RA 11232 - Presence of Par Value

Question 1

o Par value shares are those shares with face value stated in the certificate of stock.

Explain:

✓ Minimum par value
✓ Minimum issue price of par value
✓ Legal capital in case of par value shares

Answer 1

✓ Minimum par value – there is no minimum par value.
✓ Minimum issue price of par value – the minimum issue price of par value shares is the par value because shares as a general rule
shall not be issued below par except treasury shares which may be issued below par as long as the price is reasonable.
✓ Legal capital in case of par value shares – the total par value of shares issued and subscribed.

Question 2

o No par value shares are those shares without par value but must be issued with stated value. Only common stocks may be classified as no par value shares.

Explain:
✓ Minimum stated value
✓ Minimum issue price of no-par value shares
✓ Legal capital in case of no-par value shares

Answer 2

✓ Minimum stated value – none as long as the minimum issue price is P5.
✓ Minimum issue price of no-par value shares – P5.
✓ Legal capital in case of no-par value shares – the total consideration received.

Question 3

o Corporations that cannot issue no-par value shares (BLTBPIPO)

Answer 3

✓ Building and Loans Association
✓ Trust Company
✓ Bank
✓ Public utility
✓ Insurance company
✓ Preneed company
✓ Other corporations authorized to obtain or access money from the public (whether publicly listed or not)

Question 4

o Other types of shares:
.

Answer 4

✓ Founders’ shares are those shares issued to founders of the corporation and may be given special privilege such as exclusively
right to be elected in the Board of Directors. However, such special privilege given to founders’ shares shall not exceed 5 years.

✓ Promoters’ shares are those shares issued to the promoters of the corporation.

✓ Escrow shares are those shares the issuance of which is subject to a suspensive condition.

✓ Watered shares are those shares issued for a price even below par resulting to overstatement of capital, overstatement of assets or understatement of liability. It violates trust fund doctrine