Who are considered as corporators, incorporators, stockholders & members? How do we classify shares?

Summary

Attorney Marie Chris Baton Lasko's YouTube channel simplifies legal concepts in under 10 minutes. This video focuses on Sections 5 and 6 of the Revised Corporation Code, explaining key terms like corporators, incorporators, stockholders, and members. It clarifies the roles and distinctions between them. The video also delves into shares of stock, their classifications, and the voting rights of different share classes. It highlights the importance of par value and the special considerations for issuing no par value shares, particularly for financial institutions and public utilities.

Takeaways

• 📚 The video script is a legal tutorial by Attorney Marie Chris Baton Lasko, aiming to simplify the law and discuss concepts and principles within 10 minutes.
• 🏢 Section 5 of the Revised Corporation Code introduces key terms such as 'corporators', 'incorporporators', 'stockholders', and 'members', which are essential to understanding the roles within a corporation.
• 🔑 A 'corporator' is a broad term referring to members of a non-stock corporation or stockholders of a stock corporation, and can also include the original incorporators of the corporation.
• 👥 'Incorporporators' are the original corporators named in the articles of incorporation, who are instrumental in the initial formation of the corporation.
• 🤝 'Stockholders' are those who own shares in a stock corporation, which can include natural persons, corporations, or partnerships.
• 👫 'Members' are the corporators of a non-stock corporation, who do not own shares but are part of the corporation's ownership structure.
• 🔑 'Promoters' are individuals who facilitate the formation of a corporation by bringing together the incorporators, but are not necessarily stockholders themselves.
• 📝 'Subscribers' are individuals who have promised to purchase unissued shares of a corporation, but are not yet considered stockholders until their shares are fully paid for.
• 💼 'Underwriters' are typically investment bankers who agree to purchase or market a significant portion of a corporation's issued shares.
• 📈 Section 6 of the Revised Corporation Code discusses the concept of 'shares of stock', which represent a shareholder's interest in a corporation and are the basis for voting rights, dividends, and asset distribution upon liquidation.
• 🔄 Corporations have the power to classify and issue different classes of shares, with rights and privileges as outlined in the articles of incorporation.
• ⭐ Preferred shares must be issued with a par value and can be given priority in dividend distribution and asset distribution in the event of liquidation.
• 💰 Both par value and no par value shares can be issued, with specific regulations for no par value shares, including a minimum issue consideration of five pesos per share and restrictions for certain types of corporations.

Q & A

What is the primary goal of Attorney Marie Chris Baton Lasko's YouTube channel?

The primary goal of Attorney Marie Chris Baton Lasko's YouTube channel is to simplify the law and discuss concepts and principles of law in under 10 minutes.

What are the four terms introduced in Section 5 of the Revised Corporation Code?

The four terms introduced in Section 5 of the Revised Corporation Code are corporators, incorporators, stockholders, and members.

What does the term 'corporator' refer to in the context of the Revised Corporation Code?

In the context of the Revised Corporation Code, a 'corporator' refers to either members in a non-stock corporation or stockholders of a stock corporation, and can also refer to the incorporators of the corporation.

Who are 'incorporators' according to the Revised Corporation Code?

Incorporators are the original corporators named in the articles of incorporation as those who are originally forming the corporation.

What is the difference between 'incorporators' and 'corporators'?

The difference between 'incorporators' and 'corporators' is that incorporators are the original founders named in the articles of incorporation, while corporators refer to all members or stockholders of the corporation, whether original or subsequent.

What is the significance of 'shares of stock' in a corporation?

Shares of stock represent the interest of a shareholder in a corporation and serve as the basis for participation in the corporation, including the right to vote and share in dividends and assets upon liquidation.

Can a corporation issue different classes of shares according to Section 6 of the Revised Corporation Code?

Yes, according to Section 6 of the Revised Corporation Code, a corporation can issue different classes of shares, with each class having specific rights and privileges as indicated in the articles of incorporation.

What is the general rule regarding the voting rights of shares issued by a corporation?

The general rule is that all shares issued by a corporation must have complete voting rights, except for those classified as preferred shares or redeemable shares.

What are 'preferred shares' and why must they have a par value?

Preferred shares are shares that are given preference in the distribution of dividends or corporate assets in case of liquidation. They must have a par value, which is a specific money value fixed for the share and stated in the articles of incorporation and the certificate of stock.

What is the minimum consideration for issuing no par value shares according to Section 6?

The minimum consideration for issuing no par value shares according to Section 6 is at least five pesos per share.

What happens to the consideration received by the corporation for its no par value shares?

The entire consideration received by the corporation for its no par value shares must be treated as capital and shall not be available for distribution as dividends.

Why might a corporation classify its shares to ensure compliance with constitutional or legal requirements?

A corporation might classify its shares to ensure compliance with constitutional or legal requirements to meet specific ownership structures, such as those requiring a certain percentage of Filipino citizen ownership.