What are founder's shares, redeemable shares and treasury shares? (Sections 7, 8 and 9 of the RCC)

Attorney Marie Chris Baton Lasko introduces the topic of the video, which will simplify the law by discussing three types of shares: founders' shares, redeemable shares, and treasury shares, as per Sections 7, 8, and 9 of the Revised Corporation Code.

Founder's shares are offered to the organizers or promoters of a corporation and often come with special privileges, such as the exclusive right to vote and be elected as a director. This privilege is limited to five years from the date of incorporation.

Redeemable shares (also known as callable shares) are those that the corporation has the option to buy back from shareholders upon the expiration of a fixed period, as stipulated in the articles of incorporation. A key feature is that these shares can be repurchased by the corporation even without the existence of unrestricted retained earnings, making it an exception to the general rule under Section 40. Once redeemed, these shares are usually retired and cannot be resold unless otherwise specified in the articles of incorporation.

Treasury shares are shares that have been issued, fully paid for, and subsequently reacquired by the corporation through various lawful means (e.g., purchase, donation). Unlike redeemable shares, treasury shares require the existence of unrestricted retained earnings for their acquisition, falling under the general rule of Section 40. These shares do not get retired and can be disposed of again by the board of directors. While held in treasury, they are not considered outstanding shares, meaning they do not have voting rights or other shareholder privileges.

The video concludes by reiterating the differences between founder's shares, redeemable shares, and treasury shares, emphasizing their respective characteristics under Sections 7, 8, and 9 of the Revised Corporation Code.