Corporation Law: The Revised Corporation Code of the Philippines - Sec 12

  THE REVISED CORPORATION CODE  OF THE PHILIPPINES  

Republic Act No. 11232 

TITLE II -  INCORPORATION AND ORGANIZATION OF PRIVATE CORPORATIONS


SEC. 12. Minimum Capital Stock Not Required of Stock Corporations. - Stock corporations shall not be required to have a minimum capital stock, except as otherwise specifically provided by special law.

NOTES 

1. Minimum Authorized Capital.

  • Section 12 provides that there is no minimum authorized capital under the RCCP. 
  • Important terms relating to this topic as well as their definitions, are as follows:
    1. Authorized Capital Stock
      • is the amount fixed in the articles of incorporation to be subscribed and paid by the stockholders of the corporation. 
    2. Subscribed Capital
      • is that portion of the authorized capital stock that is covered by subscription agreements whether fully paid or not.
    3. Paid Up Capital
      • is the amount of outstanding capital stock and additional paid-in capital (APIC) or premium paid over the par value of the shares.
      • APIC is any additional contribution by shareholders over the par value of shares. 
    4. Outstanding Capital Stock
      • refers to the total shares of stock issued to subscribers or stockholders, whether or not fully or partially paid except treasury shares so long as there is a binding subscription agreement
    5. Capital
      • includes properties and assets of the corporation that are used for its business or operation.
    6. Stated Capital
      •  is the sum of the par value of all issued par value shares, the entire amount received for no-par value shares and any amount transferred by a stock dividend.
2. Paid-up Capital. 
  • Special laws may also impose initial capitalization requirements. 
  • The Securities and Exchange Commission prescribes the following minimum paid-up capital for:
    • Financing Company
      • Metro Manila and other 1st class cities................₱10,000,000.00
      • Other classes of cities...........................................₱  5,000,000.00
      • Municipalities.......................................................₱  2,500,000.00
3. Initial Subscribed and Paid-Up Capital. 
  • The RCCP requires that a portion of the authorized capital is subscribed in a stock corporation. 
    • This is evident from the requirement that the Articles of Incorporation must contain a list of subscribers. 
    • Besides, the investment of the subscribers is the primary source of the capital that the corporation will use for its operations. 
    • Hence, it follows that at least a portion of the subscription must also be paid. 
  • Stocks corporations must necessarily issue shares of stock that are fully or partially paid for by considerations that are acceptable under the RCCP.
    • However, there is no required minimum subscribed capital and paid-up capital under the RCCP.
    • The exceptions are corporations governed by special laws that require a minimum subscribed and/or paid-up capital.
  • Subscribers may pay in full or in part the subscription price.
    •  If the subscription contracts require full payment of the subscription price, the contract must be followed. 
  • The amount of paid-up may be established by various documents such as the Audited Financial Statement, the Articles of Incorporation, treasurer's affidavit (for corporations organized under the Corporation Code) and Certificate of Filing of increase of authorized capital.

Practice Questions:
Q: What is Authorized Capital Stock according to the RCCP, and how is it defined?
A: Authorized Capital Stock is the amount fixed in the articles of incorporation to be subscribed and paid by the stockholders.

Q: How is Outstanding Capital Stock defined, and what does it include?
A: Outstanding Capital Stock refers to the total shares of stock issued to subscribers or stockholders, whether fully or partially paid, except treasury shares, as long as there is a binding subscription agreement. 

Q: How is the concept of Paid Up Capital defined?
A: Paid Up Capital refers to the amount of outstanding capital stock and additional paid-in capital (APIC) or premium paid over the par value of shares. 

Q: What is Stated Capital, and how is it calculated?
A: Stated Capital is the sum of the par value of all issued par value shares, the entire amount received for no-par value shares, and any amount transferred by a stock dividend. It represents the total monetary value of the issued shares of a corporation, considering both par and no-par value shares.



Q: Does the RCCP impose a minimum authorized capital requirement for corporations?
A: No, there is no minimum authorized capital requirement under the RCCP. Corporations are not obliged to have a specific minimum amount of authorized capital.

Q: What is the requirement regarding initial capitalization in stock corporations under the RCCP?
A: The RCCP mandates that a portion of the authorized capital must be subscribed in a stock corporation. This requirement is reflected in the necessity for the Articles of Incorporation to contain a list of subscribers, and these subscriptions serve as the primary capital for the corporation's operations.

Q: Are there specific guidelines regarding the minimum subscribed and paid-up capital under the RCCP?
A: No, the RCCP does not specify a required minimum subscribed or paid-up capital. However, corporations governed by special laws may have minimum subscribed and/or paid-up capital requirements.

Q: What documents can establish the amount of paid-up capital for a corporation?
A: The amount of paid-up capital can be determined through various documents such as the Audited Financial Statement, the Articles of Incorporation, treasurer's affidavit (for corporations organized under the Corporation Code), and Certificate of Filing of increase of authorized capital.

Q: Can subscribers choose to pay only a part of the subscription price?
A: Yes, subscribers have the option to pay in full or in part the subscription price. If the subscription contracts mandate full payment, subscribers are obligated to adhere to the terms specified in the contract.

Q: Are corporations obligated to adhere to specific initial capitalization requirements under special laws?
A: Yes, special laws can impose initial capitalization requirements on corporations. 

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