If you want to venture into business and wish to form a corporation, one of the things you have to consider is how many shares of stock should your corporation have. A common question is usually posed – What is the minimum number of shares of stock should a corporation have?
Before we answer the question, it is first necessary to define various terminologies pertaining to capital stock. It must be noted that authorized capital stock is the amount fixed in the articles of incorporation to be subscribed and paid, or agreed to be paid by stockholders in money, property services or other means at the organization of the corporation and afterwards and upon which it is to conduct business. In short, this is the total number of shares held by the corporation.
Subscribed capital stock is the amount of capital stock of the corporation that is subscribed or are acquired by persons or other corporations. There is no need to subscribe to all the shares of the corporation. It is actually best to leave some unsubscribed shares so they may be readily available to future investors.
Finally, the paid-up capital stock is the portion of subscribed or outstanding capital stock that is paid. This pertains to capital stock that has been both subscribed and paid. Note that the subscribed capital stock need not be paid in full initially by the stockholder. The balance for the payment of the shares may be settled at a later time.
Now, let us go back to the question – What is the minimum number of shares of stock should a corporation have? The general answer is that there is NO minimum number of shares required for a corporation to possess. Section 12 of Republic Act No. 11232, otherwise known as the Revised Corporation Code of the Philippines states:
“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.”
The general answer, of course, is subject to certain exceptions. Certain businesses or industries are subject to the minimum paid-up capital requirement. The amount varies depending on the industry. Please see below a table of industries with required minimum paid-up capitals as issued by the Securities & Exchange Commission (SEC):
Break Bulk Agent | P | 250,000.00 |
Cargo Consolidator | P | 400,000.00 |
Financing Company-Main | ||
1st class cities | P | 10,000,000.00 |
Other cities | P | 5,000,000.00 |
Municipalities | P | 2,500,000.00 |
Financing Company-Branch | ||
1st class cities | P | 1,000,000.00 |
Other Cities | P | 500,000.00 |
Municipalities | P | 250,000.00 |
Freight Forwarders | ||
Domestic | P | 250,000.00 |
International | P | 2,000,000.00 |
Health Maintenance Organization | P | P10,000,000.00 |
Insurance | ||
Insurance Broker | P | 20,000,000.00 |
Reinsurance Broker | P | 20,000,000.00 |
Insurance Broker and Reinsurance Broker | P | 50,000,000.00 |
Life Insurance Company | P | 1,000,000,000.00 |
Non-Life Insurance Company | P | 1,000,000,000.00 |
Reinsurance Company | P | 2,000,000,000.00 |
Investment Adviser/Manager | P | 10,000,000.00 |
Investment Company | P | 50,000,000.00 |
Investment House | P | 300,000,000.00 |
Lending Company-Main | P | 1,000,000.00 |
Lending Company-Branch | ||
1st class cities | P | 300,000.00 |
Other Cities | P | 150,000.00 |
Municipalities | P | 75,000.00 |
Mining | ||
(Authorized Capital Stock) | P | 100,000,000.00 |
(Paid-up Capital Stock) | P | 6,250,000.00 |
Non-Vessel Operating Common Carrier | P | 4,000,000.00 |
Pawnshop | P | 100,000.00 |
Pre-Need Plan Issuer | P | 100,000,000.00 |
Pre-Need Plan Agent | P | 5,000,000.00 |
Recruitment for Local Employment | ||
Corporation | P | 500,000.00 |
Partnership | P | 200,000.00 |
Recruitment for Overseas Employment | P | 5,000,000.00 |
Retail Trade with Foreign Equity | US $ | 2,500,000.00 |
School (for stock corporations) | ||
Elementary Education | P | 1,000,000.00 |
Elementary & Secondary Education | P | 2,500,000.00 |
Elementary, Secondary, Tertiary | P | 5,000,000.00 |
Security Agency | P | 500,000.00 |
Securities Broker/Dealer (New/SRO-Member) | P | 100,000,000.00 |
Securities Broker/Dealer (Existing/SRO-Member) | P | 10,000,000.00 |
Securities Broker/Dealer in Proprietary Shares (Non-SRO- Member) | P | 5,000,000.00 |
Special Purpose Vehicle | P | 31,250,000.00 |
Special Purpose Corporation | P | 5,000,000.00 |
Transfer Agent | P | 1,000,000.00 |
The table below, culled from the SEC, illustrates the mandatory paid-up capital when foreign equity is involved:
Domestic Corporations with more than 40% foreign equity | ||
– Domestic Market Enterprise | US $ | 200,000.00 |
– Export Market Enterprise | P | 5,000.00 |
Foreign Branch Office | ||
– Domestic Market Enterprise | US $ | 200,000.00 |
– Export Market Enterprise | P | 5,000.00 |
Partnership with foreign partner | ||
– Domestic Market Enterprise | US $ | 200,000.00 |
– Export Market Enterprise | P | 3,000.00 |
Foreign Representative Office | US $ | 30,000.00 |
Regional Area Headquarters (RHQ) | US $ | 50,000.00 |
Regional Operating Headquarters (ROHQ) | US $ | 200,000.00 |
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