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Law on Partnership & Corporation
Transcript of Law on Partnership & Corporation
The law on Partnership is governed by the Civil Code of the Philippines, while the Law on Corporation is governed by Batas Pambansa Blg. 68, Corporation Code of the Philippines
Article 1767. By the contract of partnership two or more persons bind themselves to contribute money, property or industry to a common fund, with the intention of dividing the profits among themselves.
- is an association of two or more persons to carry on as co-owners of a business for profit
- a partnership contract is based on TRUST and CONFIDENCE
DELECTUS PERSONAE - no one can become a partner in a partnership without the consent of all the partners
The essential requisites of a partnership are:
(1) An agreement to contribute money, property, industry to a common fund.
This is complied with if:
a. each one of the partners brings o is obliged to bring something to the partnership;
b. that which is brought becomes COMMOM PROPERTY.
(2) Intent to divide the profits among themselves,
This is complied with if:
a. partnership is established to obtain profits;
b. profit must be common to all the parties; and
c. profit or loss must be divided among the partners.
Advantages of forming a partnership:
1. Easy to form
2. Improved growth possibilities
3. Freedom from bureaucracy
forming a partnership:
2. Difficulty in obtaining large sums of capital
3. Firm is tied to the acts and judgement of one partner as agent
4. Difficulty in severing partnership ties
Classification of Partnerships
1. According to subject matter:
a. Universal partnership
b. Particular partnership
2. According to liability:
a. General partnership
b. Limited partnership
3. According to duration:
a. Partnership for a fixed term - is one in which the term of its existence has been agreed upon EXPRESSLY or IMPLIEDLY.
Forms of Partnership
1. when it is stipulated;
2. when immovable property or real rights are contributed
3. in case of limited partnerships, the parties must:
a. sign and swear to a certificate w/c shall state, among others the name of the partnership adding the word "Limited", and the character of the business;
b. file for record the certificate in the Office of the Securities and Exchange Commission.
Failure to comply with the forgoing formal requirements will only make the partnership a GENERAL PARTNERSHIP.
Obligations of the Partners
1. Where contribution is money or property.
2. Where contribution is industry.
3. Obligation of the capitalist partner.
4. Responsibility between partnership and partner.
Industrial partner - a partner who merely contributed industry or services to the common fund
Capitalist partner - a partner who contributed money and property to the common fund
5. Sharing of profit and loss among partners.
6. Property rights of a partner.
7. Liability of individual partners to third person.
8. Liability of the limited partner.
Law on Corporation
Sec. 2. Corporation defined. - A corporation is an artificial being created by operation of law, having the right of succession and the powers, attributes and properties expressly authorized by law or incident to its existence.
"Right of Succession" means that a corporation has a capacity to exist regardless of the DEATH, WITHDRAWAL, INSOLVENCY or INCAPACITY of the individual stockholders and regardless of the transfer of interest or shares of stock.
a. Stock Corporation
b. Non-stock Corporation
c. Corporation De Jure
d. De Facto Corporation
e. Public Corporation
f. Public Corporation
g. Private Corporation
h. Eleemosynary Corporation
i. Domestic Corporation
j. Foreign Corporation
Kinds of Corporation
Advantages of a Corporate Organization:
1. Strong separate juridical personality
2. Limited liability to investors
3. Free transferability of units of ownership
4. Centralized management through the Board of Directors
6. Easier to sell small amounts of stock to raise capital
Disadvantages of a Corporate Organization
1. Extensive government regulation
2. Double taxation
3. Activities are limited by charter and various laws
Steps in Creation and Organization of a Corporation
3. Formal organization and commencement of the business operation
Contents of the Articles of Incorporation
1. The name of the corporation.
2. The specific purpose or purposes for which the corporation was incorporated.
3. The place where the principal office of the corporation is located, which must be within the Philippines.
4. The term for which the corporation is to exist.
5. The names, nationalities and residences of the incorporators.
Qualifications of incorporators:
a. a natural person
b. not less than five (5) but not more than (15) incorporators
c. of legal age
d. majority must be residents of the Philippines
e. must own at least one (1) share of the capital stock of the corporation.
6. The names, nationalities and residences of the incorporating board of directors until the first regular directors or trustees are duly elected and qualified.
7. The authorized capital stock, and the amount subscribed and paid by the stockholders / incorporators.
- paid up capital must not be less than Php5,000.00