Law on Business Organizations (Corporation: General Provisions-Continuation) S7

PERTINENT CLASSES OF CORPO.

1. As to Existence of Stocks:
a) Stock- with capital stock divided into shares and authorized to distribute dividends
b) Non- Stock- all other corpo.
2. As to Composition:
a) One-Person- with single stockholder and incorporator
b) Corporation Sole- formed by chief archbishop, priest, minister, for administering and
managing as trustee the affairs or properties of any religious denomination
c) Corporation Aggregate- incorporated by more than 1 person
3. As to Incorporation and Nationality:
a) Domestic- incorporated under Philippine laws
b) Foreign- incorporated under foreign laws

PERTINENT CLASSES OF SHARES/STOCKS

1. As to Preference:
a) Common- without preference
b) Preferred- with preference in distribution of dividends and corporate assets in
liquidation
2. As to Voting Rights:
a) Voting- entitled to vote in all meetings
b) Non-Voting- deprived of such right
3. As to Value
a) Par value- with fixed value stated in AOI and COS
b) No Par Value- without fixed value
4. Founder’s shares- with rights not enjoyed by other stockholders; if it’s with right to vote
and be voted during election of directors, said right must be for a limited period not to exceed
5 years from date of incorporation.
5. Redeemable shares- may be purchased by the corpo upon expiration of a fixed period
when provided by the AOI
6. Treasury shares- issued and fully paid by corpo but subsequently reacquired by issuing
corpo by purchase, redemption, donation or other lawful means.
7. Watered stock/Fictitious stock- issued as a bonus or without consideration or for a less
sum of money than the par value or for labor or property at a fair valuation less than the par
value
REQUIREMENTS IN CLASSIFYING SHARES/STOCKS
1. Classification of shares, their rights, restrictions and stated par value must be indicated in
the articles of incorporation (AOI) and certificate of stock (COS).
2. GR: Each share shall be equal in all respects to every other share
EXC: when AOI and COS state the contrary
3. GR: No share may be deprived of voting rights
EXC: Preferred shares and Redeemable shares are stated in AOI as non-voting
4. When non-voting shares are issued, there shall be class of shares with complete voting
rights.
PERTINENT INSTANCES WHEN NON-VOTING SHARES ARE ENTITLED TO VOTE
1. Amendment of AOI
2. Adoption and amendment of by-laws
3. Sale, lease, mortgage or other disposition of all or substantially all the corpo assets
4. Increase or decrease of capital stock
5. Merger/consolidation with other corpo;
6. Dissolution of corpo.
PERTINENT LIMITATIONS ON ISSUANCE OF NO-PAR VALUE SHARES
1. Banks and other corpo authorized to obtain or access public funds shall not be
permitted to issue no-par value shares.
2. Preferred shares cannot be issued as no-par value share.
3. No par value shares must be issued for consideration of at least P5.00 per share.
4. The entire consideration received by corpo for its non-par value shares shall be
treated as capital and shall not be available for distribution of dividends.
PERTINENT POINTS AS TO REDEEMABLE SHARES
o GR: Redemption of redeemable shares may be done regardless of the existence of
surplus profits
o EXC: Redemption should not prejudice the creditors of corpo. Thus, redemption may
be done only if corpo has sufficient assets to cover debts and liabilities after such
redemption
o Redemption of preferred shares may be restricted by the exercise of police power.