RA 11232 - Formation of Private Stock Corporation or Incorporation Flashcards
FORMATION OF PRIVATE STOCK CORPORATION OR INCORPORATION
Refers to the performance of conditions, acts, deeds, and writings by incorporators, and the official acts, certification or records, which
give the corporation its existence. Filing of articles of incorporation and applications for amendments thereto with SEC in the form of
electronic document is now allowed subject to the rules and regulations to be issued by SEC.
Oks
o Conditions precedent for acquiring juridical personality
▪ Submission of Articles of Incorporation to SEC
▪ Capital stock requirement prior to incorporation
Following cards are related
o Conditions precedent for acquiring juridical personality
▪ Submission of Articles of Incorporation to SEC
Explain:
- Articles of Incorporation?
✓ Qualifications of Incorporators of Proposed Private Corporation
✓ Required vote for amendment of Articles of Incorporation
- Articles of Incorporation refers to the document that defines the charter of relationships between the State and the
corporation, the stockholder and the State, and between the corporation and its stockholders. It is submitted by the incorporators of a proposed corporation to SEC in order to obtain the Certificate of Registration. It is more important
than By-Laws.
o Conditions precedent for acquiring juridical personality
▪ Submission of Articles of Incorporation to SEC
✓ Articles of Incorporation
2. Qualifications of Incorporators of Proposed Private Corporation?
✓ Required vote for amendment of Articles of Incorporation
- Qualifications of Incorporators of Proposed Private Corporation
* Any person, partnership, association or corporation, singly or jointly but not more than fifteen (15) in number may become incorporators.
- Majority must be residents of the Philippines and all must be of legal age.
- In stock corporations, each must own or subscribe to at least one share, while in nonstock corporations, members are not owners of shares of stocks, and their membership depends on terms provided in the articles of incorporation.
- Compliance with the required minimum ownership of Filipino or maximum ownership of foreigners in industries reserved to Filipinos.
o Conditions precedent for acquiring juridical personality
▪ Submission of Articles of Incorporation to SEC
✓ Articles of Incorporation
✓ Qualifications of Incorporators of Proposed Private Corporation
3. Required vote for amendment of Articles of Incorporation?
✓ Required vote for amendment of Articles of Incorporation:
- For simple amendment, the articles of incorporation may be amended by at least majority vote of the board of directors or trustees and the vote or written assent of the stockholders representing at least two-thirds
(2/3) of the outstanding capital stock, without prejudice to the appraisal right of dissenting stockholders in accordance with the provisions of this Code, or the vote or written assent of at least two-thirds (2/3) of the members if it be a non-stock corporation. - For very important amendment, articles of incorporation may be amended by a majority vote of the board of directors or trustees and the ratification vote of the stockholders representing at least two-thirds (2/3) of the
outstanding capital stock, without prejudice to the appraisal right of dissenting stockholders in accordance with the provisions of this Code, or the ratification vote of at least two-thirds (2/3) of the members if it be a non-stock corporation. - Effectivity of Approval of Amendment of Articles of Incorporation
▪ Upon approval by Securities and Exchange Commission; or▪ Upon lapse of six (6) months from the date of submission to SEC if there is inaction by SEC for causes not attributable to the corporation.
o Conditions precedent for acquiring juridical personality
▪ Submission of Articles of Incorporation to SEC
✓ Articles of Incorporation
✓ Qualifications of Incorporators of Proposed Private Corporation
* Compliance with the required minimum ownership of Filipino or maximum ownership of foreigners in industries reserved to Filipinos. - Provide Nationality requirement in certain industry reserved for Filipinos:
- Mass Media – 100% reserved to Filipinos.
- Advertising – 70% reserved to Filipinos.
- Public Utility – 60% reserved to Filipinos.
- Educational Institution – 60% reserved to Filipinos.
- Exploration, evaluation and development of natural resources – 60% to Filipinos.
- Ownership of land – 60% of the stockholders of the Corporation must be Filipinos.
o Conditions precedent for acquiring juridical personality
▪ Capital stock requirement prior to incorporation
- Minimum authorized capital stock?
- Minimum subscribed capital?
- Minimum paid-up capital?
- Minimum authorized capital stock –
- Minimum subscribed capital – None
- Minimum paid-up capital – None
o Juridical personality of a private corporation
- Moment of start of juridical personality of a private corporation?
✓ Certificate of registration
✓ Effect of failure to formally organize within 5 years from the date of incorporation
✓ Effect of continuous inoperation for a period of at least 5 years after its formal organization
Moment of start of juridical personality of a private corporation
▪ The juridical personality of a private corporation begins from the moment the SEC issues the certificate of registration.
o Juridical personality of a private corporation
✓ Moment of start of juridical personality of a private corporation?
- Certificate of registration?
✓ Effect of failure to formally organize within 5 years from the date of incorporation
✓ Effect of continuous inoperation for a period of at least 5 years after its formal organization
Certificate of registration refers to the document issued by the SEC to a newly formed corporation which evidenced the
existence of the juridical personality of the corporation. It is also known as the primary franchise of a corporation.
o Juridical personality of a private corporation
✓ Moment of start of juridical personality of a private corporation?
✓ Certificate of registration?
3 Effect of failure to formally organize within 5 years from the date of incorporation?
✓ Effect of continuous inoperation for a period of at least 5 years after its formal organization
Effect of failure to formally organize within 5 years from the date of incorporation
▪ The corporation is ipso facto or automatically dissolved by operation of law without need of a court order or SEC decision.
o Juridical personality of a private corporation
✓ Moment of start of juridical personality of a private corporation?
✓ Certificate of registration?
✓ Effect of failure to formally organize within 5 years from the date of incorporation?
4 Effect of continuous inoperation for a period of at least 5 years after its formal organization
Effect of continuous inoperation for a period of at least 5 years after its formal organization:
▪ The SEC may, after due notice and hearing, place a corporation which subsequently becomes inoperative for a period
of at least five (5) years under delinquent status.
▪ A delinquent corporation shall have a period of two (2) years to resume operations and comply with all requirements that SEC shall prescribe. Upon compliance by the corporation, the SEC shall issue an order lifting the delinquent status.
▪ Failure to comply with the requirements and resume operations within the period given by the SEC shall cause the revocation of the corporation’s certification of incorporation.
▪ The SEC shall give reasonable notice to, and coordinate with the appropriate regulatory agency prior to the suspension, revocation of the certificate of incorporation of companies under their special regulatory jurisdiction.
