TITLE I.
GENERAL PROVISIONS, incurs liability, the stockholders are shielded
DEFINITIONS AND CLASSIFICATIONS
SEC. 1. TITLE OF THE CODE
INTRODUCTION
TYPES OF BUSINESS ORGANIZATIONS
(1) Sole Proprietorships
(2) Partnerships
(3) Corporation
ADVANTAGES OF A CORPORATION
(1) More capitalization
(2) Limited liability
(3) Right of succession – upon the death
of a stockholder, the heir becomes the new
stockholder which provides stability for
the business to continue
(4) Transferability of interest
(5) Easier management
DISADVANTAGES OF A CORPORATION
(1) Higher Income Tax Liability
(2) Less Participation in the Management.
Participation of stockholders in a
corporation is indirect.
(3) No delectus personae
(4) Dissolution
(5) Greater degree of government control
and supervision
(6) Difficulty in meeting requirements
SEC. 2. CORPORATION DEFINED
What are the consequences of a corporation
existing as an artificial being?
A:
1. It has a separate and distinct
personality from its members or
shareholders, thus incurs separate
liability
2. It enjoys rights separate from the
stockholders
3. Properties of the corporation are
separate from the properties of the
stockholders.
VEIL OF CORPORATE FICTION
A corporation has a separate and
distinct personality from its shareholders,
officers, and directors. Once said corporate
fiction is created, the veil hides the
stockholders such that when a corporation
from liability. In so far as the law is concerned,
we are only dealing with the corporation.
When can there be piercing of the veil of
corporate fiction?
1. Defeats public convenience;
2. Is used to perpetuate fraud;
3. Is used to defend a crime;
4. Is used to justify a wrong.
RELATIONSHIPS OF A CORPORATION
(1) Relationship between Corporation
and the Shareholders
(2) Relationship among Shareholders
themselves
(3) Relationship between the
Corporation and the State
(4) Relationship between the
Corporation and the Public
SEC. 3. CLASSES OF CORPORATIONS
(A) As to purpose
1. Public Corporation
2. Private Corporation
(a)Publicly Listed
(b) Quasi-Public
(c) Government Owned and
Controlled Corporation (GOCC)
(B) Under the Revised Corporation Code
1. Stock Corporation
2. Non-Stock Corporation
(C) As to number of corporators
1. Corporation Sole
2. One Person Corporation
3. Corporation Aggregate
(D) Whether it is Open or Close
1. Open Corporation
2. Close Corporation
(E) As to Legal or Corporate Existence
1. De jure corporation
2. De facto corporation
(F) Whether it is for a religions purpose or
not
1. Ecclesiastical Corporation
2. Lay Corporation
(G) As to Formation
 1. Domestic Corporation
2. Foreign Corporation

(H) As to their relation to another

corporation
1. Holding or Parent Corporation
2. Subsidiary Corporation
3. Affiliated Corporation

(I) As to its nationality

1. Philippine national
2. Foreign corporation

SEC. 4. CORPORATIONS CREATED BY

SPECIAL LAWS OR CHARTERS

SEC. 5. CORPORATORS AND

INCORPORATORS, STOCKHOLDERS
AND MEMBERS

Who are the persons involved in the

organization of a corporation?
A: They are:
1. Incorporators
2. Corporators
3. Board of Directors/ Trustees
4. Promoters
5. Underwriters
6. Founders

SEC. 6. CLASSIFICATION OF SHARES

SEC. 7. FOUNDERS’ SHARES
SEC. 8. REDEEMABLE SHARES
SEC. 9. TREASURY SHARES

What are “shares”?

A: Shares represent the interest or the
investment of a stockholder in a corporation.
How do we classify shares?

A: Shares are classified as:

(1) Common shares
(2) Preferred shares
(3) Par value shares
(4) No-par value shares
(5) Founder’s shares
(6) Redeemable shares
(7) Treasury shares
(8) Convertible shares
(9) Voting shares
(10) Non-voting shares
(11) Shares in escrow