Kinds of Corporation

1. As to existence of stocks

Stock Corporation (Sec. 3, RCC) Non-Stock Corporation (Sections 86-87)

 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.
 Has capital stock divided into
shares.
 Organized for profit.
 Composed of stockholders, not be
more than 15
directors/incorporators.
 A corporation where no part of its income is
distributable as dividends to members, trustees
or officers. Any profit obtained as an incident to
its operations shall, whenever necessary or
proper, be used for the furtherance of the
purpose for which the corporation was
organized.
 No capital stocks. Non-stock corporations only
have contributions or donations.
 Not organized for profit
 Composed of members, may or may not be
more than 15 trustees except non-education
institutions.

2. As to control

Holding company Parent and subsidiary companies

 One that controls another as a 
subsidiary or affiliate by the
power to elect its management;
one which holds shares in other
companies for purposes of
control rather than for mere
investment.
When a corporation has a controlling financial
interest in one or more corporations, the one
having control is known as the “parent
company” and the controlled corporations are
known as the “subsidiary companies”.

3. Other classifications

a. Close Corporation (Sec. 95) –

 One whose AOI provides that all of 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); subject to specified restrictions on
transfers; and it shall not list in any stock exchange or make any public offering of
its stocks of any class. A corporation is “going private” when it is adopting the
features of a closed corporation.
 Notwithstanding, a corporation shall not be deemed a close corporation when at
least 2/3 of its voting stock is owned or controlled by another corporation which is
not a close corporation within the meaning of this Code.

b. One Person Corporation (Sec. 115)

A corporation wherein all of the stocks are held directly or indirectly by one person. It is not
necessarily illegal for as long as it follows and observes the law throughout