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Classes of Corporations - Sections 3, 86, 87, 95, 115, 116 RCC; Annotations, RCC Text Book

1. Stock Corporation
SEC. 3. Classes of Corporations. – Corporations formed or organized under this Code may be
stock or nonstock corporations. Stock corporations are those which have 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. All other corporations are
nonstock corporations.

2. Non-Stock Corporation
SEC. 86. Definition. – For purposes of this Code and subject to its provisions on dissolution, a
nonstock corporation is one where no part of its income is distributable as dividends to its
members, trustees, or officers: Provided, That any profit which a nonstock corporation may
obtain incidental to its operations shall, whenever necessary or proper, be used for the
furtherance of the purpose or purposes for which the corporation was organized, subject to the
provisions of this Title.

SEC. 87. Purposes. – Nonstock corporations may be formed or organized for charitable, religious,
educational, professional, cultural, fraternal, literary, scientific, social, civic service, or similar
purposes, like trade, industry, agricultural and like chambers, or any combination thereof, subject
to the special provisions of this Title governing particular classes of nonstock corporations.

3. Close Corporation
SEC. 95. Definition and Applicability of Title. – A close corporation, within the meaning of this
Code, is one whose articles of incorporation provides that: (a) all the corporation’s issued stock
of all classes, exclusive of treasury shares, shall be held of record by not more than a specified
number of persons, not exceeding twenty (20); (b) all the issued stock of all classes shall be
subject to one or more specified restrictions on transfer permitted by this Title; and (c) the
corporation shall not list in any stock exchange or make any public offering of its stocks of any
class. Notwithstanding the foregoing, a corporation shall not be deemed a close corporation
when at least two-thirds (2/3) of its voting stock or voting rights is owned or controlled by
another corporation which is not a close corporation within the meaning of this Code.

Any corporation may be incorporated as a close corporation, except mining or oil companies,
stock exchanges, banks, insurance companies, public utilities, educational institutions and
corporations declared to be vested with public interest in accordance with the provisions of this
Code.
4. Special Corporations

SEC. 115. Applicability of Provisions to One Person Corporations. – The provisions of this Title shall
primarily apply to One Person Corporations. Other provisions of this Code apply suppletorily, except
as otherwise provided in this Title.

SEC. 116. One Person Corporation. – A One Person Corporation is a corporation with a single
stockholder: Provided, That only a natural person, trust, or an estate may form a One Person
Corporation.

Banks and quasi-banks, pre-need, trust, insurance, public and publicly-listed companies, and non-
chartered government-owned and -controlled corporations may not incorporate as One Person
Corporations: Provided, further, That a natural person who is licensed to exercise a profession may
not organize as a One Person Corporation for the purpose of exercising such profession except as
otherwise provided under special laws.