTION RECEIVABLE 4,000,000
SUBSCRIBED SHARE CAPITAL 1,000,000
SHARE PREMIUM-ORDINARY
CASH
SUBSCRIPTION RECEIVABLE (PARTIAL OR FULL PAYMENT)
SUBSCRIBED SHARE CAPITAL

SHARE CAPITAL - ORDINARY
(UPON FULL PAYMENT , FOR ISSUANCE OF STOCK CERTIFICATE)
NO STOCK CERTIFICATE CAN BE ISSUED, IF NOT YET FULLY PAID.
ANY BALANCE IN THE SUBSCRIBED SHARE CAPITAL ACCOUNT IS PRESENTED IN THE SHAREHOLDER’S
EQUITY SECTION – UNDER THE CONTRIBUTED CAPITAL.
SUBCRIPTION RECEIVABLE ACCOUNT – DEDUCTION FROM SHAREHOLDER’S EQUITY

- CURRENT ASSET IF RECEIVABLE WITHIN 1 YEAR
4. DELINQUENT SUBSCRIPTIONS
CORP HAS 2 REMEDIES TO COLLECT:
A. SUE DELINQUENT SUBSCRIBER TO ENFORCE COLLECTION

B. SELL THE DELINQUENT SHARES AT PUBLIC AUCTION TO THE HIGHEST BIDDER
HIGHEST BIDDER- ONE WHO IS WILLING TO PAY THE UNPAID SUBS. PLUS ALL COST RELATED
TO THE DEFAULTED SHARES AND WILLING TO RECEIVE THE LEAST NO OF SHARES.
CASH
SUBCRIPTION RECEIVABLE
SUBSCRIBED SHARE CAPITAL-ORDINARY (# OF SHARES X PV or SV or (Total Subs.Price)
(UPON SUBSCRIPTION)
CASH
SUBSCRIPTION RECEIVABLE (PARTIAL OR FULL PAYMENT)
(INSTALLMENT)
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RECEIVABLE FROM HIGHEST BIDDER

SUBSCRIPTION RECEIVABLE (UNPAID SUBSCRIPTION)
CASH (ADVERTISING COST)
(UPON AUCTION)
CASH
(PAYMENT BY HIGHEST BIDDER)
SUBSCRIBED SHARE CAPITAL-ORDINARY SHARES

SHARE CAPITAL –ORDINARY SHARES
(ISSUANCE OF STOCK CERTIFICATE TO ORIGINAL SUBSCRIBER AND
THE HIGHEST BIDDER)
NO BIDDER ON DELINQUENT SHARES – SHARES ARE PLACED IN THE TREASURY
TREASURY SHARES
SUBSCRIBED SHARE CAPITAL-ORDINARY SHARES

SHARE CAPITAL –ORDINARY SHARES
(ISSUANCE OF STOCK CERTIFICATE IN THE NAME OF THE CORP)
10.RETAINED EARNINGS (ACCUMULATED PROFITS –IFRS)

-REPRESENTS THE FIRMS ACCUMULATED
 PROFIT OR LOSS, INCLUDING PRIOR PERIOD ADJMTS
 LESS THE DIVIDENDS DECLARED
 OTHER AMOUNTS TRANSFERRED TO CAPITAL ACCOUNTS
PROFIT OR LOSS FOR THE CURRENT PERIOD
FINAL CLOSING ENTRIES IN THE BOOKS OF THE CORP-
PROFIT OR LOSS SUMMARY HAS A CR. BALANCE - PROFIT

PROFIT OR LOSS SUMMARY HAS A CR. BALANCE- LOSS
11.DIVIDENDS
-DISTRIBUTION OF CORPORATE INCOME TO ITS SHAREHOLDERS ON A PRO-RATA BASIS
-TAKEN FROM ITS ACCUMULATED EARNINGS EXCEPT FOR
LIQUIDATING DIVIDENDS –RETURN TO THE SHAREHOLDERS OF THEIR INVESTMENT
-POWER TO DECLARE IS VESTED UPON THE BOARD OF DIRECTORS WITH 3 IMPT DATES
 DATE OF DECLARATION-APPROVES AND ANNOUNCES THE DIVIDDENDS

 DATE OF RECORD (CUT-OFF DATE) – LIST OF SHAREHOLDERS ENTITLED TO DIVIDENDS
 DATE OF PAYMENT OR DISTRIBUTION-SETTLEMENT OF THE DIVIDENDS
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KINDS OF DIVIDENDS
 CASH – CORP MUST HAVE ENOUGH CASH AND RETAINED EARNINGS TO PAY THE DIVIDEND
- % OF THE PAR VALUE OF SHARE CAPITAL OR AS A PESO AMOUNT PER SHARE.
- WHEN DECLARED , CURRENT LIABILITY IS RECOGNIZED IN THE ACCOUNT( CR. DIV. PAYABLE)
DR TO RETAINED EARNINGS)
-DECLARATION OF THE DIVIDEND DECREASES THE TOTAL SHAREHOLDERS EQUITY.
 PROPERTY – PAYABLE IN ASSETS, EQUITY OR DEBT SECURITIES HELD IN OTHER COMPANY’S

-OTHER NON-CASH ASSETS
-MEASURED AT LOWER OF THE CARRYING AMOUNT AND FAIR VALUE
LESS COST TO DISTRIBUTE.
 SHARE DIVIDENDS (CAPITALIZATION ORBONUS ISSUE)-PRO-RATA DISTRIBUTION OF A CORP.

OWNS SHARE TO ITS SHAREHOLDERS.
-CONSIST OF SAME CLASS OF SHARE OR ORDINARY BONUS ISSUE
-DIFFERENT CLASS OF SHARE- SPECIAL BONUS ISSUE
-DOES NOT AFFECT TOTAL ASSETS AND TOTAL SHAREHOLDERS EQUITY, JUST A
TRANSFER OF CAPITAL FROM RETAINED EARNINGS TO CONTRIBUTED CAPITAL
-20% EFFECT ON THE SHARES PREVIOUSLY OUTSTANDING- SMALL BONUS ISSUE
-FV OF ADDITIONAL SHARES TRANSFERRED FROM R/E TO PAID-IN CAP. ACCPOUNT
-MORE THAN 20% EFFECT – AMT CAPITALIZED=PAR OR STATED VALUE OF THE S/C
 FRACTIONAL SHARE WARRANTS- DIVIDENDS W/C RESULTS TO FRACTION OF A SHARE

CORP. MAY
-ISSUE THE FRACTIONAL SHARE
-PAY THE SHAREHOLDER AN AMOUNT EQUAL TO THE MARKET PRICE OF THE
FRACTIONAL SHARE
- REQUIRE THE SHAREHOLDER TO PAY SUFFICIENT AMOUUNT TO RECEIVE A
FULL SHARE
 SCRIP DIVIDEND- PROMISSORY NOTE REQUIRING CORP TO PAY DIVIDENDS AT SOME

FUTURE DATE
-CORP HAS ENOUGH RETAINED EARNINGS BUT NOT ENOUGH CASH
-INTEREST BEARING
-ACCRUED INTEREST IS RECORDED AS AN EXPENSE
 LIQUIDATING DIVIDENDS – RETURN OF CONTRIBUTED CAPITAL THAN A DISTRIBUTION OF

EARNINGS
-WHEN CORP. IS CEASING OR REDUCING OPERATIONS
P a g e | 15
12.ALLOCATION OF CASH DIVIDENDS BETWEEN PREFERENCE SHARE AND ORDINARY SHARES
-PREFERENCE SHARES HAS NO VOTING RIGHTS BUT HAS PRIORITY OVER DIVIDENDS
 NON-CUMULATIVE PREFERENCE SHARES –NOT ENTITLED TO PRIOR YRS DIVIDENDS

 CUMULATIVE PREFERENCE SHARES –ENTITLED TO CURRENT AND PRIOR YRS DIVIDENDS
 NON-PARTICIPATING PREFERENCE SHARES- NOT ENTITLED TO ADDITONAL DIVIDENDS AFTER
PAYMENT TO ORDINARY SHARE
 PARTICIPATING PREFERENCE SHARES- ENTITLED TO ADDITONAL DIVIDENDS AFTER PAYMENT
TO ORDINARY SHARE
13. APPROPRIATIONS FOR RETAINED EARNINGS
RESTRICTED RETAINED EARNINGS –UNAVAILABLE FOR DIVIDENDS

-EARMARKED FOR A DESIGNATED PURPOSE
- LEGAL REQUIREMENTS – REACQUISITION OF OWN SHARES
AS TREASURY SHARES
-CONTRACTUAL AGR. –ISSUANCE OF LONG TERM BOND
-DISCRETIONARY ACTIONS-FUTURE EXPANSION OR
POTENTIAL LOSSES

CORPORATIONS For BSBA ABM

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CORPORATIONS For BSBA ABM

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2. CREATED BY OPERATION OF LAW-

3. HAS THE RIGHT OF SUCCESSION

4. HAS THE POWERS, ATTRIBUTES AND PROPERTIES

TYPES OF ACTS OF A CORPORATION:

1. ULTRA VIRES –CONTRACT BEYOND ITS POWERS (ILLEGAL AND VOID)

1. LEGAL CAPACITY TO ACT AS A LEGAL ENTITY

1. COMPLICATED IN FORMATION AND MGMT.

6. MGMT &CONTROL SEPARATE FROM OWNERSHIP

MAJOR CLASSES OF CORPORATIONS:

OTHER CLASSES OF CORPORATION

4. CHARITABLE PURPOSE OR NOT

5. LEGAL RIGHT TO CORPORATE EXISTENCE

a. DE JURE- EXISTING IN FACT AND IN LAW

6.DEGREE OF PUBLIC PARTICIPATION AS TO OWNERSHIP

7.ACCORDING TO RELATION TO ANOTHER PERSON-

a. PARENT OR HOLDING CORP.

8. GOVERNMENT OWNED AND CONTROLLED CORPORATIONS – CORPORATIONS CONTROLLED

STEPS IN THE CREATION OF A CORP.-

3. FORMAL ORGANIZATION AND COMMENCEMENT

CORPORATION CODE OF THE PHILS.

WHILE GOVERNMENT OWNED AND CONTROLLED CORPORATIONS

-NAME OF THE CORP

-STOCK OR NON-STOCK CORP.

AUTHORIZED SHARE CAPITAL (AUTHORIZED CAPITAL STOCK)

MANDATORY REQUIREMENTS ON SUBSCRIPTIONS

SUBSCRIBED CAPITAL STOCK

AT THE TIME OF INCORPORATION

CONTENTS OF THE BY-LAWS

4. SHARE CERTIFICATES- MANNER OF ISSUANCE

CORPORATE ORGANIZATIONAL STRUCTURE

THE SHAREHOLDERS (OWNERS).

MEMBERS OF THE BOARD OF DIRECTORS

ADM. OFFICERS OF THE CORP

CORPORATE BOOKS AND RECORDS.

2. STOCK AND TRANSFER BOOK

7. STOCK CERTIFICATE BOOK-

“TRUST FUND DOCTRINE”

THE OWNER’S EQUITY SECTION IS CALLED

B. SHARE PREMIUM (ADDITIONAL PAID IN CAPITAL- CONTRIBUTIONS IN EXCESS OF PAR OR

A. SHARE CAPITAL –CONTRIBUTIONS EQUAL TO THE TOTAL CONSIDERATION RECEIVED

1. PAR VALUE SHARES

2. NO PAR VALUE SHARES

 HAS CONTROL OVER THE CORP.

CLASSES OF PREFERENCE SHARES:

A. CUMULATIVE – ENTITLED TO DIVIDENDS PRIOR AND CURRENT PERIODS

B. NON-CUMULATIVE-ENTITLED TO CURRENT DIVIDENDS ONLY

C. PARTICIPATING-PROVIDE ADDITIONAL DIVIDENDS PROPORTIONATE TO ORDINARY SHAREHOLDERS

D. NON-PARTICIPATING-NOT ENTITLED TO ADDITIONAL DIVIDENDS PROPORTIONATE TO ORDINARY SHARE

E. CONVERTIBLE- OPTION TO EXCHANGE THE SAME TO ORDINARY SHARES

A. FINANCIAL ASSET OF ONE ENTITY

TERMS USED IN STOCK TRANSACTIONS:

ACCOUNTING FOR AUTHORIZED SHARE CAPITAL (AUTHORIZED CAPITAL STOCK)

2. JOURNAL ENTRY METHOD-

NOTE: WHEN SHARE CAPITAL IS ISSUED , IT IS CREDITED TO UNISSUED SHARE CAPITAL

1. SHARES ISSUED FOR CASH

CASH (# OF SHARES @MARKET VALUE OR @PAR VALUE)

ISSUED 10,000 SHARES @MV OF P120/SHARE

A. FAIR VALUE OF THE PROPERTY OR SERVICES RECEIVED

B. FAIR VALUE OF THE SHARE CAPITAL ISSUED

C. PAR VALUE OF SHARES ISSUED

LAND /SERVICES (FV OF PROPERTY OR SERVICE)

3. SHARES SOLD ON SUBSCRIPTION