Lesson 6 Flashcards
is a type of business
organization that is legally separate from its
owners.
corporation
It is created through a legal process
that it can own property, enter into contracts, sue,
and be sued
corporation
a corporation is independent
from its owners
Legal Entity
Owners are only responsible for the business’ debts up to
the amount of shareholdings.
Limited Liability
continues to exist even there are change of
owners.
Unlimited life/Perpetual Existence
a legal person in
itself which can buy, own, sell property, sue
and be sued
Separate legal entity
Ownership
can be easily transferred by buying or selling
shares of stocks.
Transferability of Shares:
Managed by a
Board of Directors and executives
Governance Structure
Owned by shareholders
who invest money in exchange for shares.
Stock Corporation
Formed for social,
Educational, or charitable purpose (non-profit
Organizations) example: Red Cross
Non-Stock Corporation
stated that a Corporation
is an artificial being created by the operation of
the law.
< Its life is limited stated in the articles of the
Corporation but not exceed 50 years subject for
Extension not longer than 50 years.
BP # 68, Section 2
Issued by the
SEC; its date of issuance is the beginning of
the corporation’s juridical personality
Certificate of Incorporation
Refers to the corporators mentioned in the articles of incorporation who originally formed and composed the corporation.
Incorporated
Five to
fifteen individuals legal age and majority are
residents of the Philippines may form a private
corporation for any lawful purpose or purposes.
Section 10 of the Corporation Code
is the governing
bodies of the stock corporation.
The Board of Directors
is the governing bodies
of the non-stock corporation.
The Board of Trustees
An entity where capital
is in the form of capital stock divided into
shares;
: Dividend refers as corporate earnings
] distributed to shareholders.
Stock Corporation
Solely for charitable,
religious, educational, cultural or similar
purpose (no sharing of income among members)
Non-Stock Corporation
Formed for the
government .
Public Corporation
Formed for private
purpose/benefit.
Private Corporation
Owns controlling
interest in another corporation by more than 50%.
Parent Corporation
Investee corporation
in which the parent corp. has controlling interest.
Subsidiary Corporation
Limited to selected or
family members.
Closed Corporation
Open to any persons
intending to become a stockholder or member
of the corporation.
Open Corporation
Refers to the right of
stockholders to all issues of shares, in
proportion to his shareholdings -0
Pre-emptive Right:
Refers to
the net worth of shareholder’s stake in a
company.
Book Value of Shareholdings
.) It has Voting Right
b.) It grants Proxy Voting
c.) Right to share proportionally in dividends, and in all assets after liabilities in a liquidation
d.) It has preemptive rights.
Common Stocks / Capital Stocks :
class of stock with
preferences over common shares, including
distribution of dividends and corporate assets
incase of dissolution.
Preferred Stock
: It has a stated liquidating value per share.
: The cash dividend is described in terms
of peso amount per share.
Stated Value
Allow owners to receive dividend payout from the company even if the company is not profitable.
Dividends (preferred stock)
With fixed-rate dividend, unpaid dividend during the years will be carried over to the next year
Cumulative
Lose the right for undeclared dividends in a given year.
Non-Cumulative
Shares for Filipino Stockholders
Class A Stock
Shares for foreign investors.
Class B Stock
Refers to share of Capital
Stock has fixed value (original issue price)
Par Value Share
Value received by stockholders from
investment
. All Assets and earnings are owned by the company which can be transferred to stockholders upon declaration for dividends distribution by the BOD.
Dividends
Upon cash payment to
Stockholders – Corporate Accounts’ RETAINED
EARNINGS decrease
Cash Dividends
Form of non-cash
Asset of the corporation (invested stock in other
Company)
Property Dividends
Form of Stock of the `issuing company’s outstanding capital
stocks.
Stock Dividend
Forms of promissory
notes indicating the kind of benefits the
stockholders shall be received in the
future.
Scrip Dividend
Declared Bond instead
of Cash
Bond Dividend
Or Return of Capital to Investors; Declared upon dissolution of the
company.
Liquidating Dividend
