Who are considered as corporators, incorporators, stockholders & members? How do we classify shares?
Summary
TLDRAttorney 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.
Outlines
📚 Introduction to Legal Terms in Corporation Code
Attorney Marie Chris Baton Lasko introduces viewers to her virtual classroom on YouTube, where she aims to simplify the law in under 10 minutes per video. In this session, she discusses Section 5 and 6 of the Revised Corporation Code, focusing on key legal terms such as corporators, incorporators, stockholders, and members. She explains that corporators can refer to members of a non-stock corporation or stockholders of a stock corporation, while incorporators are the original corporators named in the articles of incorporation. Stockholders are those who compose a stock corporation and can be either natural or juridical persons. Members are the corporators of a non-stock corporation. The video also touches on other roles such as promoters, subscribers, and underwriters in the formation of a corporation.
🏢 Understanding Shares and Stock Concepts
The second paragraph delves into the concept of shares of stock as outlined in Section 6 of the Revised Corporation Code. A share of stock represents a shareholder's interest in a corporation and is a unit of the capital stock. Shares can be issued in different classes with varying rights, which must be specified in the articles of incorporation. The principle of equality among shares is discussed, with the exception of preferred or redeemable shares that may be deprived of voting rights. The video explains that while preferred shares can have special rights regarding dividends and asset distribution, they must have a par value. The importance of the par value concept is highlighted, with certain limitations on issuing no par value shares, especially for banks, insurance companies, and other corporations dealing with public funds.
🗳️ Voting Rights and Matters for Shareholders
This paragraph explains the voting rights of shareholders, emphasizing that all shares must have complete voting rights except for preferred or redeemable shares. It outlines specific matters on which even non-voting shares can vote, such as amendments to the articles of incorporation, changes to bylaws, disposition of corporate property, and other significant corporate actions. The video clarifies that while non-voting shares have limited participation in regular corporate decisions, they retain the right to vote on critical issues that could affect the company's direction and their investment.
💰 Par Value and No Par Value Shares
The discussion continues with the concept of par value, which is a specific monetary value assigned to a share as stated in the articles of incorporation and the certificate of stock. The video explains that shares can be issued with or without a par value, but there are restrictions for certain types of corporations, such as banks and insurance companies, which cannot issue no par value shares. It also mentions that preferred shares must have a par value and that the minimum consideration for issuing no par value shares is five pesos per share, with the entire consideration treated as capital and not available for dividend distribution.
🏷️ Classification of Shares for Legal Compliance
The final paragraph of the script addresses the ability of a corporation to classify its shares to ensure compliance with constitutional or legal requirements, such as those pertaining to ownership percentages for Filipino citizens in certain types of corporations. This classification power is highlighted as a means for corporations to adapt to specific regulatory environments while maintaining the integrity of their capital structure.
Mindmap
Keywords
💡Corporators
💡Incorporate
💡Stockholders
💡Members
💡Promoters
💡Subscribers
💡Underwriters
💡Shares of Stock
💡Preferred Shares
💡Par Value
💡Voting Rights
Highlights
Introduction to Section 5 and 6 of the Revised Corporation Code, focusing on key terms and concepts.
Definition and distinction between 'corporators', 'incorporporators', 'stockholders', and 'members'.
Corporators encompass both members in a non-stock corporation and stockholders in a stock corporation.
Incorporporators are the original founders named in the Articles of Incorporation.
Stockholders compose a stock corporation and can be individuals or other legal entities.
Members are the corporators of a non-stock corporation without divided stocks.
Explaining the roles of 'promoters', 'subscribers', and 'underwriters' in corporation formation.
Promoters facilitate corporation formation by assembling incorporators.
Subscribers are individuals who commit to purchasing unissued shares.
Underwriters are typically investment bankers who agree to purchase or market shares.
Section 6 introduces the concept of 'shares of stock' and their significance in a stock corporation.
Shares represent a shareholder's interest and form the basis for voting rights and dividends.
The possibility for corporations to issue different classes of shares with varying rights.
Requirements for classifying shares and specifying rights in the Articles of Incorporation.
Principle that all shares are presumed equal unless stated otherwise in official documents.
Non-voting shares can still vote on specific corporate matters as outlined in Section 6.
Differentiation between par value and no par value shares and their implications.
Certain types of corporations are restricted from issuing no par value shares.
Preferred shares must have a par value and can be given priority in dividends and asset distribution.
No par value shares are considered fully paid and non-assessable, with specific minimum issuance considerations.
Corporations may classify shares to comply with constitutional or legal requirements.
Closing remarks summarizing the importance of understanding Sections 5 and 6 for simplified law comprehension.
Transcripts
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[Music]
hi i am attorney marie chris baton lasko
this is my virtual classroom welcome to
my youtube channel in this channel i
shall aim to simplify the law i shall
discuss concepts and principles of law
in under 10 minutes
hello again everyone welcome to our
virtual classroom for this video i want
to talk about section 5 and 6 of the
revised corporation code what is in
section 5 and what is in section 6
section 5 and section 6 will now
introduce you to terms
that are important in understanding your
revised corporation code so let's talk
about these terms one by one so let's
look at section five
section five now we'll introduce you to
four terms what are these terms you have
corporators you have
incorporators you have
stockholders and members
so what do we mean by these terms who do
we refer to when we say you are a
corporator or you are an incorporator or
you are a stockholder or you are a
member
when we
talk about corporators or a corporator
this refers to either members in a
non-stop corporation or stockholders
of a stock corporation this can even
refer to
incorporators of your corporation
what does that tell you it tells you
then that the term corporator is a very
broad term
and this term refers to all those
who compose the corporation again be it
members in a non-stop corporation or be
a stockholders in a stock corporation
how about the term incorporator or
incorporators
they refer to the original corporators
they are those who are named in the
articles of incorporation as those
originally forming the corporation
so that's the difference between your
incorporator and cooperator
in incorporator they are the original
corporators the corporate or the term
cooperator would now refer to all the
members or stockholders whether they are
the original formers of the corporation
or they are stockholders who want their
shares
into the to become um to have a
shareholding rather in the corporation
or if they are new members in a
non-stock corporation the term
stockholders i have mentioned this
earlier this refers to those who compose
a stock corporation
your stockholders
may be
natural persons or juridical persons
because corporations or partnerships can
in fact buy shares in a stock
corporation they can buy shares of stock
so that they have share holdings now in
the stock corporation
how about the term members
members now refer to the corporators
of a non-stock corporation you do not
call them stockholders because there are
no stocks that are being divided and
distributed to the owners
they are called
members
so these are the
important terms that we also have to
learn and these are the terms that are
introduced to us
on section or in section five rather of
your revised corporation code
now there are other classes of people
who help form the corporation although
not stated or given in section 5. we
have your promoters you have your
subscribers and you have your
underwriters now who are the promoters
the promoters are those who bring about
the formation and organization of the
corporation by bringing together
the incorporators of the corporation
they are not necessarily
um the incorporators they are not
necessarily stockholders but they are
the ones who bring about the formation
of the corporation they just
bring together this these people who
might want to
form a particular corporation
how about subscribers
subscribers are those people who promise
to purchase
shares
and issued shares of the corporation do
we consider them as stockholders
technically not yet because you become a
stockholder only when you have already
fully paid for your share so if you have
if you have just promised to
purchase the unissued shares of the
corporation you are still called a
subscriber
not a stockholder yet it's only when you
pay for these shares that you become a
stockholder how about an underwriter an
underwriter is usually an investment
banker who has agreed to purchase an
entire issue of shares or a substantial
portion of such issued shares or perhaps
he has promised to
market those shares
so that is what an underwriter is
now let's talk about section 6 of your
revised corporation code it now
introduces you to the concept of shares
of stock
now remember
having shares of stock that would mean
that the corporation is a stock
corporation
now what are shares of stock
a share of stock represents
the interest of a shareholder in a
corporation
it is a unit in the capital stock of the
corporation
and what is the importance of this share
of stock as we said it represents the
interest of the shareholder
because then your share of stock will
now become the basis for your
participation
in the corporation in terms of your
right to vote
it will also become the basis
for your share in the dividends should
the corporation through the board of
directors declare dividends
it should it also rather becomes the
basis of your share in the assets of the
corporation if there are any left after
liquidation of a corporation having
discussed what a share of stock is
can the corporation
issue
several classes of shares
the answer is yes
now you might ask what do you mean by
different classes of shares
your shares
may also be issued and classified
depending on the rights
that would attach to such shares
and that is what section 6 is actually
talking about
now let's go over section six
the first paragraph of section six yes
the classification of shares their
corresponding rights privilege or
restrictions and their stated par value
if any must be indicated in the articles
of incorporation
each share shall be equal in all
respects to every other share except
otherwise in the articles of
incorporation and in the certificate of
stock
now let's study that first paragraph of
section six
what does that tell you
it basically tells you that your
corporation has the power
to classify
their shares
they can issue several classes of shares
and that the privileges the rights of
each share
must be indicated in the articles of
incorporation
in that paragraph also it will tell you
of the principle
that all shares are presumed equal
unless otherwise stated and that is why
it is important for the
incorporators
when they form the corporation when they
make the articles of incorporation
that they specify
the privilege or the right of each
classification of share now let's go
over the second paragraph of section 6.
it says the shares and stock
corporations may be divided into classes
or series of shares or both
no share may be deprived of voting
rights except those classified and
issued as preferred or redeemable shares
unless otherwise provided in this code
provided that there shall always be a
class or series of shares with complete
voting rights
what do we mean by the second paragraph
of section 6
it tells you
that the shares of stock
that is issued by the corporation
must have complete voting rights
except those shares that are classified
as preferred shares
or redeemable shares
in other words as a general rule
when the corporation issues shares or
series or classified series of shares
all of these shares must have complete
voting rights
except when they are preferred shares or
redeemable shares
i will talk about what preferred shares
are and what redeemable shares are in
another video
let's talk about just the general rule
here
so again
your corporation has the power to
classify several series of shares but
the corporation must put to mind
that
all those shares must have complete
voting rights except for preferred
shares or
redeemable shares
now you might ask what are these voting
rights
what will the stockholder vote on anyway
remember that a stockholder having a
share in the corporation they're
actually part owners of the corporation
and being so they must have a say in the
direction of the corporation and so if
there are matters that would need to be
voted on
like
if this corporation will make an
investment in a certain business
then a vote can be called upon
to determine whether the stockholders
would be amenable to it
another
matter that the stockholders would be
voting on would be the membership also
of the board of directors of course they
must have a c as to the leadership in
the corporation so these are just some
matters
that may be put up for a
vote
so that again of course the stockholders
being part owners of the corporation can
have a say
in the direction of the corporation now
let's move on to the third paragraph of
section six what does it say it says
holders of non-voting shares shall
nevertheless be entitled to vote on the
following matters
amendment of the articles of
incorporation
adoption and amendment of bylaws
sale lease exchange mortgage pledge or
other disposition of all or
substantially all of the corporate
property
incurring creating or increasing bonded
indebtedness
increase or decrease of authorized
capital stock
merger or consolidation of the
corporation with another corporation or
other corporation
investment of corporate funds in another
corporation or business in accordance
with this code and the solution of the
corporation
the third paragraph tells you that even
if
your share is a non-voting share like if
it's a preferred share
or any other share to which there are no
voting privileges
that paragraph
tells you
that
there are still matters that even
non-voting shares can vote on
and what are these matters
those matters enumerated under
your third paragraph of section six
for other corporate acts however where
the corporation would ask the
stockholders to vote
again
excluding those that is in those that
are rather enumerated in the third
paragraph of section six
they would refer only to shares with
voting rights
because those enumerated under the third
paragraph of section six
will also enable the non-voting shares
to also vote on these
matters
now let's move on to the next paragraph
a section 6 is quite long so what does
the next paragraph say it says
the shares or series of shares
may or may not have a par value
provided that banks trust insurance and
pre-need companies
public utilities building and loan
associations and other corporations
authorized to obtain or access funds
from the public whether publicly listed
or not shall not be issued to issue no
par value shares of stock
so this paragraph now introduces you to
another term
and such is par
value
what do we mean by
our
value
a par value of a share
is that specific money value that is
fixed for that particular share
and that is written or stated in your
articles of incorporation and in the
certificate of stock
now you might ask what is a certificate
of stock
a certificate of stock is that written
instrument which is actually proof that
you are a holder of a share so what does
section 6 tell you about the par value
of a share as what we have read earlier
on
it says there that the shares issued by
a corporation may have a par value
or may have no par value
meaning the corporation has the liberty
to decide whether to
give a specific money value to a
particular share if there is a specific
value that is fixed for a particular
share and is stated in the articles of
incorporation and stated in the
certificate of stock then that share has
a par value or that is a par value share
if there is none then that is a no par
value
now your section 6
will tell you of a limit of uh of a
certain limitation on issuing no par
value shares and what is this limitation
we stated it a while ago and it says
that banks
insurance companies pre-need companies
loan associations public utilities
they cannot issue shares that do not
have a par
value that is what your section 6 is
telling you
your section 6 will also tell you that
if the corporation issues preferred
shares
these preferred shares must also have a
par
value
what are preferred shares
you can actually
find
the description or definition of
preferred shares in the next paragraph
of section 6. let's read the next
paragraph it says
preferred shares of stock issued by a
corporation may be given preference in
the distribution of dividends and in the
distribution of corporate assets in case
of liquidation or such other preferences
provided that preferred shares of stock
may be issued only with a par value
the board of directors where authorized
in the articles of incorporation may fix
the terms and conditions of preferred
shares of stock or any series thereof
provided further that such terms and
conditions should be effective upon
filing of a certificate thereof with the
securities and exchange commission
herein after referred to as the
commission
in that paragraph it tells you that
preferred shares are those shares that
are being given a preference in the
distribution of dividends or in the
distribution of corporate assets if
there be liquidation of the corporation
preference meaning they would be the
first to be given dividends or the first
to receive a share in the assets as
opposed to the other types of
shares so that's why they are called
referred shares
so in that paragraph it tells you that
if there are preferred shares being
issued by the corporation then they
should be issued only with a par value
meaning that there must be a specific
money value fixed for preferred shares
and of course it must be stated in the
articles of incorporation and stated in
the certificate of stock now on to the
second to the last paragraph of section
six you're almost done with section six
what does the second to the last
paragraph say
it says
shares of capital stock issued without
par value
shall be deemed fully paid and
non-accessible and beholder of such
share shall not be liable to the
corporation or to its creditors in
respect their tool
provided that no poor value shares must
be issued for a consideration of at
least five pesos per share
provided further that the entire
consideration received by the
corporation for its no par value shares
shall be treated as capital and shall
not be available for distribution as
dividends
so what should we remember here
we should remember that yes a
corporation can issue no par value
shares
and that no par value shares do not have
a specific money value that is fixed
however your section 6 gives you the
minimum
value for no par value shares
and that it should not be less than
5 pesos
and such that once those shares are
being issued and paid for
no part
of the amount that was paid for no par
value shares
can be distributed as dividends because
it shall
all be part of your
capital of the capital of the
corporation
finally the last paragraph of section
six it states
a corporation may further classify its
shares for the purpose of ensuring
compliance with constitutional or legal
requirements
now
this just tells you again of the power
of the corporation to classify shares
and this time they may do so in
compliance with constitutional and legal
requirements
when certain corporations must have 60
percent ownership of
of filipino citizens or it should have
70 percent um ownership of filipino
citizens depending on the type of
corporation so that ends our discussion
on section 5 and section 6 of your
revised corporation code i hope i was
able to simplify the concepts under
section 5 and section 6.
see you next time in my next video
i hope you have learned something from
this video if you have 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
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