What are the different classes of corporations? (Section 3-4, Revised Corporation Code)

Summary

Attorney Marie Chris Bataan introduces viewers to the classes of corporations as outlined in the Revised Corporation Code. She explains the distinction between stock and non-stock corporations, with the former aiming for profit distribution and the latter focusing on public welfare. Special mention is given to educational institutions and financial entities, which can be either stock or non-stock, and GOCCs, which are governed by their own charters. The video aims to simplify legal concepts for viewers.

Takeaways

• 📚 The video is an educational resource aimed at simplifying legal concepts, specifically focusing on the classification of corporations.
• 🏢 Section 3 of the Revised Corporation Code outlines that corporations can be classified as either stock or non-stock.
• 💼 Stock corporations are businesses created for profit, with capital stock divided into shares that can be distributed to shareholders.
• 🌐 Non-stock corporations are established for public welfare or public good rather than profit, and do not distribute capital stock to members.
• 🔄 The distinction between stockholders and members is clarified, with stockholders being associated with stock corporations and members with non-stock corporations.
• 🏛️ Non-stock corporations often include religious, charitable, scientific, literary, or civic organizations.
• 🏫 Educational institutions can be either non-stock (non-profit) or stock (for-profit) corporations, indicating flexibility in their legal structure.
• 🏦 Certain businesses, such as banks and financial institutions, are required to be organized as stock corporations.
• 📜 Section 4 discusses corporations created by special laws or charters, which are primarily governed by their specific charter or law, with the Revised Corporation Code applying only supplementary.
• 🏛️ Government-owned or controlled corporations (GOCCs) are examples of entities governed by special charters, highlighting the diversity in corporate governance.
• 🔑 The video emphasizes the importance of understanding the legal framework that governs different types of corporations for both legal professionals and the general public.

Q & A

What are the two major types of corporations classified under Section 3 of the Corporation Code?

The two major types of corporations classified under Section 3 of the Corporation Code are stock corporations and non-stock corporations.

What is the primary characteristic that distinguishes a stock corporation from a non-stock corporation?

A stock corporation has capital stock divided into shares and is authorized to distribute dividends or allotments of surplus profits to the stockholders based on their shares, while a non-stock corporation does not have capital stock distributed to its members.

What is the purpose of a stock corporation as mentioned in the script?

The purpose of a stock corporation is to make a profit, which is then distributed to the stockholders in the form of dividends based on their shareholdings.

What is the purpose of a non-stock corporation according to the video?

A non-stock corporation is created for public welfare or public good, not for the purpose of making profits.

Can you provide examples of organizations that are typically non-stock corporations?

Typically, non-stock corporations include religious, charitable, scientific, literary, and civic organizations.

What are some institutions that can be created either as stock or non-stock corporations?

Educational institutions, such as schools, can be created either as non-stock non-profit or for-profit stock corporations.

What types of businesses are required to be created as stock corporations?

Banks and financial institutions are examples of businesses that can only be created in the form of stock corporations.

What does Section 4 of the Corporation Code discuss regarding corporations?

Section 4 discusses corporations created by special laws or charters, stating that they are primarily governed by the provisions of the special law or charter creating them, supplemented by the provisions of the Corporation Code where applicable.

What are GOCCs and how do they relate to the discussion in the script?

GOCCs are Government-Owned or Controlled Corporations, like Land Bank of the Philippines and GSIS. They are created by special laws or charters, and their primary governing law is the charter or law that created them.

What is the role of the Revised Corporation Code in relation to corporations created by special charters?

The Revised Corporation Code applies to corporations created by special charters only insofar as the provisions are applicable and do not conflict with the special law or charter creating the corporation.

What does the script suggest for viewers who have found the video informative?

The script encourages viewers who have found the video informative to click like, subscribe, and enable notifications for new video uploads.

Outlines

00:00

📚 Introduction to Corporation Classes

Attorney Marie Chris Bataan introduces the topic of different classes of corporations as defined by the Revised Corporation Code. She explains that corporations can be classified into stock and non-stock corporations. Stock corporations are those with capital stock divided into shares, which can distribute dividends or surplus profits to shareholders based on their shareholdings. These are typically profit-oriented businesses. Non-stock corporations, on the other hand, do not have capital stock distributed to members and are created for public welfare or public good, such as religious, charitable, scientific, literary, or civic organizations. The video also touches on the possibility of educational institutions being either non-profit or for-profit entities, and the necessity of certain businesses like banks to be organized as stock corporations.

05:01

🏛️ Corporations Created by Special Charters

In the second paragraph, the discussion shifts to corporations created by special laws or charters, which are primarily governed by the provisions of their creating law or charter, supplemented by the Revised Corporation Code where applicable. These corporations, such as Government-Owned or Controlled Corporations (GOCCs), have their own charters and are regulated by the specific laws that established them. Examples given include the Land Bank of the Philippines, GSIS, and the Development Bank of the Philippines. The video concludes with a prompt for viewers to engage with the content, subscribe, and enable notifications for future uploads.

Keywords

💡Stock Corporation

A stock corporation is a type of business entity that is created with the primary purpose of making a profit. This profit is then distributed to the shareholders in the form of dividends, which are typically based on the amount of stock they own. In the video, the attorney explains that stock corporations have capital stock that is divided into shares and can be distributed to investors, which is a key feature distinguishing them from non-stock corporations. Examples of stock corporations mentioned include typical business corporations that aim to generate profit for their shareholders.

💡Non-Stock Corporation

A non-stock corporation is a legal entity that is established not for the purpose of making a profit but rather for the public welfare or public good. Unlike stock corporations, non-stock corporations do not distribute profits to shareholders; instead, they focus on serving a specific social purpose. In the script, non-stock corporations are exemplified by religious, charitable, scientific, literary, or civic organizations. The attorney clarifies that members of non-stock corporations are referred to as 'members' rather than 'stockholders'.

💡Capital Stock

Capital stock refers to the total amount of share capital issued by a corporation, which is divided into individual shares. It represents the ownership interest in a corporation and is a key component of stock corporations. The video script explains that stock corporations have capital stock that can be distributed to those who wish to own a part of the company, with dividends being allocated based on the number of shares held.

💡Dividends

Dividends are the payments made by a corporation to its shareholders, usually as a distribution of profits. They are a way for stock corporations to share their earnings with the investors who own shares in the company. In the video, dividends are mentioned as a primary reason for the existence of stock corporations, as they distribute profits to shareholders based on their shareholdings.

💡Revised Corporation Code

The Revised Corporation Code is the legal framework that governs the formation and operation of corporations in the Philippines. The video script references sections 3 and 4 of this code, which classify corporations into stock and non-stock entities. The code provides the rules and regulations that corporations must follow, including those created by special laws or charters.

💡Public Welfare

Public welfare refers to the well-being and social services provided for the benefit of the community or the public at large. Non-stock corporations are often established for the purpose of promoting public welfare, focusing on areas such as education, health, or social services. The video emphasizes that non-stock corporations are created to serve the public good rather than to generate profit.

💡Special Charters

Special charters are unique legal documents or laws that create corporations with specific purposes and governance structures different from those of general corporations. In the context of the video, special charters are mentioned in relation to corporations created by special laws, such as government-owned or controlled corporations (GOCCs), which have their own charters governing their operations.

💡GOCCs (Government-Owned or Controlled Corporations)

GOCCs are corporations that are owned or controlled by the government and are typically established to fulfill specific public service functions. The video script mentions GOCCs as examples of corporations that are created by special charters, such as the Land Bank of the Philippines or the Government Service Insurance System (GSIS). These entities are primarily governed by the laws or charters that created them.

💡Educational Institutions

Educational institutions can be established as either stock or non-stock corporations, depending on their objectives and the nature of their operations. The video script discusses the dual nature of educational institutions, with some being non-profit (non-stock) and others being for-profit (stock). This highlights the flexibility in the corporate structure that can be chosen based on the mission and goals of the institution.

💡Banks and Financial Institutions

Banks and financial institutions are types of businesses that are typically organized as stock corporations due to the nature of their operations and the need for capital investment. The video script points out that certain businesses, like banks, are required to be established as stock corporations, emphasizing the importance of capital stock for these entities.

Highlights

Introduction to simplifying the law through the YouTube channel

Discussion on the different classes of corporations as per Section 3 and 4 of the Revised Corporation Code

Definition of stock corporations having capital stock divided into shares

Stock corporations are authorized to distribute dividends based on shareholdings

Non-stock corporations do not have capital stock distributed to members

Non-stock corporations are created for public welfare or public good, not for profit

Examples of non-stock corporations include religious, charitable, scientific, literary, and civic organizations

Educational institutions can be either non-stock or stock corporations

Banks and financial institutions can only be created as stock corporations

Section 4 discusses corporations created by special laws or charters

Special charter corporations are primarily governed by the provisions of their creating law or charter

Revised Corporation Code supplements the governance of special charter corporations

Examples of corporations created by special charter include GOCCs like Land Bank of the Philippines

GOCCs have their own charters or laws that created them

Concluding remarks and invitation to like, subscribe, and enable notifications for new video uploads

Transcripts

foreign

[Music]

hi i am attorney marie chris bataan

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 for this video i

want to talk about the different classes

of corporations is classified by

section 3 and 4 of your revised

corporation code

let's look into section 3.

section three

states

corporations formed or organized under

this code may be stock or non-stock

corporations

stock corporations are those which have

capital stock divided into shares and

are authorized to distribute to the

holders of such shares dividends or

allotments of the surplus profits on the

basis of the shares health all other

corporations are non-stock corporations

there are therefore

two

major types of corporations is

classified under section three of your

corporation code and that is your stock

corporation and your non-stop

corporation so what is a stock

corporation your stock corporation is

basically your ordinary

um business corporations

that were created for the purpose of

making a profit

and such profit is then distributed to

the stockholders

in the form of dividends

um

in the form of dividends on the basis of

their investment or of their

shareholdings so this is what you

usually see

the the business um corporations again

the purpose is to make profit

another thing to remember about stock

corporations

is that they have a capital stock

that is to be distributed to those who

would want to

have shareholdings in a corporation

as opposed to a non-stock corporation

a non-stock corporation does not have a

capital stock that is distributed to the

members we do not call them stockholders

if it's a non-stop corporation we call

them

members of the

non-stop corporation as opposed also to

us the corporation that is created for

the purpose of making profits your

non-stock corporation is not created

for the purpose of making a profit it is

created for

the public welfare or for the public

good so non-stop corporations are

usually those that are religious um

religious charitable organization

scientific literary or civic

organizations they are created for

public wear welfare or public good they

are not created for

profits

there are however some institutions that

can be created either

either in the form of stock corporations

or non-stock corporations

as in educational institutions your

schools

some schools are non-stock non-profit

and there are also schools that are

for-profit or are stock corporations

there are also

um

businesses

that can only be

created

in the form of stock corporations as in

the case of

banks or financial institutions

now how about section four

section four talks about corporations

created by special charters what does it

say it says

corporations created by special laws or

charters shall be governed primarily by

the provisions of the special law or

charter creating them or applicable to

them supplemented by the provisions of

this code insofar as they are applicable

what does that tell you it tells you

that

if it is a corporation created by a

special law or a special charter

that means that the primary law that

will govern them will be the charter or

the law creating them and of course your

revised corporation code will only apply

solitarily

what are examples of your

corporations that are created by special

charter your gocc's or your

government-owned or controlled

corporations like your land bank of the

philippines like your gsis your

development of bank of the philippines

so the gocc's

they have their own charter or there is

a law that created them

so what will govern them primarily will

of course be that law that created them

and so preparing

the general law on corporations or your

revised corporation code

so that is it for this very short video

lecture on the different classes of

corporations is classified by your

section three and four of your

corporation code i hope you have learned

something from this video and i will see

you in the text 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

[Music]

you