Presentation corpo code intro

PowerPoint Presentation: 

THE CORPORATION CODE OF THE PHILIPPINES 1

Brief History of Private Corporations: 

Brief History of Private Corporations 2

Brief History of Private Corporations: 

Brief History of Private Corporations with the coming of the Americans and with the guidance of the Philippine Bill of July 1, 1902 Piece of Legislation was embodied in Act. No. 1459 known as Corporation Law (Batas Pambansa Bilang 68) of the Corporation Code of the Phil. Batas Pambansa Bilang 68 * took effect May 1, 1980 Corporation Code of the Philippines Aims.... * seeks to established new concept of business corporations; * not only to private gain but also to the National Government in spreading profits & benefits for the social and economic development 3

NEW CORPORATION CODE;EFFECT ON EXISTING CORPORATION: 

NEW CORPORATION CODE;EFFECT ON EXISTING CORPORATION Significant changes have been introduce in the Corporation Code, in order to update former provisions to be granted by the SEC of the Philippines SECTION 148 * it simply states that under this new corporation code, all existing legally registered corporations in the Philippines must be amended in accordance with the new corporation law. * New additional requirements will be needed and must be comply within 2 years from the date of its effectivity. Section 148 was done only way back before, when the new corporation code was amended. 4

Modern Corporation: 

Modern Corporation Corporate form has acquired a larger significance; Become both method of property and a means of organizing economic life; Grown tremendous proportion, said to be a “corporate system”; *feudal system which has attracted to it self , by means of powers and attributes to attain degree of prominence in the major institutions. 5

TITLE I - GENERAL PROVISIONS DEFINITIONS AND CLASSIFICATIONS : 

TITLE I - GENERAL PROVISIONS DEFINITIONS AND CLASSIFICATIONS Section 1. Title of the Code. - This Code shall be known as "The Corporation Code of the Philippines." Section 2. Corporation defined. - A corporation is an artificial being created by operation of law, having the right of succession and the powers, attributes and properties expressly authorized by law or incident to its existence. * C orporation as Artificial being. A corporation is given by law with rights, powers and liabilities usually accorded a natural person. * as an artificial person, it can act only through directors who are chosen by stockholders, directors then elect their officers , select employees, agents and make company policies . 6

.....Corporation as Artificial being: 

.....Corporation as Artificial being legal person takes and hold property and conveys the same; It contracts obligations Is sues and be sued in its corporate name Same manner as natural person They compose the corporation, but they are not the corporation. 7

Other attributes of corporations: 

Other attributes of corporations 1. Aside from its artificial being, it has attributes that is created by operation of law; * Unlike partnership it cannot be arise by voluntary agreement of partners. 2. Right to succession and has the powers; * private corp. may continue even death, insolvency, incapacity of any of its directors, officers and employees; * even in terms of transfers of shares of any stock holders to another. * unlike partnership, corporations has given only not to exceed of 50 years; 3. Attributes and properties authorized by law or incident by its existence; * A corporation, being a mere creature of law has such powers only as impliedly conferred or grant by the act of incorporation. Powers of Corporation- can do only what is impliedly allowed by law or charters Powers of natural person- can do anything not forbidden by law. 8

Corporate Nationality: 

Corporate Nationality * Recognize doctrine of corporate law in terms of private corporations: National- natively born in the RP e.g pure Filipino Citizen – An inhabitant of a particular town or city; One who is domiciled in a country, and who is a citizen , though neither native nor naturalized; half breed Filipino. Resident- inhabitant in the RP over a long period of time e.g a foreigner married to a Filipina for a long time * All created and organized by law and is called “Incorporation Rule” in terms of nationality. *Control Test- used by the Supreme Court to recognized the citizenship or nationality of a corporation’s stockholders. 9

Mere ownership by single stockholder not ground to disregard corporate personality....: 

Mere ownership by single stockholder not ground to disregard corporate personality.... Invested by law with a personality separate and distinct from those of the persons composing the company. e.g. It doesn't mean that if you sue the father by his liabilities in terms of company transactions , the rest of his clan are liable too? No, it can't be not unless they are part of the company. 10

Identical features of Partnership and Corporations: 

Identical features of Partnership and Corporations both are organizations composed of an aggregate ( kasunduan ) of individuals. Have juridical personality distinct from their respective component members; e.g 3. Can act only through their respective agents. e.g may tauhan po 11

PURPOSE OF CORPORATION LAW: 

PURPOSE OF CORPORATION LAW authorized businessmen to organized and operate their business, large or small; Drawn to facilitate efficient management; Provide legal frame and financial structure to intricate corporate (highly involve one) to carry on business by means of capitals and energies to work together. 12

Distinctions between Partnership & Corporation: 

Distinctions between Partnership & Corporation partnership Created by agreement among partners Organized by two person or not greater than four Partner is considered an agent of partnership General partners are liable to 3 rd person even with their separate properties Does not have power of successions Interest cannot be transferred w/o the consent of other partners, due to its delectus personae character. May be formed in indefinite period of time. Govern by Civil Code corporation cannot be created without the consent of the state ( corp.law ) Requires at least five incorporators The power to bind the corporation , unless delegated, rests in the board of directors . Shareholders are liable only to the extent of the shares subscribed by them; Death ,insolvency, incapacity of partners does not affect existence of corporations; stockholder may transfer shares even w/o the consent of other stockholder, because delectus personae is foreign in corporation Limited by law to 50 years , extendible not to more than 50 yrs. For each extension; Govern by Corporation Code 13

Advantages of corporations businesses: 

Advantages of corporations businesses capacity to hold property; To contract; To sue be sued as a legal unit or distinct entity ( has a legal and separately identifiable existence) Exemptions of shareholder from individual liability Continuity of existence Transferability of shares Centralized management under a board of directors Standardized methods of organization, mgt., finance for the protection of shareholders and creditors 14

Disadvantages of corporate form of business : 

Disadvantages of corporate form of business limited liability of stockholder serves to limit the credit available to the corporation (plenty process to follow before granted) Transferability of shares permits the uniting of incompatible and conflicting interest in one enterprise Minority stockholder are usually subservient to the wishes of the majority In big corporations ,the stockholders voting rights have become largely theoretical because of widespread ownership , disinterest in the mgt. , inertia and inaccessible meeting places; Large corporations are subject to governmental restrictions, controls, reports requirements not imposed on other forms of business organizations In large corporations, mgt, and control has been separated from ownership Corporate sphere of activity is limited in transaction of its business to the state of organization; Corporate forms involves “double taxation” on corporate income; 15

Section 3.Classes of Corporation: 

Section 3. Classes of Corporation Classes of corporations. - Corporations formed or organized under this Code maybe stock or non-stock corporations. Corporations which have capital stock divided into shares and are authorized to distribute to the holders of such shares dividends or allotments of the surplus(excess) profits on the basis of the shares held are stock corporations. All other corporations are non-stock Corporations . 1. stock corporations- private corporations which have a 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 shares; e.g SAN MIGUEL BREWERY CORPORATION 2. non-stock corporations- are those that do not issue stock e.g religious, social, charitable, civic or professional organizations, membership organization like bar or medical association; 16

Other kinds of corporations: 

Other kinds of corporations Quasi – means having similarities 1. quasi- “ as if ” e.g public boards created by law (MTRCB, MMDA) 2. Quasi-public (utility corporation)- rendering basic services like privileges of eminent domain or use of public property. E.g post office, mrt , lrt,ntc 3. Government –owned or controlled corporations- organized by gov’t and it is the majority stockholder. E.g PAL 4. Domestic and foreign corporations domestic is one incorporated in the Philippines Laws foreign corporations- is one formed organized, or existing under any laws other those in the RP Religious corporations- organized by sole corp. and aggregate Ecclesiastical and lay corporations- organized for religious purposes Eleemosynary and civil corporations- organized for charitable purposes 17

Other kinds of corporations: 

Other kinds of corporations 8. close and open corporations close corporations- owned by family members or immediate members open corporations – all the members has a voting or elections of the directors and other officers 9. Multi-national corporations- activities across national boundaries and subject to legal sanctions of the countries they operate 10. non-profit Corporations- organized w/o profits . Gains, or dividends. 18

Section 4. Corporations created by special laws or charters.: 

Section 4. Corporations created by special laws or charters. Section 4. Corporations created by special laws or charters . - Corporations created by special laws or charters shall be governed primarily by the provisions of the special law or charter creating them or applicable to them, supplemented by the provisions of this Code, insofar as they are applicable. e.g Banking Corporations- is govern by General Banking Act and may be supplemented by Corporation Code Boy Scout of the Philippines- govern by Civil Service Law and 1987 Administrative Code 19

Section 5. Corporators and incorporators, stockholders and members.: 

Section 5. Corporators and incorporators, stockholders and members. Section 5. Corporators and incorporators, stockholders and members. Corporators are those who compose a corporation, whether as stockholders or as members. Incorporators are those stockholders or members mentioned in the articles of incorporation as originally forming and composing the corporation and who are signatories thereof. Components of Corporations corporators - those who composed the corporations, whether stockholders of members. Incorporators- stockholders or members mentioned in the articles of incorporations; they are the persons who are the signatories to the Art.of Incorporations and filed with SEC. Stockholders or shareholder- they are the owners of the stock and called capital stock. Corporators in a stock corporations are called stockholders /shareholders. Members- corporators in a non-stock corporations and called members. 20

Components of Corporations: 

Components of Corporations 5. Incorporator and corporator distinguished. Incorporator – natural persons whose names appear in the articles of incorporations as originally forming a corporation. Corporator - all persons who compose the corporations at any given time and need not be a signatories in the articles of incorporations. But, on the other hand incorporators may be considered a corporators as long as he/she continues to be a stockholder, although not all corporators are incorporators. 6. Capacity of incorporators: Incorporators must have valid capacity to enter into a valid and enforceable contract. Minors cannot be incorporators yet Married women may however, be incorporators; * Civil Code provides that women age 21+ is qualified for all acts of civil life. 21

Components .......: 

Components ....... .............Married women *Article 117 of the same code provides that,”a wife may exercise any profession or occupation or engage in business” it means that the husband has a right to object on some grounds. if the wife will contribute any conjugal property to a corporation , she then must first seek husbands consent before doing so, for security. 7. Promotion – act of procuring the initial the initial finances and all preparation before launching corporation. 8. Activities of promoter- promoters may requires to have help form aids like lawyers, experts , bankers etc. In order to build-up company. In summary of his activities he then must follow all standardization in promoting a new corporation in the economy. 9. Promoters Control- the promoter can make any agreement if it is required in the activities, nevertheless it should be approved by the corporation , if then not granted the promoter can be liable alone. 22

Definition of Terms: 

Definition of Terms Par value- share of stock given a definite or fixed value in articles of incorporation; Purpose is to fix a minimum subscription or original issue price of shares. It indicates the amount w/c the original subscribers are supposed to contribute; 2. No- par value- share of stock that has no fixed value; Shares of capital stock issued without par value shall be deemed fully paid and non-assessable and the holder shall not be liable to the corporation or its creditors, unless: mga loans or inutangan ** no-par value may not be issue if less than the value of P5.00 per share; ** entire consideration received by the corporation to no-par value share shall be considered capital and shall not be distributed as dividends. 23

Definition of Terms: 

Definition of Terms 3. share of stock- one of the units w/c the capital stock has been divided ** stockholder has no right to the property of the corporation because that belongs to the company as distinct entity. 4. Stock certificates- The one that certifies the holder or owner of a certain number of shares of stock in the corporation. 5.Common and preferred shares - entitles the owner of it to an equal pro rata division of profits. 24

Section 6. Classification of shares. : 

Section 6. Classification of shares. Section 6. Classification of shares. - The shares of stock of stock corporations may be divided into classes or series of shares, or both, any of which classes or series of shares may have such rights, privileges or restrictions as may be stated in the articles of incorporation: Provided, That no share may be deprived of voting rights except those classified and issued as "preferred" or "redeemable" shares, unless otherwise provided in this Code: Provided, further, That there shall always be a class or series of shares which have complete voting rights. Any or all of the shares or series of shares may have a par value or have no par value as may be provided for in the articles of incorporation: Provided, however, That banks, trust companies, insurance companies, public utilities, and building and loan associations shall not be permitted to issue no-par value shares of stock. 25

Section 6. Classification of shares. : 

Section 6. Classification of shares. Preferred shares of stock issued by any corporation may be given preference in the distribution of the assets of the corporation in case of liquidation and in the distribution of dividends, or such other preferences as may be stated in the articles of incorporation which are not violative of the provisions of this Code: Provided, That preferred shares of stock may be issued only with a stated par value. The board of directors, where authorized in the articles of incorporation, may fix the terms and conditions of preferred shares of stock or any series thereof: Provided, That such terms and conditions shall be effective upon the filing of a certificate thereof with the Securities and Exchange Commission. Shares of capital stock issued without par value shall be deemed fully paid and non assessable and the holder of such shares shall not be liable to the corporation or to its creditors in respect thereto: Provided; That shares without par value may not be issued for a consideration less than the value of five (P5.00) pesos per share: Provided, further, That the entire consideration received by the corporation for its no-par value shares shall be treated as capital and shall not be available for distribution as dividends. A corporation may, furthermore, classify its shares for the purpose of insuring compliance with constitutional or legal requirements. Except as otherwise provided in the articles of incorporation and stated in the certificate of stock, each share shall be equal in all respects to every other share. 26

Section 6. Classification of shares. : 

Section 6. Classification of shares. Where the articles of incorporation provide for non-voting shares in the cases allowed by this Code, the holders of such shares shall nevertheless be entitled to vote on the following matters: 1. Amendment of the articles of incorporation; 2. Adoption and amendment of by-laws; 3. Sale, lease, exchange, mortgage, pledge or other disposition of all or substantially all of the corporate property; 4. Incurring, creating or increasing bonded indebtedness; 5. Increase or decrease of capital stock; 6. Merger or consolidation of the corporation with another corporation or other corporations; 7. Investment of corporate funds in another corporation or business in accordance with this Code; and 8. Dissolution of the corporation. Except as provided in the immediately preceding paragraph, the vote necessary to approve a particular corporate act as provided in this Code shall be deemed to refer only to stocks with voting rights. 27

Shares of Stock may be divided into Classes & Series: 

Shares of Stock may be divided into Classes & Series Restrictions Classes & Series : (summarized) shares shall not be deprived by voting rights, except preferred and redeemable shares; but it doesn't mean that a non-voting shares is not entitle to vote on matters specified on Section 6 last paragraph. Complete voting rights of classes and series must be available; Banks, trust companies, insurance co., public utilities co., building and loan association shall not permit to issue no-par value shares of stock. Preferred shares may be given preference in distribution of assets and in case of liquidation and distribution of dividends may only be issued with stated par value. Terms and Conditions for preferred shares and series shall be fix by the boards only if authorized by SEC. Shares w/o par value may not be issued if less than P5.00 per share. Privileges, rights and restrictions should be stated in the Articles of Corporation and so to Stock Certificates. 28

Classes or Series of Shares: 

Classes or Series of Shares Voting and non-Voting shares *** all shares be considered voting shares ; *** general rule is that every member of non-stock corporation & every legal owner of shares in stock corporation has a right to present and vote at all corporate meetings. *** Section 6 of Corporation Code 2. Par value and No- par value shares 3. Preferred share of stock *** refer to the payment of dividends & distribution of assets upon dissolution & liquidation of corporation. *** are entitled to receive dividends of their shares declared, and be given before any dividends of all common stock. 4.Promotion Stock- *** issued to those who may originally own valuable rights, and it may depends on the efforts & services during the promoting stage of corporation that shareholders may agreed upon before granting; 29

Classes or Series of Shares: 

Classes or Series of Shares 5. Shares of Escrow *** shares subject to escrow agreement; *** shares are deposited by grantor or his agent 6. Founders Shares *** Under Section 7. Founders' shares. classified as such in the articles of incorporation may be given certain rights and privileges not enjoyed by the owners of other stocks, provided that where the exclusive right to vote and be voted for in the election of directors is granted, it must be for a limited period not to exceed five (5) years subject to the approval of the Securities and Exchange Commission. The five-year period shall commence from the date of the aforesaid approval by the Securities and Exchange Commission. *** founders, shares, generally common stock , given founders or promoters of a corporation the payment for services rendered. *** issued of Founders requires SEC Approval 30

Classes or Series of Shares: 

Classes or Series of Shares *** issued of Founders requires SEC Approval. WHY? *** since founders may enjoy privileges & rights that stockholders may not be, in order to be fair. *** founders can be a voted director *** exclusive rights to vote and be voted that will not exceed 5 years 7. Redeemable shares *** usually preferred are frequently depends on shareholders or corporation at definite price. SEC has clarified that redeemable shares in a corporation under a legal contract can be purchase or take up from their holders . Retired ,redeemed shares cannot be reclassified: Once a share has been retired or redeemed it cannot be return again. Meaning there's no turning back as they already lost their stands. 31

PowerPoint Presentation: 

8. Treasury shares *** Under Section 9. Treasury shares. are shares of stock which have been issued and fully paid for, but subsequently reacquired by the issuing corporation by purchase, redemption, donation or through some other lawful means. Such shares may again be disposed of for a reasonable price fixed by the board of directors. *** owned by the corporation reacquired by the issuing corporation by, “purchase, donation,redemtion,or other lawful means” *** carry no voting rights as to dividends or distributions 9.Other shares classified to comply w/ constitutional or legal requirements 32