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CORPORATION

• INCORPOTATORS

o  You need at least 5 incorporators to create a corporation

• ADVANTAGE OF A CORPORATION: i!ited ia"ilit# o$ Stoc%&olders 'S()

o S( in*ol*e!ent is li!ited to t&e EECTION OF +OARD OF DIRECTORS '+OD)

o GR: +OD &as t&e a"solute aut&orit# to !ana,e- T&is cannot "e c&an,ed or re*ie.ed "# S(-

E/: ater on t&ere are issues needed to "e a0r!ed "# t&e S(- Suc& as "ut not li!ited to:

• 1C&an,e in t&e "asic structure o$ t&e corp23

• 1C&an,e in t&e Articles o$ Incorporation 'AIO)2

• Disposal o$ all Assets• PARTNERS(IP VS CORPO

PARTNERS(IP CORPO4ana,e!ent Decided "# t&e partners- +OD !ana,es-

ia"ilit# lia"le to t&e t&eir in*est!entand separate properties-'e/cept li!ited partner)

S( is lia"le onl# to t&ee/tent o$ &is in*est!ent-

No S( .ill assu!e e/cesso$ t&eir in*est!ent-

o As a rule3 Creditors cannot ,o a$ter S( to .&at is e/cess o$ t&eir in*est!ent- T&e# .ill &a*e to "ear t&eloss-

o (o.e*er in so!e instances3 4AOR S( are as%ed to Guarantee ia"ilities o$ t&e Corporation to

creditors- Suc& Guarantee A,ree!ents are na!ed as suc& "ut are in in $act in su"stance Suret#A,ree!ents t&at !a%e 4a6or S( lia"le pri!aril# and not su"sidiaril#-

o (O7EVER: S( ARE RE89IRED AND IA+E TO PAY T(E +AANCE OF T(E INVEST4ENT-o Note: onl# t&e stoc%&older e/ecutin, is lia"le personal o"li,ation

• ; TER4S OF CAPITA<- Aut&ori=ed Capital Stoc% 'ACS)

a- 4a/i!u! a!ount t&at a stoc%&older can in*est"- Not necessaril# total ACS s&ould "e su"scri"ed- T&e la. re>uires onl# at least ?5@ s&ould "e

su"scri"ed-'su"scri"ed: a!ount &e co!!its to in*est)

?- Su"scri"ed Capital Stoc% 'SCS)a- Co!!it!ent o$ S( to in*est in t&e corporation"- At least ?5@ o$ t&e ACS s&ould "e su"scri"edc- T&is is t&e CAPITA OF T(E CORPORATIONd- At least ?5@ o$ t&e SCS !ust "e paid

;- Paid9p Capital Stoc% 'PCS)a- At least ?5@ o$ t&e SCS !ust "e paid upon incorporation-"- B5@ o$ t&e "alance !ust "e paid:

i- A,reed 9pon Dateii- Call o$ t&e +OD to Pa#-

o Note: I$ creditor later on can ,o a$ter up to t&e a!ount o$ t&e su"scription not paid "# t&e S(-Creditors can ,o a$ter t&e total su"scri"ed capital stoc%3 .&et&er paid or unpaid since it is t&ecapital o$ t&e corporation t&us t&e# !a# ,o a$ter t&e re!ainin, B5@

o R9E to create a corporation:

o ACS  at least ?5@ o$ t&e ACS !ust "e Su"scri"ed SCS  at least ?5@ o$ SCS !ust "e

paid Paid 9p Capital Stoc%

• ARTICES OF INCORPORATION 'AOI)o +asic contract a!on, corporators-

o +asic a,ree!ent o$ t&e corporators-o So!e Contents:

ACS3 SCS3 PCS

• A!ount t&at eac& S( is .illin, to su"scri"e and &o. !uc& t&e# are .illin, to pa#

NA4E OF T(E CORPORATION

• I!portant $or identication3 $or re,istration o$ SEC and $or ser*ice o$ su!!ons-

P9RPOSE OF CORPORATION

•  You cannot 6ust decide on an#t&in,- +ecause .it& t&is purpose .e can see .&at are9TRA VIRES ACTS  Doin, so!et&in, "e#ond t&e aut&orit#-

• E: Construction Corp- t&e "usiness .ill "e li!ited to construction-o I$ incase it en,a,es in an 9%a#?/ "usiness and t&e custo!ers are $ound ill

"ecause o$ t&e products sold- T&e corporation cannot "e sued "ecause t&e

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lia"ilit# arose $ro! a transaction t&at is an ultra *ires act- S( .ill not "e lia"le"ut +OD-

• Secondar# Purpose !ust "e related to Pri!ar# Purpose-

o In t&e e/a!ple a secondar# purpose !a#"e i!portation o$ &ea*# e>uip!ent

or &irin, o$ arc&itects-o Ot&er Related Docu!ents:

 Treasurers A0da*it H Certicate o$ +an% Deposit

•  T&is .ill s&o. t&at t&e capital re>uired to incorporate &as "een co!plied .it& and it isrecei*ed and is .it& t&e "an%

•  T&e purpose o$ t&e Certicate o$ +an% deposit is to c&ec% i$ in $act suc& a!ount &as

"een deposited "ecause due to t&e +an% Secrec# Act t&e SEC is pro&i"ited to c&ec%t&e "an% account on its o.n accord-

Na!e Reser*ation .it& t&e SEC .e"site-

SEC re>uires *erication i$ $ound t&at suc& na!e is alread# in use3 t&e# are allo.ed to

propose ; ot&er na!es-

• +Y A7So File to,et&er .it& t&e AOI OR ; da#s a$ter t&e su"!ission o$ t&e AOIo CONTAINS:

t&e procedure and internal rules and re,ulations .it&in t&e Corporation itsel$-

(o. election o$ o0cers to "e done

Function o$ eac& o0cer

4eetin,s .&ic& !a# "e:

• Annual or Special

• For Stoc%&olders 'annuall#) or $or +OD 't&eoreticall# !ont&l#)

• P9+IC CORPORATION *s PRIVATE CORPORATIONo Pu"lic Corporation to ,o*ern a certain area o$ t&e state- 'FOR ORAS 89ESTION IS DepEd a Pu"-

CorpJ)o Pri*ate Corporation

Pu"licl# isted

• An#"od# can su"scri"e- It is still a pri*ate corporation3 t&e na!e !erel# i!plies t&att&e corporation is pu"licl# listed-

Not Pu"licl# isted

• CERTIFICATE OF INCORPORATIONo +irt& certicate o$ t&e corporation

o  T&is is .&en t&e corporation ac>uires a ne. personalit#o No. considered separate and distinct $ro! its S(-

o GR: T&is is .&en a *eil is created called t&e Veil o$ Corporate Fiction- T&is *eil protects t&e S( $ro!personal lia"ilities-

o ECEPTION: t&ere are instances later to "e discussed .&en t&is *eil !a#"e "e pierced in accordance

.it& t&e la.-

•  T(E CORPORATION EIST-

-TO IMMUNITY AND BEYOND-