NORTHERN CPA REVIEW
4th Floor Pelizloy Centrum, Lower Session Road, Baguio City
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ATTY. ANDRIX DOMINGO, CPA
THE LAW ON CORPORATION
an artificial being created by operation of law, having the right of succession and the powers, attributes and properties expressly authorized by law or incident to its existence.
Attributes of a Corporation:
1. It is an artificial being
•Doctrine of piercing the veil of corporate entity or corporate fiction This is the doctrine to the effect that the separate personality of a corporation may be disregarded if such entity is used to defeat public convenience, justify wrong, protect fraud, or defend crime 2. It is created by operation of law.
3. It has the right of succession.
4. It has the powers, attributes and properties expressly authorized by law or incident to its existence. •Doctrine of limited capacity
A corporation can exercise only the powers expressly conferred upon it by law and its articles of incorporation, those implied from such powers expressly granted, and those that are incident to its existence.
Classification of corporations
As to whether shares of stock are issued or not
As to the state or country under whose laws it was created a.
As to number of persons composing them
As to whether its purpose is public or private
As to whether its purpose is religious or not
a. Ecclesiastical or religious corporation
b. Lay Corporation
As to whether its purpose is charitable or not
b. Civil corporation
As to their legal right to corporate existence
De jure corporation
b. De facto corporation
As to their relation to another corporation or other corporations
Parent or holding corporation
One which owns the shares of another corporation and having power, directly or indirectly, over the latter including the election of the directors thereof. b. Subsidiary corporation
One whose shares of stock are owned by another corporation, called the parent corporation, which has the power to elect its directors. 9.
As to whether its shares may be held by the public or not a.
b. Open corporation
10. Other classifications
•Corporation by prescription
•Corporation by estoppels
Components of a corporation
1. Corporators – stockholders or members.
2. Incorporators – those stockholders or members mentioned in the articles of incorporation as originally forming and composing the corporation and who are signatories of such document. 3. Stockholders
Share of stock
A share of stock is one of the units into which the capital stock of the corporation is divided.
A stock certificate is the written acknowledgment by the corporation of the stockholder’s interest in the corporation and its property.
Rules on redeemable shares
a. They may be issued by the corporation only if expressly provided in the articles of incorporation. b. They may be deprived of voting rights.
c. They may be purchased or taken up by the corporation upon the expiration of a fixed period, regardless of the existence of unrestricted retained earnings in the books of the corporation. d. The terms and conditions for their redemption must be stated in the articles of incorporation and the stock certificate representing the said shares.
Rules on founders’ shares
a. Founders’ shares must be classified as such in the articles of incorporation. b. They may be given rights and privileges not enjoyed by other shares subject to the following limitations: 1) If...
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