Corporation is an artificial being, created by operation of law, having the right of succession and the

powers, attributes and properties expressly authorized by law or incident to its existence.

Within 6 months to organize and to commence business within 5 years.

At least 5 but not more than 15 members

Classes or Kinds of Corporation

1. Stock Corporations- Corporation which have capital stock dividend into shares and are
authorized to distribute to the holders of such shares dividends or allotments of the surplus
profits on the basis of shares.
2. Non-stock corporations

Fiction of Law:

 Corporation as juridical entity has distinct and separate personality envisages for
convenience and to serve justice.
 Should not be used as a subterfuge to commit injustice and circumvent labor laws
 Corporation is invested by law with a personality separate and distinct from persons
composing it.
 A stockholder cannot be made to answer for any of the corporation’s financial obligations
even if he were the President

Attributes of Corporation:

 It is an artificial being;
 It is created by operation of law;
 It has the right of succession;
 It has the powers, attributes and properties expressly authorized by law or incident to its
existence.

Steps in Incorporation:

1. Drafting and execution of the Articles of Incorporation and by-laws

2. Filing of Articles of Incorporation with the following:
a. Treasurer’s Affidavit showing at least 25% of entire authoried share has been
subscribed and 25% of subscribed capital has been paid in cash or property; not less
than P5,000.00
b. In case a corporation is governed by special law, a favourable recommendation of
appropriate government agency. Eg. DEPED for educational institutions, DOE for
power generation companies;
3. Payment of the filing and publication fees;
4. Issuance by the SEC of the Certificate of Incorporation; may commence business in 5 days.

Contents of Articles of Incorporation

1. Name of the Corporation

 Corporation acquires juridical personality with its name
  Has the power of succession by its corporate name
 By its name, it is authorized to transact business
 Exclusive to the original corporation.
Disallowed:
 Identical
 Deceptive
 Confusingly similar to any existing corporation
 Not a name of a past President
 Not a name of the government
 Should not be misleading
2. Purposes for Incorporation
 Purposes operates as an authorization to the management to enter into contracts
and transactions included within or incidental to purposes
 Imposes IMPLIED LIMITATIONS on the powers of the corporation
 Confers wide discretionary authority upon directors and management as to the
kinds of business in which it may engage
Reasons for Statement of Purpose:
 Person who intends to invest knows where or what business his money will be
invested;
 Directors and officers know the authorized scope of business
 Third persons who deal with the corporation will know whether transactions are
within the authority of the Corporation.
3. Name of Incorporators- original founders of the Corporation
 “All incorporators are corporators while corporators are not always an
incorporator.”
4. Address of the Corporation
 Place where the principal office is located within the Philippines
 For effective regulation and supervision of corporation
 Place where its books and records are ordinarily kept and its officers usually not for
purpose of managing the affairs and transacting the business of the corporation
5. Officers of the Corporation
 President-must be a stockholder of the corporation
 Secretary-not necessarily a stockholder of the corporation
 Treasurer-not necessarily a stockholder of the corporation
 President/Secretary-prohibited
 Secretary/Treasurer-allowed
6. Nature of business
7. Lifetime of a Corporation- 50 years maximum renewable to another 50 years
 Renew it on its 45th year or 5 years before the expiration.
8. Names, nationalities and residences of the Incorporators
 Enables the SEC to determine prima facie compliance with legal requirements
regarding ownership by Filipino citizens of certain percent of capital stock
9. Number of Directors or Trustees
 Not less than 5 but not more than 15
10. Names, nationalities and residences of temporary directors/trustees (until official ones are
duly elected)
11. Par value of stocks in stock corporations
12. In non-stock corporation, amount of capital plus names, nationalities and residences of
contributors and amount of contribution
13. Such other matter which incorporators may deem necessary and convenient