We love PROFITS!

Sole Proprietors make all of it.

PARTNERSHIPS

Share PROFITS

Corporations

Share profits among thousands

WHY a CORPORATION ?

Business has grownWant to expand

Want to be more visibleWant the latest equipment

Charge less than competitorsGain market share

Don’t wantMore Partners

But need MONEY

LOOK for WHAT?FINANCIAL BACKERS

Use their $$$ while you run the business

That’s what a corporation is!

Owned by manyBy law is treated as though it were a person

Can own propertyCan pay taxes

Can sue & be suedCan make contracts, etc.

A separate & distinct existence

From stockholders who own its STOCK= share of corporation’s ownership,

entitling buyer to part of future profits & assets

Corporations

• “Corporation is an artificial being created by operation of law having the right if succession and the powers, attributes and properties expressly authorized by law or incident to its existence.

Corporation

• A corporation is a form of business organization in which the owners known as stockholders have an undivided ownership share in the assets of the corporation and corresponding amount of shares of stock which they own.

Organizing a Corporationsverification of corporate name with SEC

drafting and execution of the articles of incorporation

deposit of cash receives for subscribed shares of stock

filing the articles of incorporation

payment of filing and publication feesissuance of SEC of the certificate of incorporation

Organizing a Corporation

• registration of the corporate name with DTI• obtaining municipal licenses from the local

government• obtaining the VAT or non-VAT account number

from the BIR• registration with BIR of books of accounts and

accounting forms

Articles of Incorporation

• name of the corporation• purpose for which the corporation being

incorporated• the place of the main office is to be located• the term of which the corporation is to exist• the names, nationalities and residences of the

incorporators

Articles of Incorporation

• the number of directors or trustees• the names, nationalities and residences of directors

and trustees• if it is a stock corporation:

a. amount of authorized capital stockb. the number of shares divided into par values

• if it is a non-stock, the amount of capital, name, nationalities and residencies of contributor and contribution of each.

By-laws

• it may be defined as the rules of a corporation for the internal government of a corporation and for the government of its officers, stockholders and members.

By- laws

• the time, place and manner of calling and conducting regular or special meetings

• the required quorum in meetings of stockholders

• the form of proxies of stockholders and members

• the qualification, duties and compensation of directors

By-laws

• -the time and holding of the annual election of directors and trustees-in case of stock corporation, the manner of issuing stock certificates-the penalties for violation of the by-laws

Right of Shareholders

• right to attend and vote in person at stockholders meeting

• right to receive dividends when declared• right to inspect corporate books and records• right to pre-emption in the issue of shares• right to elect and remove directors• right to transfer of stock on the corporate

books

Corporations

Advantages• has a legal capacity• it has continued and

more or less• management is

centralized.• it has the most efficient

management

Corporations

Advantages• limited liability• shareholders freedom• ability to raise more

capital

CorporationsDisadvantagesnot easy to organize

governmental intervention

subject to higher tax

it has limited powers

CorporationsDisadvantages• abuses of corporate

officials• engaged in questionable

activities• formal relationship

between the officers and employees of corporation

Classification of Corporation

• 1.based on nature of its capitala.stockb.non-stock

Classification of Corporation

• 2.based on purposea.publicb.private

Classification of Corporation

• 3. based on relation to other corporationa.parent corporationb.subsidiary corporation

Classification of Corporation

• 4.based on situs of incorporationa.domestic corporationb.foreign corporation

Classification of Corporation

• 5.based on whether they want it public or nota.close corporationb.open corporation

• Categories of shares of stocks1.common stock2.preferred stock3.class A shares4.class B shares5.par value shares6.no par value shares7.founders’ shares

• Dividendsit is also called as the distributed profits

of the corporation. It represents the corporation’s profit, which are distributed to stockholders according to the proportionate interest of their shareholdings

• Kinds of dividends1.cash2.property3.stock4.scrip5.bond6.liquidating