What is a capital stock? Should it be fully owned by Filipinos? (Section 12, RCC)
Summary
TLDRAttorney Marie Chris Mathan's video explains the concept of capital stock and its distinction from share of stock within a corporation. She clarifies that capital stock is the maximum capital that can be raised and distributed to shareholders, while share of stock represents units of this capital. The video also outlines the minimum capital stock requirements for certain types of corporations as per the Revised Corporation Code and the Constitution, emphasizing the Filipino ownership percentage requirements for businesses in sectors like natural resources, public service, mass media, banking, and retail trade, among others.
Takeaways
- 📜 Capital Stock is the amount indicated in the articles of incorporation, representing the capital that can be paid for or subscribed for by the corporation's stockholders.
- 🔄 The term 'capital stock' is synonymous with 'authorized capital stock', which is the maximum amount of capital that the incorporators decide to raise.
- 🔢 The Revised Corporation Code of the Philippines does not require a minimum capital stock for corporations, as it does not provide protection to creditors or third parties.
- 🏦 Certain types of corporations, like commercial banks, investment houses, and insurance companies, are required by special laws to have a higher paid-up capital due to their vested public interest.
- 📊 Share of stock refers to the units into which the capital stock is divided, allowing for distribution to shareholders.
- 🇵🇭 The Philippine Constitution and other laws specify minimum Filipino ownership requirements for various types of corporations.
- 🌋 Corporations involved in the exploration, development, and utilization of natural resources must be at least 60% Filipino-owned.
- 🏢 Public service and educational corporations are also required to have at least 60% Filipino ownership of their capital stock.
- 📰 Mass media corporations must be 100% Filipino-owned, as mandated by the Constitution.
- 🏦 Banking corporations require at least 60% Filipino ownership of voting stock, with foreign banks following guidelines set by the Bangko Sentral ng Pilipinas.
- 🛒 Retail trade corporations with capital less than $2.5 million must be wholly Filipino-owned, while rural banks allow up to 60% foreign investment, implying at least 40% Filipino ownership.
- 🚢 Corporations engaged in coastwise shipping must have at least 60% of their capital stock owned by Filipino citizens.
- 🔒 Pawnshop businesses require at least 70% of their voting capital stock to be owned by Filipino citizens.
- 🕵️♂️ Corporations involved in recruitment, private detective, watchman, or security guard agencies must be wholly Filipino-owned.
Q & A
What is the main focus of Attorney Marie Chris Mathan's YouTube channel?
-The main focus of Attorney Marie Chris Mathan's YouTube channel is to simplify the law by discussing concepts and principles of law in under 10 minutes.
What is the definition of 'capital stock' as mentioned in the video?
-Capital stock is the amount indicated in the articles of incorporation, representing the capital that can be paid for or subscribed for by the stockholders of the corporation. It is synonymous with 'authorized capital stock'.
What does 'share of stock' refer to in the context of the video?
-A 'share of stock' refers to the units into which the capital stock is divided. It is how the capital stock is distributed to shareholders.
Is there a minimum capital stock required by law for incorporators to indicate in their articles of incorporation according to the revised corporation code?
-No, the revised corporation code does not require a minimum capital stock to be raised by a corporation, except as specifically provided by special law.
Why might special laws require a higher paid-up capital for certain corporations?
-Special laws may require a higher paid-up capital for certain corporations, such as commercial banks, investment houses, and insurance companies, because they are vested with public interest and it is needed for the protection of depositors, creditors, and the public.
What is the Filipino percentage of ownership requirement for corporations engaged in the exploration, development, and utilization of natural resources?
-The constitution requires that corporations engaged in the exploration, development, and utilization of natural resources must be owned by at least 60 percent Filipino citizens.
What is the required Filipino percentage of ownership for public service and educational corporations?
-For public service and educational corporations, at least 60 percent of the capital stock must be owned by Filipino citizens.
What is the ownership requirement for mass media corporations according to the constitution?
-The constitution requires that mass media corporations must be 100 percent owned by Filipino citizens.
What is the minimum Filipino ownership requirement for advertising corporations?
-For advertising corporations, at least 70 percent of the capital stock must be owned by Filipino citizens.
What is the Filipino ownership requirement for banking corporations?
-Banking corporations must have at least 60 percent of the voting stock owned by Filipino citizens.
What are the minimum Filipino ownership requirements for corporations engaged in retail trade, rural banks, and coastwise shipping?
-Corporations engaged in retail trade with a capital of less than 2.5 million USD must be wholly owned by Filipino citizens. Rural banks should have at least 40 percent Filipino ownership since foreign investors can invest up to 60 percent. For coastwise shipping, at least 60 percent of the capital stock must be owned by Filipino citizens.
Outlines
📚 Introduction to Capital Stock and Shares
Attorney Marie Chris Mathan introduces her virtual classroom YouTube channel, which aims to simplify the law in under 10 minutes. In this video, she discusses the concept of capital stock, its difference from a share of stock, and the specific Filipino percentage ownership requirements for various types of corporations. Capital stock is the amount indicated in the articles of incorporation, representing the maximum capital that can be raised by the corporation. It is synonymous with authorized capital stock. A share of stock, on the other hand, refers to the units into which the capital stock is divided for distribution to shareholders. The video clarifies that there is no minimum capital stock required by the Revised Corporation Code, except for specific corporations like commercial banks, investment houses, and insurance companies, which have higher paid-up capital due to their vested public interest.
🏢 Filipino Ownership Requirements for Corporations
The second paragraph delves into the specific Filipino ownership requirements for different types of corporations as stipulated by the Philippine Constitution and other laws. It outlines that corporations involved in the exploration, development, and utilization of natural resources, public service, and education must have at least 60% Filipino ownership. Mass media corporations require 100% Filipino ownership. Advertising agencies need at least 70% Filipino capital stock. Banking corporations mandate at least 60% Filipino voting stock ownership, with foreign banks following guidelines set by the Bangko Sentral ng Pilipinas. Retail trade corporations with capital less than $2.5 million must be wholly Filipino-owned. Rural banks now allow up to 60% foreign investment, implying at least 40% Filipino ownership. Coastwise shipping corporations require 60% Filipino capital stock ownership, pawnshops need at least 70% Filipino voting capital stock, recruitment and placement corporations must have 75% Filipino voting capital stock, and private detective, watchman, or security guard agencies must be wholly Filipino-owned. The video concludes by emphasizing the importance of adhering to these ownership requirements when forming a corporation.
Mindmap
Keywords
💡Capital Stock
💡Authorized Capital Stock
💡Share of Stock
💡Articles of Incorporation
💡Minimum Capital Stock
💡Paid-up Capital
💡Filipino Percentage of Ownership
💡Public Interest
💡Voting Stock
💡Rural Banks
💡Coastwise Shipping
Highlights
Introduction to the virtual classroom by Attorney Marie Chris Mathan on YouTube, aiming to simplify the law.
Discussion on capital stock and its distinction from share of stock.
Capital stock defined as the amount indicated in the articles of incorporation, representing capital paid for or subscribed by stockholders.
Capital stock is synonymous with authorized capital stock, the maximum amount of capital that can be raised by the corporation.
Share of stock refers to the units of capital stock, which is how capital is distributed to shareholders.
There is no minimum capital stock required by law, except for specific corporations as provided by special laws.
Special laws require higher paid-up capital for commercial banks, investment houses, and insurance companies due to public interest.
Constitution and other laws set specific Filipino percentage ownership requirements for certain types of corporations.
Corporations exploring natural resources must be at least 60% Filipino-owned as per the constitution.
Public service and educational corporations require at least 60% Filipino ownership of capital stock.
Mass media corporations must be 100% Filipino-owned according to the constitution.
Advertising corporations require at least 70% Filipino ownership of capital stock.
Banking corporations need at least 60% Filipino ownership of voting stock.
Corporations engaged in retail trade with less than $2.5 million capital must be wholly Filipino-owned.
Rural banks allow up to 60% foreign investment, meaning Filipinos should own at least 40%.
Coast-wise shipping corporations require at least 60% Filipino ownership of capital stock.
Pawnshop businesses mandate at least 70% Filipino ownership of voting capital stock.
Recruitment and placement corporations need at least 75% Filipino ownership of voting capital stock.
Private detective, watchman, or security guard agencies must be wholly Filipino-owned.
Importance of remembering the minimum Filipino percentage ownership for compliance when forming a corporation.
Closing remarks encouraging viewers to like, subscribe, and turn on notifications for new uploads.
Transcripts
foreign
[Music]
hi i am attorney marie chris mathan
this is my virtual classroom welcome to
my youtube channel
in this channel i shall aim to simplify
the law i will discuss concepts and
principles of law in under 10 minutes
for this video i want to talk about
capital thought
and how it differs from the term share
of stock also in this video i will be
talking about the filipino percentage
ownership requirement for different
types of corporations so let's begin
so what is a capital stock a capital
stock is actually
the amount that the incorporators will
have to indicate in the articles of
incorporation
and this is the amount representing
capital that can be
that will be rather paid for or
subscribed for
by the stockholders of the corporation
your term capital stock is actually
synonymous also to the term authorized
capital stock
so this is the amount that the
incorporators have actually decided to
be the maximum amount that uh the
maximum amount of capital that that they
can raise
by having it available to be distributed
again to be paid for or subscribed by
the stockholders
on the other hand
the share of stock
actually refers to the units in a
capital stock because your capital stock
is the collective sense and this capital
stock will now then be divided into
units
and that is your share of stock because
how then can you distribute the capital
stock to shareholders it has to be
through units and that is what we call
your share of stock
so having said that
is there a minimum capital stock that is
required by law for incorporators to
indicate in their articles of
incorporation
the answer to that question is found in
your revised corporation code section
12.
let's read section 12. it says
stock corporations shall not be required
to have a minimum capital stock except
as otherwise specifically provided by
special law so your revised corporation
code does not give a minimum capital
stock that must be raised by a
corporation
because it actually does not afford any
protection to the creditors or third
persons dealing with the corporation
however
there are certain corporations
provided by special laws that must have
a higher
paid up capital like your commercial
banks because of course um these these
businesses or these corporations are
vested with public interest and so it is
needed that there is a higher paid up
capital for the protection of the
depositors and of the creditors of such
corporations
other corporations that special that
special laws may require a higher paid
up capital would be your investment
houses and your insurance companies
because again they are vested with
public interest
now let's talk about
filipino percentage of ownership
requirement
is there a particular percentage
ownership by filipinos
that would be required in certain
corporations
the answer is yes and you can find that
in your constitution and in several
other laws now i'm going to show here a
list
of
of corporations and the required
filipino
percentage ownership so first
corporations for the exploration
development and utilization of natural
resources your constitution requires
that it must be owned by at least 60
percent filipino citizens
public service corporations
there must also be at least 60 percent
of the capital stock owned by filipino
citizens that is also the same for
educational corporations which would
also require at least 60 percent of the
capital stock to be owned by filipino
citizens about corporations engaged in
mass media the constitution requires
that it must be 100
owned by filipino citizens how about
advertising your constitution requires
that the capital stock must be owned by
a rather at least 70 percent rather of
the capital stock must be owned by
filipino citizens
about banking corporations
at least 60 percent of the voting stock
must be owned by filipino citizens
of course foreign banking corporations
can now enter the philippines but they
have to follow the guidelines set forth
by your banco central philippines
corporations engaged in retail trade
with a capital of less than 2.5 million
us dollars must be wholly owned by
filipino citizens
for rural banks since foreign investors
are now allowed to invest up to 60
percent of the capital stock of rural
banks then that would mean that filipino
citizens should have
um at least 40 percent of the
of the ownership of the
of rural banks
how about corporations engaged in coast
wise shipping
there must at least be 60
of the capital stock being owned by
filipino citizens how about corporations
engaged in the pawnshop business
at least 70 percent of the voting
capital stock must be owned by filipino
citizens for corporations engaged in the
recruitment and placement of workers
it must be at least 75 percent of the
voting capital stock must be owned by
filipino citizens
how about for corporations engaged in
private detective watchman or security
guard agencies
it must be wholly owned by filipino
citizens
so you must remember
these types of corporations because
there is a minimum required filipino
percentage ownership so that you are
guided when you venture into a business
in any of these types of businesses when
you want to form a corporation you must
make sure to comply with these minimum
minimum filipino percentage ownership
requirements
so that's it for this video i hope you
now have learned what is a capital stock
and what is a share of stock and please
do remember the minimum filipino
percentage ownership requirement of
certain corporations i hope you have
learned from this video and i will see
you in the next
so if you find this video helpful please
click like subscribe and that
notification bell so that you will be
notified of new video uploads thank you
for watching see you next time in mbl
classroom
[Music]
you
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