Business

Organizations
AC 122
Week 6

1
Incorporation and organization of private
corporation
-Number and qualifications of
corporations
-Corporate term
-Capital stock requirements
-Articles of incorporation

Week 6
2
 Incorporation and organization of private corporation

◺ Number and qualifications of corporations

◺ Corporate term
◺ Capital stock requirements
◺ Articles of incorporation

3
* Students to provide examples and discuss
 Incorporation and organization of private corporation

Number and qualifications of corporations

◺ Section 10 of the old Corporation Code, or Batas
Pambansa Blg. 68, only provides:
◺ “Any number of natural persons not less than five (5)
but not more than fifteen (15), all of legal age and a
majority of whom are residents of the Philippines,
may form a private corporation for any lawful
purpose or purposes. (cont.)
4
* Students to provide examples and discuss
 Incorporation and organization of private corporation

Number and qualifications of corporations

◺ Section 10 of the old Corporation Code, or Batas
Pambansa Blg. 68, only provides:
◺ “Each of the incorporators of stock corporation must
own or be a subscriber to at least one (1) share of the
capital stock of the corporation.”

5
* Students to provide examples and discuss
 Incorporation and organization of private corporation

Section 10 of the old Corporation Code, or

Batas Pambansa Blg. 68

Republic Act No. 11232, or the Revised

Corporation Code of the Philippines (RCC)
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* Students to provide examples and discuss
 Incorporation and organization of private corporation

Republic Act No. 11232, or the Revised Corporation

Code of the Philippines (RCC)
“Any person, partnership, association or
corporation, singly or jointly with others but not
more than fifteen (15) in number, may organize a
corporation for any lawful purpose or purposes:
(cont.)
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* Students to provide examples and discuss
 Incorporation and organization of private corporation

Republic Act No. 11232, or the Revised Corporation

Code of the Philippines (RCC)
◺ Provided, that natural persons who are licensed
to practice a profession, and partnerships or
associations organized for the purpose of
practicing a profession, shall not be allowed to
organize as a corporation unless otherwise
provided under special laws. (cont.) 8
* Students to provide examples and discuss
 Incorporation and organization of private corporation

Republic Act No. 11232, or the Revised Corporation

Code of the Philippines (RCC)
◺ Incorporators who are natural persons must
be of legal age. Each incorporator of a stock
corporation must own or be a subscriber to at
least one (1) share of the capital stock.”

9
* Students to provide examples and discuss
 Incorporation and organization of private corporation

The following salient features are provided for under

SEC MC (memorandum circular) No. 16, s. of 2019:
◺ 1. To form a new domestic corporation, two (2)
or more persons, but not more than 15, may
organize themselves and form a corporation
(Section 1, SEC MC No. 16, s. of 2019).

10
* Students to provide examples and discuss
 Incorporation and organization of private corporation

The following salient features are provided for under

SEC MC (memorandum circular) No. 16, s. of 2019:
◺ 2. The composition of incorporators is any
combination of natural person/s, SEC-
registered partnership/s, SEC-registered
domestic corporation/s or association/s, as
well as foreign corporation/s
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* Students to provide examples and discuss
 Incorporation and organization of private corporation

The following salient features are provided for under

SEC MC (memorandum circular) No. 16, s. of 2019:
◺ 3. The inclusion of foreign nationals in the
Articles of Incorporation shall be subject to the
applicable constitutional, statutory and
regulatory restrictions, as well as conditions,
with respect to foreign participation in certain
investment areas or activities
* Students to provide examples and discuss
12
 Incorporation and organization of private corporation

The following salient features are provided for under

SEC MC (memorandum circular) No. 16, s. of 2019:
◺ 4. The SEC will require a favorable recommendation from
the appropriate government agency in case banks,
banking and quasi-banking institutions, preneed,
insurance and trust companies, Non-Stock Savings and
Loan Associations (NSSLAS), pawnshops and other
financial intermediaries will be incorporated
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* Students to provide examples and discuss
 Incorporation and organization of private corporation

The following salient features are provided for under

SEC MC (memorandum circular) No. 16, s. of 2019:
◺ 5. There will be manual registration by the
SEC’s Company Registration and Monitoring
Department and the Extension Offices for the
processing of all applications until further
notice
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* Students to provide examples and discuss
 Incorporation and organization of private corporation

Republic Act No. 11232, or the Revised Corporation Code

of the Philippines (RCC), section 10
◺ Incorporators who are natural persons must be of
legal age. Each incorporator of a stock corporation
must own or be a subscriber to at least one (1) share
of the capital stock.”

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* Students to provide examples and discuss
 Incorporation and organization of private corporation

Corporate term
◺ Under the old Corporation Code, the maximum
corporate term is only fifty (50) years, subject to
extensions.
◺ Under RCC (Revised Corporation Code of the
Philippines), the limit on corporate term has been
removed. (cont.)

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* Students to provide examples and discuss
 Incorporation and organization of private corporation

Capital stock requirements

◺
The minimum paid-up capital for Philippine
corporations is only P5,000, but banks often
require more than this as initial deposit in
opening an account. For certain industries,
however, the SEC requires much higher
minimum paid-up capital.
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* Students to provide examples and discuss
 Incorporation and organization of private corporation

Capital stock requirements

◺
If foreign ownership is involved, specific
capitalization requirements must also be met
depending on the nature of the business, the
industry, and the desired percentage of
foreign equity. (cont.)

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* Students to provide examples and discuss
 Incorporation and organization of private corporation

Capital stock requirements

◺
Export companies, however, may be
established with 100% foreign ownership and
capitalization of only P5,000, provided they
apply for exemption with the SEC.

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* Students to provide examples and discuss
 MINIMUM CAPITAL REQUIREMENTS FOR CORPORATIONS

Break Bulk Agent 250,000.00

Cargo Consolidator 400,000.00
Financing Company-Main
•1st class cities •10,000,000.00
•Other cities •5,000,000.00
•Municipalities •2,500,000.00
Financing Company-Branch
•1st class cities •1,000,000.00
•Other cities •500,000.00
•Municipalities
* Students to provide examples and discuss
•250,000.00 20
 MINIMUM CAPITAL REQUIREMENTS FOR CORPORATIONS

Freight Forwarders
•Domestic •250,000.00
•International •2,000,000.00
Health Maintenance
• 10,000,000.00
Organization
Freight Forwarders
•Domestic •250,000.00
•International •2,000,000.00
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* Students to provide examples and discuss
 MINIMUM CAPITAL REQUIREMENTS FOR CORPORATIONS

Insurance
•Insurance Broker •20,000,000.00
•Reinsurance Broker •20,000,000.00
•Insurance Broker and •50,000,000.00
Reinsurance Broker
•Life Insurance Company •1,000,000,000.00
•Non-Life Insurance Company •1,000,000,000.00
•Reinsurance Company •2,000,000,0

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* Students to provide examples and discuss
 MINIMUM CAPITAL REQUIREMENTS FOR CORPORATIONS

Mining
•Authorized Capital Stock •100,000,000.00
•Paid-up Capital Stock •6,250,000.00

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* Students to provide examples and discuss
 MINIMUM CAPITAL REQUIREMENTS FOR CORPORATIONS

Pawnshop 100,000.00

Recruitment for Local Employment

•Corporation
•Partnership •500,000.00
Recruitment for Overseas •200,000.00
Employment • 2,000,000.00
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* Students to provide examples and discuss
 MINIMUM CAPITAL REQUIREMENTS FOR CORPORATIONS

Retail Trade with Foreign

2,500,000.00
Equity
School (for stock
corporations)
•Elementary Education
•1,000,000.00
•Elementary and Secondary
•2,500,000.00
Education
•5,000,000.00
•Elementary, Secondary, and
Tertiary
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* Students to provide examples and discuss
 Incorporation and organization of private corporation

Articles of incorporation
◺ The articles of incorporation, sometimes called a
certification of formation or a charter, are a set of
documents filed with a government body to legally
document the creation of a corporation.
◺ This type of legal document contains general
information about the corporation, such as the
business's name and location.
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* Students to provide examples and discuss
 Articles of incorporation Example GLOBE TELECOM, INC.

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* Students to provide examples and discuss