A share of stock represents one of the units into which a corporation's capital stock is divided. It entitles the owner to three fundamental rights: the right to vote in corporate management, the right to a portion of corporate income through dividends, and the right to a portion of the corporation's remaining property upon dissolution.

1. Stock or Share of Stock:
Concept & Reality
• Stock/Share of Stock = represents one of the units
into which capital stock of a corporation is divided
or broken down
•3 Fundamental Rights to which share of stock
entitles its owner/holder:
– Right in management of corporation by means of right to
vote
– Right to portion of corporate income by way of profits
segregated or distributed as dividends
– Right, upon dissolution & winding of corporation, in the
property/assets of corporation remaining after payment of
debts/liabilities.

2. Stock or Share of Stock:
Concept & Reality
• Every share = represents a distinct undivided share or
interest in, a proportionate or aliquot part of the common
property of corporation
– Ownership of a share gives to the stockholder no immediate legal
right or title to any corporate property.
• Shares of stock = property distinct from capital or tangible
property of corporation and properly belongs to different
owners.
• Certificate of Stock = written acknowledgment by
corporation of interest, right and participation of a person in
management, profits & assets of corporation.

3. Share of Stock: Terminology
• Capital Stock = amount fixed in articles of incorporation to
be subscribed and paid in or agreed to be paid in by
stockholders in money, property, services or other means at
the organization or afterwards, and upon which it is to
conduct its business.
– Authorized Capital Stock  amount of capital stock as specified in
the articles of incorporation
– Subscribed Capital Stock amount of capital stock issued or
acquired via subscription to unissued shares in a corporation,
whether or not paid, fully or partially paid
– Outstanding Capital Stock portion of capital stock which is
issued and held by persons other than the corporation itself; total
shares of stock issued to subscribers or stockholders, whether or
not fully or partially paid (provided there is a binding subscription
agreement),except treasury shares (Sec. 137)

4. Share of Stock: Terminology
• Paid-up Capital Stock  portion of subscribed or
outstanding capital stock that is actually paid,
sometimes called actual capital stock
• Unissued Capital Stock  portion of capital stock
that is not issued or subscribed; has got no voting
rights and draws no dividends
• Legal Capital  amount equal to aggregate par
value/issued value of outstanding capital stock
• Distinction between ‘capital’ and capital stock:
capital is actual corporate property and
fluctuates,whereas capital stock refers to an amount
that is fixed in articles of incorporation

5. Other Kinds of Shares of Stock
• Founders’ Share = shares whose classification
dictated by the articles of incorporation, with certain
rights/privileges not enjoyed by other stocks (Sec. 7)
and usually issued to organizers or promoters or
incorporators of the corporation
– This type of share may be given exclusive right to vote
and be voted for in election of members of the Board of
Directors but –
• Exclusive right good only for five years, and
• With Approval by Securities & Exchange Commission
• Five-year exclusivity to begin from SEC’s approval (Sec. 7)

6. Other Kinds of Shares of Stock
• Redeemable Share = also referred to as callable
share, usually of the preferred kind, which by its
terms is redeemable at a fixed date or at option of
either issuing corporation or stockholder or both at a
definite redemption price
– This type of share may be purchased/taken back by
corporation upon expiration of fixed period regardless of
existence of unrestrictive retrained earnings in the books
of corporation and upon such other terms & conditions as
stated in articles of incorporation & in the certificate of
stock (Sec. 8)

7. Other Kinds of Shares of Stock
• Founders’ Share = shares whose classification
dictated by the articles of incorporation, with certain
rights/privileges not enjoyed by other stocks (Sec. 7)
and usually issued to organizers or promoters or
incorporators of the corporation
– This type of share may be given exclusive right to vote
and be voted for in election of members of the Board of
Directors but –
• Exclusive right good only for five years, and
• With Approval by Securities & Exchange Commission
• Five-year exclusivity to begin from SEC’s approval (Sec. 7)

8. Stock or Share of Stock:
Concept & Reality
• Stock/Share of Stock = represents one of the units into
which capital stock of a corporation is divided or broken
down
• 3 Fundamental Rights to which share of stock entitle its
owner:
– Right in management of corporation by means of right to vote
– Right to portion of corporate income by way of profits segregated
or distributed as dividends
– Right, upon dissolution & winding of corporation, in the
property/assets of corporation remaining after payment of
debts/liabilities.

9. Stock or Share of Stock:
Concept & Reality
• Stock/Share of Stock = represents one of the units into
which capital stock of a corporation is divided or broken
down
• 3 Fundamental Rights to which share of stock entitle its
owner:
– Right in management of corporation by means of right to vote
– Right to portion of corporate income by way of profits segregated
or distributed as dividends
– Right, upon dissolution & winding of corporation, in the
property/assets of corporation remaining after payment of
debts/liabilities.

10. Stock or Share of Stock:
Concept & Reality
• Stock/Share of Stock = represents one of the units into
which capital stock of a corporation is divided or broken
down
• 3 Fundamental Rights to which share of stock entitle its
owner:
– Right in management of corporation by means of right to vote
– Right to portion of corporate income by way of profits segregated
or distributed as dividends
– Right, upon dissolution & winding of corporation, in the
property/assets of corporation remaining after payment of
debts/liabilities.

11. Stock or Share of Stock:
Concept & Reality
• Stock/Share of Stock = represents one of the units into
which capital stock of a corporation is divided or broken
down
• 3 Fundamental Rights to which share of stock entitle its
owner:
– Right in management of corporation by means of right to vote
– Right to portion of corporate income by way of profits segregated
or distributed as dividends
– Right, upon dissolution & winding of corporation, in the
property/assets of corporation remaining after payment of
debts/liabilities.

12. Stock or Share of Stock:
Concept & Reality
• Stock/Share of Stock = represents one of the units into
which capital stock of a corporation is divided or broken
down
• 3 Fundamental Rights to which share of stock entitle its
owner:
– Right in management of corporation by means of right to vote
– Right to portion of corporate income by way of profits segregated
or distributed as dividends
– Right, upon dissolution & winding of corporation, in the
property/assets of corporation remaining after payment of
debts/liabilities.

13. Stock or Share of Stock:
Concept & Reality
• Stock/Share of Stock = represents one of the units into
which capital stock of a corporation is divided or broken
down
• 3 Fundamental Rights to which share of stock entitle its
owner:
– Right in management of corporation by means of right to vote
– Right to portion of corporate income by way of profits segregated
or distributed as dividends
– Right, upon dissolution & winding of corporation, in the
property/assets of corporation remaining after payment of
debts/liabilities.

14. Stock or Share of Stock:
Concept & Reality
• Stock/Share of Stock = represents one of the units into
which capital stock of a corporation is divided or broken
down
• 3 Fundamental Rights to which share of stock entitle its
owner:
– Right in management of corporation by means of right to vote
– Right to portion of corporate income by way of profits segregated
or distributed as dividends
– Right, upon dissolution & winding of corporation, in the
property/assets of corporation remaining after payment of
debts/liabilities.

15. Stock or Share of Stock:
Concept & Reality
• Stock/Share of Stock = represents one of the units into
which capital stock of a corporation is divided or broken
down
• 3 Fundamental Rights to which share of stock entitle its
owner:
– Right in management of corporation by means of right to vote
– Right to portion of corporate income by way of profits segregated
or distributed as dividends
– Right, upon dissolution & winding of corporation, in the
property/assets of corporation remaining after payment of
debts/liabilities.

16. Stock or Share of Stock:
Concept & Reality
• Stock/Share of Stock = represents one of the units into
which capital stock of a corporation is divided or broken
down
• 3 Fundamental Rights to which share of stock entitle its
owner:
– Right in management of corporation by means of right to vote
– Right to portion of corporate income by way of profits segregated
or distributed as dividends
– Right, upon dissolution & winding of corporation, in the
property/assets of corporation remaining after payment of
debts/liabilities.

17. Stock or Share of Stock:
Concept & Reality
• Stock/Share of Stock = represents one of the units into
which capital stock of a corporation is divided or broken
down
• 3 Fundamental Rights to which share of stock entitle its
owner:
– Right in management of corporation by means of right to vote
– Right to portion of corporate income by way of profits segregated
or distributed as dividends
– Right, upon dissolution & winding of corporation, in the
property/assets of corporation remaining after payment of
debts/liabilities.

18. Stock or Share of Stock:
Concept & Reality
• Stock/Share of Stock = represents one of the units into
which capital stock of a corporation is divided or broken
down
• 3 Fundamental Rights to which share of stock entitle its
owner:
– Right in management of corporation by means of right to vote
– Right to portion of corporate income by way of profits segregated
or distributed as dividends
– Right, upon dissolution & winding of corporation, in the
property/assets of corporation remaining after payment of
debts/liabilities.