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Corporation is an artificial being, created by operation of law, having the right of succession and

with powers, attributes and properties expressly authorized by law or incident to its existence.
Stock corporation- Corporation which have capital stocks divided into shares and are authorized
to distribute to the holders of shares dividend or allotment of surplus profit on the basis of the
shares held.Primarily to make profits for its stockholder
Non-stock corporation all other private corporation, one in which no part of its income is
distributable as dividend to its member, officer, or trustees. May be formed for charitable,
educational, religious, civic, social, cultural, professional, scintific and other similar purposes.
Advantages of Corporate organization
1. Separate Juridical personality
2. Limited liability to investors
3. Free transferability of units of ownership
4. Centralized management
Partnership
v

Corporation

Created by mere agreement of parties


Composed of two or more person

Created by operation of law


Composed of at least five and maximum
of 15 incorporators
Partners are liable for the debt of the Stockholders cannot be made personally
partnership
answerable
All owners actively participate in the Centralized management and the BOD
management
has exclusive power to bind the
corporation
Based on mutual trust and confidence
Has stability as it enjoys the right of
succession
Incorporators stockholders or members mentioned in the AOI as originally forming and
composing the corporation and who are signatories thereof.
Requisites of and incorporators
1. Natural person
2. At least five but not more than 15
3. Of legal age
4. Majority should be resident of the Philippines
5. Each must own or subscribe to at least one
G.R. Need not be a citizen
XPN: In certain areas such as
1) Public utilities
2) Retail Trade
3) Investment houses
4) Saving & loan associations
5) Schools
6) Banks
Steps in the formation of a corporation
A. Promotional Stage
B. Drafting of AOI (CCPTICO)
1. Corporate Name essential to its existence since it is through it that the corporation
can sue and be sued and perform all legal acts.
Disallowed:
1. Identical, deceptively or confusing similar with other existing corporation or any
other name already protected by law

2.
Reason:
1.
2.
3.

Patently deceptive, confusing or contrary to existing law


Avoidance of Fraud upon the public
Prevention of evasion of legal obligation
Reduction of difficulties of administration and supervision over corporation

2. Purpose Clause
A corporation has only such powers as are expressly granted by law or its AOI
Powers which are incidental to such conferred powers
Powers reasonably necessary to accomplish its purpose and those which are
incident to its existence.
3. Principal Office
Must be within the Philippines
4. Terms of existence
Cannot specify terms which is longer than 50 years at a time, may be renewed for
another 50 years but not earlier than 5 yrs prior to the original or subsequent expiry date.
5. Incorporators and Directors
-name, nationalities and residence of incorporators/directors
- treasurer chosen by the pre incorporation subscriber
6. Capital Stock
- amount of its authorize capital stock in lawful money of the Phil.
- No. of shares in which it is divided
- In case the shares are par value shares, the par value of each
- Name, nationalities and residence of the original subscriber
7. Other matters
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