RESEARCH QUESTIONS:

1. What is the required number and qualifications of incorporators?

Section 10. Number and Qualifications of Incorporators. Any person,
partnership, association or corporation, singly or jointly with others but not
more than fifteen (15) in number, may organize a corporation for any
lawful purpose or purposes: Provided, that natural persons who are
licensed to practice a 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. What is the subscription requirement for an incorporator in a stock

corporation?
Section 10. Paragraph 2. Each incorporator of a stock corporation must
own or be a subscriber to at least one (1) share of the capital stock.
Section 12. Minimum Capital Stock Not Required of Stock Corporations.
Stock corporations shall not be required to have minimum capital stock,
except as otherwise specially provided by special law.

3. What is a One Person Corporation?

Section 10. A corporation with a single stockholder is considered a One
Person Corporation as described in Title XIII, Chapter III of this Code.
Section 116. 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.
A One Person Corporation (OPC) is a business entity with just one
stockholder. This single stockholder is also the sole incorporator, director,
and president of the company. This single stockholder’s liability is limited
to the extent of their assets, combining the best of both worlds between a
sole proprietorship and a limited liability company. An OPC’s company
name will have the suffix “OPC” either below or at the end of its corporate
name. Some one person company examples are a sari-sari store or a rice
retailing business. Favorably, OPC does not need a minimum capital stock
except where specified by law. This extends to foreigners looking to set up
an OPC in the Philippines – as long as laws and regulations are met, there
should not be any minimum capital stock requirements.

4. Briefly describe Common, Preferred, Founder’s, Redeemable, and Treasury

Shares.
Sections. 6, 7, 8 & 9.
Common Shares/Stocks – represents the residual ownership
interest in the corporation. It is a basic class of stock ordinarily and
usually issued without extraordinary rights or privileges and
entitles the shareholder to a pro rata division of profits. It usually
 carries with it the right to vote, and frequently, the exclusive the
right to do so.

Preferred Shares – these entitle the shareholder to some priority on

distribution of dividends and assets over those holders of common
shares.

Founder’s Shares – shares classified as such in the Articles of

Incorporation, which are given certain rights and privileges not
enjoyed by the owners of other stocks. These may be given special
preference in voting rights and dividend payments.

Redeemable Shares – they are shares which may be purchased by

the corporation from the holders of such shares upon the expiration
of a fixed period, regardless of the existence of unrestricted
retained earnings in the books of the corporation, and upon such
other terms and conditions stated in the articles of incorporation
and the certificate of stock representing the shares, subject to rules
and regulations issued by the Commission.

Treasury Shares – shares 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 BOD.

5. What are the contents of the Articles of Incorporation?

Section 13. Contents of the Articles of Incorporation. All corporations shall
file with the Commission articles of incorporation in any of the official
languages, duly signed and acknowledged or authenticated, in such form
and manner as may be allowed by the Commission, containing substantially
the following matters, except as otherwise prescribed by this Code or by
special law:
a) The name of corporation;
b) The specific purpose or purposes for which the corporation is being
formed. Where a corporation has more than one stated purpose, the
articles of incorporation hsall indicate the primary purpose and the
secondary purpose or purposes: Provided, That a nonstock corporation
may not include a purpose which would change or contradict its nature
as such;
c) The place where the principal office of the corporation is to be located,
which must be within the Philippines;
d) the term for which the corporation is to exist, if the corporation has not
elected perpetual existence;
e) The names, nationalities, and residence addresses of the incorporators;
f) The number of directors, which shall not be more than fifteen (15) or the
number of trustees which may be more than fifteen (15);
 g) The names, nationalities, and residence addresses of persons who shall
act as directors or trustees until the first regular directors or trustees are
duly elected and qualified in accordance with this Code;
h) 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 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;
i) 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
j) Such other matters consistent with law and which the incorporators may
deem necessary and convenient.

6. When does the existence of a private corporation commence?

Section 18. Paragraph 3. A private corporation organized under this Code
commences its corporate existence and juridical personality from the date
the Commission issues the certificate of incorporation under its official seal
thereupon the incorporators, stockholders/members and their successors
shall constitute a body corporate under the name stated in the articles of
incorporation for the period of time mentioned therein, unless said period
is extended or the corporation is sooner dissolved in accordance with law.

7. What are the three basic entitlements of a stockholder in voting of directors as

regards his shares in a stock corporation?
Section 23. Paragraph 5. The said stockholder may:
(a) vote such number of shares for as many persons as there are directors
to be elected;
(b) cumulate said shares and give one (1) candidate as many votes as the
number of directors to be elected multiplied by the number of shares
owned; or
(c) distribute them on the same principle among as many candidates as
may be seen fit.

8. What is the required vote for the adoption of by-laws in a stock corporation?
Section 45. Adoption of Bylaws. For the adoption of bylaws by the
corporation, the affirmative vote of the stockholders representing at least a
majority of the outstanding capital stock, or of at least a majority of the
members in case on nonstock corporations, shall be necessary.

9. What does it mean by pre-emptive right?

Section 38. Power to Deny Pre-emptive Right. All stockholders of a stock
corporation shall enjoy pre-emptive right to subscribe to all issues or
disposition of shares of any class, in proportion to their respective
shareholdings, unless such right is denied by the articles of incorporation
or an amendment thereto.
10. Describe the Doctrines of Individuality of Subscription, Equality of Shares, and
Trust Fund Doctrine.
Individuality/Indivisibility of Subscription – the subscription is one, entire,
indivisible and whole contract which cannot be divided into portions.
Equality of Shares – each share shall be equal in all respects to every other
share, except as otherwise provided in the articles of incorporation and in
the certificate of stock.
Trust Fund Doctrine – capital stock, property and other assets of a
corporation are regarded as equity in trust for the payment of corporate
creditor. Creditors are preferred over stockholders in the distribution of
corporate assets.