SEC PH1: MOD 1 - MOCK TEST Flashcards
A __________________ proprietorship is a type of business organization in which one individual, known as the sole proprietor, owns and operates the business. It is the simplest and most common form of business ownership, and it is often used by small businesses or entrepreneurs who are just starting out.
SOLE
A ____________________ is a business owned and operated by two or more individuals or entities. Partnerships are often informal, with no formal structure or organization. Partners share the profits and losses of the business, and each partner has a say in decision-making.
PARTNERSHIP
it is also called a Limited Liability Company
PARTNERSHIP
right of succession, powers, attribute, properties
CORPORATION
artificial being; juridical person; created by law
CORPORATION
if a stockholder dies, __________ continues
CORPORATION
- 5-15 natural persons of legal age
- Residents of PH; grandfather rule 60-40
FORMATION OF CORPORATION
▪ at the time of incorporation = at least 25% of ACS = subscribed ▪ 25% of ACS = 25% of that should be PAID upon subscription
25-25 rule in Capitalization
- 25-25 rule
- Php 5,000 minimum paid up capital
- Classes of shares
Capitalization in Forming a Corporation
What’s the Difference Between Corporator and Incorporator?
1) Corporator = Shareholders
2) Incorporator = Original Corporators in the AOI
What are the TYPES OF CAPITAL?
1) AUTHORIZED CAPITAL STOCK
2) CAPITAL STOCK
3) PRE-INCORP SUBSCRIPTION
4) SUBSCRIBED CAPITAL STOCK
4.1) PAID-UP CAPITAL STOCK
4.2) ADDITIONAL PAID-IN CAPITAL (SURPLUS)
5) UNSUBSCRIBED/UNISSUED
6) ISSUED CAPITAL
6.1) OUTSTANDING CAPITAL STOCK
6.2) TREASURY SHARES
7) TRUST FUND DOCTRINE
What is the minimum paid up capital?
Php 5,000 minimum
*must be evidenced by: TREASURER’S AFFIDAVIT
What are the CLASSES OF SHARES?
1) COMMON
2) PREFERRED
3) FOUNDERS OF SHARES
4) PAR VALUE SHARES
5) NO-PAR VALUE SHARES
6) VOTING SHARES
7) NON-VOTING SHARES
8) REDEEMABLE SHARES
9) RETIREABLE SHARES
10) TREASURY SHARES
11) WATERED STOCK
What are the TYPES OF CORP FORMATION?
1) STOCK
2) NON-STOCK
3) CLOSE CORP
4) LIMITED LIABILITY CORP
5) PUBLIC / LISTED COMPANY
5) DE JURE
6) DE FACTO
NO VOTING RIGHTS
Issued BUT NOT outstanding
NO DIVIDENDS
Can be disposed of for a reasonable price
Reduces capital
TREASURY SHARES
COMMON vs PREFERRED?
COMMON = Has Voting Rights, Can have both PAR VALUE and NO PAR VALUE
PREFERRED = No Voting Rights, Never No Par Value, Can have Preference over ASSET & DIVIDENDS
Preferred is also called __________________ shares
REDEEMABLE
o Stated value
o Cannot be issued for < P5/share
o Authorized capital = authorized # of shares
o Non assessable and deemed fully paid upon issuance
No Par Value
redeemed regardless of UNRESTRICTED RETAINED EARNINGS
Redeemable shares
Classified in AOI
Exclusive right to vote; max period of 5 yrs (subj to SEC approval)
HAS VOTING RIGHTS
FOUNDERS SHARES
Subscribed; paid or unpaid
Subscribed Capital Stock
max no. of shares; par value (trust fund doctrine)
Authorized Capital Stock
max no. of shares; not par value; authorized shares but not authorized capital stock
Capital stock
Subscribed; paid
Paid-up Capital Stock
