CORPORATION As to legal right to corporation

A corporation is an artificial being existence

created by operation of law, having - De jure corporation
the right of succession and the - De facto corporation
powers, attributes, and properties - Corporation by estoppel
expressly authorized by law or - Corporation by
incidental to its existence. (SEC. 2) prescription

DOCTRINE OF PIERCING THE As to the laws of incorporation

CORPORATE VEIL - domestic corporation
- Foreign corporation
ATTRIBUTES/CHARACTERISTICS
- Created by operation of law As to relationship of management
- Right of succession and control
- Powers, attributes, and - Parent or holding
properties expressly corporation
authorized by law - Subsidiary corporation
*Powers of a Corporation As to whether they are open to the
- express powers public or not
- implied powers - Open corporation
- incidental powers - Close corporation

As to number of persons who

NATIONALITY OF CORPORATIONS
compose them
- Incorporation test ( determined
- Corporate aggregate
by the place of incorporation)
- Corporation sole
- Control test (determined by the
nationality of the controlling
As to whether they are for religious
stockholders)
purposes or not
- Grandfather Rule
- Ecclesiastical
corporation (religious
CLASSES OF CORPORATIONS
purp.)
In general:
- Lay corporation (NOT)
- Stock corporation
- Non-stock corporation
As to whether they are for charitable
purposes or not
As to purpose
- Eleemosynary
- Public corporation
corporation (Charitable)
- Private corporation
- Civil corporation (NOT)
- Government-owned or
controlled corporation
COMPONENTS OF A CORPORATION
- Quasi-public
● corporators
Corporation (performance
of public duties and ● incorporators
organized for profit; for ● stockholders or shareholder (if
example electric, water etc.) stock)
 ● members (if non-stock) This purpose clause will confer,
● BOD ( governing body in a as well as limits, the powers
stock corporation) which a corporation may
● BOTrustees ( governing body in exercise. Any act beyond its
a nonstock corp.) powers is known as ultra vires
● corporate officers acts.
● subscribers
● underwriter Consequences of ultra vires
● promoter acts
● On the corporation itself
STEPS IN THE CREATION OF ● On the rights of the
CORPORATION stockholders
1. promotional stage ● On the immediate
2. incorporation parties
3. formal organization and
commencement of business 3. The place where the principal
transactions office of the corporation is to
be located, which must be
ARTICLES OF INCORPORATION within the Philippines
The articles of incorporation 4. The term for which the
has been described as one that corporation is to exist, if the
defines the charter of the corporation has not elected
corporation and the contractual perpetual existence.
relationships between the State and
the corporation, the stockholders **** REVIVAL OF CORPORATE
and the State, and between the EXISTENCE (SEC. 11)
corporation and its stockholders.
5. The names, nationalities, and
CONTENTS OF ARTICLES OF residence addresses of the
incorporators.
INCORPORATION
6. The number of directors, which
1. The name of the corporation
shall not be more than fifteen
(unique)
(15) or the number of trustees
2. The specific purpose or
which may be more than fifteen
purposes for which the
(15);
corporation is being formed.
Where a corporation has more
7. The names, nationalities, and
than one stated purpose, the
residence addresses of
articles of incorporation shall
persons who shall act as
indicate the primary purpose
directors or trustees until the
and the secondary purpose or
first regular directors or
purposes: Provided, That a
trustees are duly elected and
nonstock corporation may not
qualified in accordance with
include a purpose which would
this Code;
change or contradict its nature
as such;
 8. If it be a stock corporation, the
amount of its authorized
capital stock, number of
shares into which it is divided,
the par value of each, names,
nationalities, and residence
addresses of the original
subscribers, amount
subscribed and paid by each
on the subscription, and a
statement that some or all of
the shares are without par
value, if applicable;
(sa 5 to) QUALIFICATIONS OF
INCORPORATORS (SEC. 10)
1. Any person, partnership,
association or corporation,
singly or jointly with others but
not more than fifteen (15) in
number, may organize a the duties of the stockholders or
corporation for any lawful
purpose or purposes: Provided,
That natural persons who are
licensed to practice a enacted by the corporation to
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.
2. Incorporators who are natural
persons must be of legal age.
3. Each incorporator of a stock
corporation must own or be a
subscriber to at least one (1)
share of the capital stock.
Terms:
- Shares of stock
- Certificate of stock
- Authorized capital stock (max
amount fixed in AOI to be
subscribed and paid by the
stockholders)
- Subscribed capital stock
- Paid-up capital stock
- Outstanding capital stock
9. If it be a nonstock corporation, the
amount of its capital, the names,
nationalities, and residence
addresses of the contributors, and
amount contributed by each; and
10. Such other matters consistent with
law and which the incorporators may
deem necessary and convenient.
BY-LAWS are rules made by a
corporation for its own government;
to regulate the conduct and define
members towards the corporation
and among themselves. They are the
rules and regulations or private laws
regulate, govern and control its own
actions, affairs and concerns and its
stockholder or members and
directors and officers with relation
thereto and among themselves in
their relation to it.
Before incorporation
(Pre-incorporation)
Bylaws shall be approved and signed
by all the incorporators and
submitted to the Commission,
together with the articles of
incorporation.
QUALIFICATION OF A DIRECTOR
Directors shall be elected for a term
of one (1) year from among the
holders of stocks registered in the
corporation’s books, while trustees
shall be elected for a term not transaction of the lawful
exceeding three (3) years from among business of the corporation
the members of the corporation. may reasonably and
Each director and trustee shall hold necessarily require, subject to
office until the successor is elected the limitations prescribed by
and qualified. A director who ceases law and the Constitution;
to own at least one (1) share of stock - To enter into a partnership,
or a trustee who ceases to be a joint venture, merger,
member of the corporation shall consolidation, or any other
cease to be such. commercial agreement with
natural and juridical persons;
CORPORATE POWERS
1. General powers MANAGEMENT RIGHTS
- To sue and be sued in its - To attend and vote in person
corporate name; or by proxy at a stockholders’
- To have perpetual existence meetings
unless the certificate of - To elect and remove directors
incorporation provides - To approve certain corporate
otherwise; acts
- To adopt and use a corporate - To adopt and amend or repeal
seal; the bylaws or adopt new bylaws
- To amend its articles of - To compel the calling of
incorporation in accordance meetings
with the provisions of this - To have the corporation
Code; voluntarily dissolved
- To adopt bylaws, not contrary - To enter into a voting trust
to law, morals or public policy, agreement
and to amend or repeal the
same in accordance with this
Code; APPRAISAL RIGHT
- In case of stock corporations, The right of any stockholder of a
to issue or sell stocks to corporation to dissent and demand
subscribers and to sell payment of the fair value of the
treasury stocks in accordance shares.
with the provisions of this
Code; and to admit members DISSOLUTION
to the corporation if it be a It is the extinguishment of the
nonstock corporation; corporate franchise and the
- To purchase, receive, take or termination of corporate existence.
grant, hold, convey, sell, lease,
pledge, mortgage, and LIQUIDATION
otherwise deal with such real refers to the process of winding
and personal property, down and terminating the operations
including securities and bonds
of a company or business entity. It
of other corporations, as the
involves selling off the assets of the
company, settling its debts and
obligations, and distributing any
remaining funds or assets to the
company's creditors and
shareholders.

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.