1. TRANSFERABILITY OF INTEREST
Corporation –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.
ARTIFICIAL BEING
LEGAL PERSONALITY
RIGHT OF SUCCESSION
CORPORATE OWNERSHIP
LIMITED LAIBILITY
TRANSFERABILITY OF INTEREST

2. Distinctions between Partnership and Corporation
Corporation Partnership
1.Created by law created by mere agreement
of the parties
2. Requires at least 5 incor may be organized by only 2
porators to be organized
3. Capital raising ability is limited capital raising ability
By the profitableness in which is limited by the #
Funds of stockholders are employed of partners

3. 4. Creditors of corp cannot General partners have
claim the personal assets unlimited liability
of the stockholders
5. There is continuity of It has a limited life.
business life.
6. Can only be dissolved with May be dissolved at any
the consent of the time by the will of the
state any or all the partners

4. Advantages…. greater amount of capital Limited liability
Transferability of shares of stocks
Continous existence
Centralized management
Standard creation

5. Disadvantages …. Subject to governmental control and supervision
Heavy taxation
It is more costly to organize
Complicated formation
Stockholders have little voice in the conduct of the business

6. Types of Corporation Public corporation Private corporation
Stock corp and non – stock corp
Government Owned or Controlled Corp
Domestic
Foreign
Close
Open

7. Kinds of Stocks AS to value
Par Value – one which has a fixed valuemstated on the certificate of stock and in the articles of incorporation.
No Par Value - one without a designed value stated in the stock cerificate but it can not be sold at less than P5.00 as provided in the Corporatin Code of the Philippines.

8. As to Right…..
Common stock – an ordinary stock issued by a corporation entitling the owner to a pro rata dividend without priority or preference over any other stockholders.
Preferred Stock – a class of stock with preferential rights or claims over the common stock

9. Legal capital – refers to the minimum permanent investment which can not be distributed to the stockholders in the lifetime of the corporation. This is called the TRUST FUND DOCTRINE/

10. Illustration ! ! !
X Corp issued 1,000 shares of stock with a par value of P100 in exchange for P120,000 cash.
X Corp issued 1,000 shares of no par value stock in exchange for P120,000 cash.

11. Rights of the Stockholders
Right to share in the corporate profits at the discretion of the Board of Directors
Right to vote and to attend annual stockholders’ meetings
Right to share in the distribution of assets upon liquidation of the business
Right to purchase additional shares of stock whenever there is an increase in the authorized capital stock. This is called pre-emptive right

12. Incorporation Requirement:
The law permits any number of natural persons, not less than 5 and not more than 15, to form a private corporation.
At least 25% of the authorized capital stock must be subscribed and at least 25% of these subscriptions must be paid.
Note: the corp code does not mention any minimum authorized number of shares for as long as the paid up capital is not less than P5,000.

13. A corporation should file its Articles of Incorporation with the SEC, duly signed and acknowledged by all incorporators .
Terms to Remember

14. Authorized Capital Stock –represents the maximum # of shares or amount the corporation may issue a stated in the articles of incorporation approved by the SEC.
Stock Subscription- an agreement to purchase stock and states the number of shares being subscribed, the subscription price, term of payment and call dates.
Capital Stock – this represents the amount paid in by the stockholders whether in cash , property or service and for which a certificate of stock is issued as evidence of stock ownership.

15. Certificate of Stock – a written evidence of the holder’s ownership of shares.
Unissued Capital Stock – difference between the authorized capital stock and the outstanding capital stock.
Subscsription Receivable - amount of contract price collectible from the subscriber.
Paid up Capital Stock – the portion of the subscribed or outstanding capital stock that is paid.

16. Accounting for stock transaction!
Authorization – recording the maximum number of shares a corp is authorized to issue. This is called authorized capital stock.
Sale – when a SH buys and pays immediately in full, the stocks are considered sold and a stock certificate is issued.
Subscription –a subscriber enters into a contract to buy a number of shares . A down payment is usually required with the balance payable on fixed dates.
Collection of subscription – the subscription may be paid by the stockholders in cash property, service or in the form of business.
Issuance of Certificate – issued once subscription is fully paid.

17. 2 methods of recording
Memorandum entry method
Journal entry method

18. Things to remember!
Asset contributions may be in the form of cash, property, or service
Properties must be recorded at its fair market value or the fair market value of the stock to be issued whichever is clearly determinable
Services must be recorded at its billed price
Capital stock and Subscribed Capital Stock must be recorded at the par value. Stocks are issued only when the stocks are fully paid for
The subcription receivable is recognized at the subscription price, which may be at par or above par.
The Excess contribution is recorded as “ Additional Paid In Capital -, Paid In Capital – Excess of Par”