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Forms of business
Organization
Corporation
Presented by:
Ferdinand C. Importado
November 11, 2012
Legal Aspects of Busines...
Outline
 General provisions
 Incorporation and organization
 Board of directors / trustees / officers
 Powers of the c...
GENERAL PROVISIONS
Section 1
What is a corporation?
A corporation is an artificial being
created by operation of law,
having the right of succession an...
Components of corporation
Incorporators Corporators
Stockholders Members
Classification
of shares
Rights /
privileges
Common
Preferred
Value
Par value
No par value
Other types of shares
Founders’
shares
Redeemable
shares
Treasury
shares
INCORPORATION AND
ORGANIZATION
Section 2
Dimensions of incorporation
Incorporators Term Capitalization
 Not less than 5
but not more
than 15
 Legal age
 Filipin...
Articles of incorporation
The articles of
incorporation is the
document prepared by
the persons establishing a
corporation...
Amending the articles
Approval
Provisions
Effectivity
Majority of the
BOD
2/3 of the capital
stock
SEC approval
6 mont...
Grounds for rejection or disapproval of
the Articles of Incorporation
Not in accordance with the prescribed form
Unconstit...
BOARD OF DIRECTORS / TRUSTEES /
OFFICERS
Section 3
The board of directors or trustees
Elected from among the holders
of stocks or members
Own at least one (1) share of
the c...
Election of directors / trustees
• Person or by representative by written proxy
• Election must be by ballot
• Schedules a...
Disqualification / removal / vacancies
Disqualification
• Convicted by final
judgment for a period
exceeding six (6)
years...
Compensation of directors
Reasonable per diems
Additional compensation is
allowed
Not more than 10% of the
preceding net i...
POWERS OF THE CORPORATION
Section 4
Corporate powers and capacity
Sue and be
sued
Succession
by corporate
name
Corporate
seal
Amend
articles of
incorporation
Corporate powers and capacity
Adopt by-
laws
Issue or sell
stocks
Deal with real
and personal
property
Merger or
consolida...
Corporate powers and capacity
Make reasonable donations
Establish plans for directors and employees
Exercise powers to car...
Other powers of a corporation
 Extend or shorten corporate term
 Increase or decrease capital stock; incur, create
or in...
By-laws defined
Rules of action adopted by the
corporation for its internal
government and the
government of its officers,...
Contents of by-laws
Conduct of meeting
Required quorum and
manner of voting
Form for proxies
The qualifications,
duties an...
OTHER TYPES OF CORPORATION
Section 5
Non-stock corporation
Where no part of its income is
distributable as dividends to its
members, trustees, or officers, sub...
Close corporation
Attributes of a close corporation
• All the corporation's issued stock of all classes
shall be held by n...
Educational corporation
 Is a stock or non-
stock corporation
organized to provide
facilities for teaching
or instruction...
Religious corporations
Refers to a corporation
composed entirely of
spiritual persons and
which is established for
the fur...
Classes of religious corporation
Corporation
sole Religious
societies
Foreign corporation
One formed, organized or existing
under any laws other than those
of the Philippines and whose laws
al...
DISSOLUTION
Section 6
Methods of dissolution
Voluntary
dissolution where
no creditors are
affected
Voluntary
dissolution where
creditors are
aff...
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Forms of business organization

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The slides discusses the corporation as a business organization under the Philippine laws. It includes some general provisions until its dissolution

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Forms of business organization

  1. 1. Forms of business Organization Corporation Presented by: Ferdinand C. Importado November 11, 2012 Legal Aspects of Business Atty. Celso D. Benologa Ph.D., CPA
  2. 2. Outline  General provisions  Incorporation and organization  Board of directors / trustees / officers  Powers of the corporation  Other corporations  Dissolution
  3. 3. GENERAL PROVISIONS Section 1
  4. 4. What is a corporation? 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 Stock corporations Non-stock corporation
  5. 5. Components of corporation Incorporators Corporators Stockholders Members
  6. 6. Classification of shares Rights / privileges Common Preferred Value Par value No par value
  7. 7. Other types of shares Founders’ shares Redeemable shares Treasury shares
  8. 8. INCORPORATION AND ORGANIZATION Section 2
  9. 9. Dimensions of incorporation Incorporators Term Capitalization  Not less than 5 but not more than 15  Legal age  Filipino citizen  Owner / subscriber of 1 share  Not to exceed 50 years  May be extended not to exceed 50 years  Extension not earlier than 5 years  Subscribed to 25% of the authorized capital  Paid 25% of the subscribed capital  Payment not less than P5000
  10. 10. Articles of incorporation The articles of incorporation is the document prepared by the persons establishing a corporation and filed with the SEC containing the matters as required by the Corporation Code. Contents of the articles of incorporation • Corporate name • Purpose • Principal office • Incorporating directors or trustees • Capital stock / capital / subscribers / contributors
  11. 11. Amending the articles Approval Provisions Effectivity Majority of the BOD 2/3 of the capital stock SEC approval 6 months of inaction Underscore changes Oath of the C/S
  12. 12. Grounds for rejection or disapproval of the Articles of Incorporation Not in accordance with the prescribed form Unconstitutional, illegal, immoral, or contrary to government rules and regulations Treasurer's Affidavit regarding capital stock subscribed and/or paid if false Percentage of ownership has not been complied with
  13. 13. BOARD OF DIRECTORS / TRUSTEES / OFFICERS Section 3
  14. 14. The board of directors or trustees Elected from among the holders of stocks or members Own at least one (1) share of the capital stock majority of the directors or trustees must be residents of the Philippines
  15. 15. Election of directors / trustees • Person or by representative by written proxy • Election must be by ballot • Schedules at the time fixed in the by-laws • The number of votes shall not exceed the number of shares owned • Candidates receiving the highest number of votes shall be declared elected
  16. 16. Disqualification / removal / vacancies Disqualification • Convicted by final judgment for a period exceeding six (6) years • Violation of the Corporate Code committed within five (5) years Removal • Vote of the 2/3 of the outstanding capital stock or members • Removal shall take place either at a regular meeting of the corporation or at a special meeting called for the purpose • Removal may be with or without cause Vacancies • Vote of at least a majority of the remaining directors or trustees • Regular or special meeting called for that purpose
  17. 17. Compensation of directors Reasonable per diems Additional compensation is allowed Not more than 10% of the preceding net income before tax
  18. 18. POWERS OF THE CORPORATION Section 4
  19. 19. Corporate powers and capacity Sue and be sued Succession by corporate name Corporate seal Amend articles of incorporation
  20. 20. Corporate powers and capacity Adopt by- laws Issue or sell stocks Deal with real and personal property Merger or consolidation
  21. 21. Corporate powers and capacity Make reasonable donations Establish plans for directors and employees Exercise powers to carry out its purpose
  22. 22. Other powers of a corporation  Extend or shorten corporate term  Increase or decrease capital stock; incur, create or increase bonded indebtedness  Deny pre-emptive right  Sale or other disposition of assets  Acquire own shares  Invest corporate funds in another corporation or business or for any other purpose  Declare dividends  Enter into management contract
  23. 23. By-laws defined Rules of action adopted by the corporation for its internal government and the government of its officers, stockholders or members
  24. 24. Contents of by-laws Conduct of meeting Required quorum and manner of voting Form for proxies The qualifications, duties and compensation of directors or trustees, officers and employees Election of directors or trustees Penalties for violation of the by-laws Manner of issuing stock certificates
  25. 25. OTHER TYPES OF CORPORATION Section 5
  26. 26. Non-stock corporation Where no part of its income is distributable as dividends to its members, trustees, or officers, subject to the provisions of this Code on dissolution. Any may be obtained as an incident to its operations shall be used for the furtherance of the purpose
  27. 27. Close corporation Attributes of a close corporation • All the corporation's issued stock of all classes shall be held by not more than twenty (20) • All the issued stock of all classes shall be subject to one or more specified restrictions on transfer • The corporation shall not list in any stock exchange or make any public offering of any of its stock of any class
  28. 28. Educational corporation  Is a stock or non- stock corporation organized to provide facilities for teaching or instruction.  Regular faculty and curriculum  Organized body of pupils or students
  29. 29. Religious corporations Refers to a corporation composed entirely of spiritual persons and which is established for the furtherance of a religion or for perpetrating the rights of the church or for the administration of the church or religious work
  30. 30. Classes of religious corporation Corporation sole Religious societies
  31. 31. Foreign corporation One formed, organized or existing under any laws other than those of the Philippines and whose laws allow Filipino citizens and corporations to do business in its own country or state. It shall have the right to transact business in the Philippines
  32. 32. DISSOLUTION Section 6
  33. 33. Methods of dissolution Voluntary dissolution where no creditors are affected Voluntary dissolution where creditors are affected Dissolution by shortening corporate term Involuntary dissolution

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