What is a capital stock? Should it be fully owned by Filipinos? (Section 12, RCC)

Summary

Attorney 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.