Who are considered as corporators, incorporators, stockholders & members? How do we classify shares?

Attorney Marie Chris Baton Lasko introduces Section 5 of the Revised Corporation Code, which defines key terms. 'Corporators' is a broad term encompassing members of non-stock corporations and stockholders of stock corporations, including incorporators. 'Incorporators' are the original corporators named in the articles of incorporation. 'Stockholders' are those who compose a stock corporation and can be natural or juridical persons. 'Members' are corporators of a non-stock corporation.

The video discusses other roles not explicitly in Section 5: 'Promoters' are individuals who facilitate the formation and organization of a corporation by bringing incorporators together. 'Subscribers' are those who promise to purchase unissued shares but are not yet stockholders until they fully pay. 'Underwriters' are typically investment bankers who agree to purchase or market an entire issue or a substantial portion of shares.

Section 6 introduces the concept of 'shares of stock,' which represent a shareholder’s interest and a unit in the capital stock of a stock corporation. Shares determine voting rights, dividend distribution, and a share in assets upon liquidation. Corporations can issue various classes of shares with different rights, privileges, or restrictions, which must be specified in the articles of incorporation.

The general rule is that all shares must have complete voting rights, except for preferred or redeemable shares. However, even non-voting shares retain the right to vote on fundamental matters such as amending articles of incorporation, adopting bylaws, disposing of corporate property, increasing or decreasing capital stock, mergers, corporate fund investments, and dissolution of the corporation.

Shares can have a 'par value' (a fixed money value stated in the articles of incorporation) or 'no par value.' Certain entities, including banks, insurance companies, pre-need companies, public utilities, and building and loan associations, are prohibited from issuing no-par value shares. Preferred shares must always have a par value and are given preference in dividend and asset distribution during liquidation.

No-par value shares are considered fully paid and non-assessable, and holders are not liable to the corporation or its creditors. However, no-par value shares must be issued for a consideration of at least five pesos per share. The entire consideration received for no-par value shares is treated as capital and cannot be distributed as dividends. Corporations can classify shares to comply with constitutional or legal requirements, such as minimum ownership percentages for local citizens.