What is the Minimum Number of Shares of Stock to Form a Corporation?

What is the Minimum Number of Shares of Stock to Form a Corporation?

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 AgentP250,000.00
Cargo ConsolidatorP400,000.00
Financing Company-Main
1st class citiesP10,000,000.00
Other citiesP5,000,000.00
MunicipalitiesP2,500,000.00
Financing Company-Branch
1st class citiesP1,000,000.00
Other CitiesP500,000.00
MunicipalitiesP250,000.00
Freight Forwarders
DomesticP250,000.00
InternationalP2,000,000.00
Health Maintenance OrganizationPP10,000,000.00
Insurance
Insurance BrokerP20,000,000.00
Reinsurance BrokerP20,000,000.00
Insurance Broker and Reinsurance BrokerP50,000,000.00
Life Insurance CompanyP1,000,000,000.00
Non-Life Insurance CompanyP1,000,000,000.00
Reinsurance CompanyP2,000,000,000.00
Investment Adviser/ManagerP10,000,000.00
Investment CompanyP50,000,000.00
Investment HouseP300,000,000.00
Lending Company-MainP1,000,000.00
Lending Company-Branch
1st class citiesP300,000.00
Other CitiesP150,000.00
MunicipalitiesP75,000.00
Mining
(Authorized Capital Stock)P100,000,000.00
(Paid-up Capital Stock)P6,250,000.00
Non-Vessel Operating Common CarrierP4,000,000.00
PawnshopP100,000.00
Pre-Need Plan IssuerP100,000,000.00
Pre-Need Plan AgentP5,000,000.00
Recruitment for Local Employment
CorporationP500,000.00
PartnershipP200,000.00
Recruitment for Overseas EmploymentP5,000,000.00
Retail Trade with Foreign EquityUS $2,500,000.00
School (for stock corporations)
Elementary EducationP1,000,000.00
Elementary & Secondary EducationP2,500,000.00
Elementary, Secondary, TertiaryP5,000,000.00
Security AgencyP500,000.00
Securities Broker/Dealer (New/SRO-Member)P100,000,000.00
Securities Broker/Dealer (Existing/SRO-Member)P10,000,000.00
Securities   Broker/Dealer   in   Proprietary   Shares   (Non-SRO- Member)P5,000,000.00
Special Purpose VehicleP31,250,000.00
Special Purpose CorporationP5,000,000.00
Transfer AgentP1,000,000.00

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 EnterpriseUS $200,000.00
– Export Market EnterpriseP5,000.00
Foreign Branch Office
– Domestic Market EnterpriseUS $200,000.00
– Export Market EnterpriseP5,000.00
Partnership with foreign partner
– Domestic Market EnterpriseUS $200,000.00
– Export Market EnterpriseP3,000.00
Foreign Representative OfficeUS $30,000.00
Regional Area Headquarters (RHQ)US $50,000.00
Regional Operating Headquarters (ROHQ)US $200,000.00

About Nicolas and De Vega Law Offices

If you need  have issues in corporate law, commercial law, corporate or commercial litigation, or civil or other criminal law-related issues,  we can help you. Nicolas and de Vega Law Offices is a full-service law firm in the Philippines.  You may visit us at the 16th Flr., Suite 1607 AIC Burgundy Empire Tower, ADB Ave., Ortigas Center, 1605 Pasig City, Metro Manila, Philippines.  You may also call us at +632 84706126, +632 84706130, +632 84016392 or e-mail us at info@ndvlaw.com. Visit our website https://ndvlaw.com.

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