Part 2: Requirements of a Stock Corporation
In the first part of this series, we talked about what a corporation is. Now we will discuss the requirements needed to start your stock corporation.
1. There should be at least 5 but not more than 15 individuals who shall be the incorporators, all of whom must be at least 18 years old, and a majority of whom are residents of the Philippines. (Section 10 of the The Corporation Code of the Philippines)
2. Each incorporator must own or be a subscriber to at least 1 share of stock of the corporation.(Section 10)
3. A stock corporation shall not be required to have any minimum authorized capital stock except as otherwise specifically provided for by law depending on the purpose or business of the corporation. (Section 12)
4. At least 25% of the authorized capital stock must be subscribed by the incorporators (i.e., issued to the incorporators) at the time of incorporation, and at least 25% of this total stock subscribed by the incorporators must be paid at the time of incorporation (called the “paid-up capital”).
Generally, the paid-up capital at the time of incorporation should not be less than Php 5,000.7 However, higher amounts of paid-up capital may be required by law. A list of the industries requiring a higher paid-up capital may be seen at www.sec.gov.ph.
5. A corporation may be subject to nationality restrictions imposed by various laws depending on its purpose or business. For example, at least 60% of the shares of stock of a corporation which owns land must be held by citizens of the Philippines.(Section 7, Article XII, Philippine Constitution)
For a list of the industries that are subject to nationality restrictions, the most recent Foreign Investment Negative List may be downloaded at www.gov.ph.
Next, we will discuss the steps in registering a stock corporation with the SEC.
Originally published at foundersguide.com
