You’re ready to register your corporation.
Then you encounter terms like:
Authorized Capital Stock.
Subscribed Capital.
Par Value.
Primary Purpose.
Incorporator.
Director.
Suddenly, registering a company feels less like starting a business and more like taking a corporate-law exam.
The Articles of Incorporation are among the foundational documents of a Philippine corporation. They contain important information about the company’s identity, purpose, location, ownership, governance, and capitalization.
The problem is that first-time founders often complete these fields without fully understanding what they mean.
That can be risky.
These aren’t just administrative questions.
The answers help define the corporation you’re creating.
Here’s what the major sections generally mean—and why they matter.
First: What Are the Articles of Incorporation?
Think of the Articles of Incorporation as part of your corporation’s foundational legal framework.
They provide essential information about the company being formed.
For a typical stock corporation, the Articles address matters such as:
Corporate name
Corporate purposes
Principal office
Corporate term
Incorporators
Directors
Capital structure
Share subscriptions
Other information required by law or applicable SEC rules
Once the corporation is established, these details can have continuing significance.
That’s why the Articles shouldn’t be treated as:
“Just another SEC form.”
Field #1: Corporate Name
This seems easy.
“What’s the name of your company?”
But corporate naming is subject to SEC rules.
Your proposed name generally needs to be distinguishable from names already reserved or registered and must comply with restrictions applicable to corporate names.
Certain words or terms may also be regulated or require additional authority depending on their use.
Example
Instead of simply:
ABC Solutions
the registered corporate name may need an appropriate corporate designation such as:
ABC Solutions Corporation
depending on the structure and approved name.
Why It Matters
Your corporate name can appear across:
SEC records
BIR records
Local permits
Contracts
Bank accounts
Invoices
Employment records
Official business communications
Consistency matters.
Common Mistake
Investing heavily in branding before confirming that the proposed corporate name can actually be registered.
Field #2: Primary Purpose
This is one of the most important sections.
The primary purpose describes the principal business activity for which the corporation is being established.
In simple terms:
What is this company primarily going to do?
For example, a corporation might principally engage in:
Business consulting
Software development
Manufacturing
Trading
Outsourcing services
Property-related activities
The actual wording should be appropriate to the proposed activity and applicable requirements.
Why It Matters
Your business activity can affect:
Regulatory requirements
Additional licenses
Foreign ownership considerations
Capitalization requirements
Local permits
Investment-incentive eligibility
Common Mistake
Writing an extremely broad purpose because:
“Maybe we’ll do all of those businesses someday.”
More activities don’t automatically make a corporation better.
Your purpose should reflect the business you genuinely intend to conduct.
Field #3: Secondary Purpose
A corporation may also identify additional activities that support or supplement its primary business, subject to applicable rules.
Think of it as:
Primary Purpose = Main Business
Secondary Purpose = Other authorized business activities
Example
A company’s primary purpose might relate to software development while appropriate secondary purposes could cover related activities that support its business model.
However, simply adding unrelated activities can create unnecessary regulatory complexity.
Common Mistake
Copying a long list of secondary purposes from another corporation’s Articles without asking whether those activities are relevant.
Every additional activity should have a reason for being there.
Field #4: Principal Office
The principal office identifies the corporation’s official location in the Philippines as required by applicable corporate rules.
This isn’t merely a mailing detail.
The business location can also affect subsequent registrations and permitting.
Why It Matters
Your location may affect matters involving:
BIR jurisdiction
Local business permits
Barangay requirements
Supporting address documents
Other regulatory registrations
Common Mistake
Choosing an address solely because it is inexpensive without first considering whether it is suitable for the intended business and subsequent permits.
Before finalizing your address, investigate the requirements associated with that location.
Field #5: Corporate Term
Under the Revised Corporation Code, corporations generally have perpetual existence unless their Articles provide otherwise.
In practical terms, a corporation does not necessarily need to choose an arbitrary 50-year lifespan simply because older corporate documents may have used fixed terms.
Why It Matters
This field addresses how long the corporation is intended to exist.
For many modern corporations, perpetual existence is the default framework.
Common Mistake
Using an old template without checking whether its provisions reflect current Philippine corporate law.
Corporate templates found online may have been prepared under older rules.
Field #6: Incorporators
An incorporator is a person or qualifying entity involved in forming the corporation and identified as such in the Articles.
This term is often confused with:
Stockholder
Director
Officer
Beneficial owner
These roles can overlap, but they don’t mean exactly the same thing.
Think of It This Way
Incorporator: Participates in forming the corporation.
Stockholder: Owns shares in the corporation.
Director: Participates in governance through the board.
Officer: Performs a corporate office or management function.
One person may occupy several roles, depending on the corporation and applicable law.
Common Mistake
Assuming every corporate title means “owner.”
It doesn’t.
Field #7: Directors
The board of directors plays a central role in corporate governance.
Shareholders own the corporation through their shares, while the board exercises corporate powers and oversees corporate affairs subject to law, the Articles, bylaws, and applicable governance rules.
Why It Matters
The board can be involved in major corporate decisions such as:
Significant contracts
Borrowing
Investments
Appointment of officers
Major transactions
Corporate policies
Common Mistake
Choosing directors only because their names are needed for registration.
Directorship carries legal responsibilities.
It shouldn’t be treated as a ceremonial title.
Field #8: Corporate Officers
Corporate officers perform specific roles within the company.
Depending on the corporation and applicable requirements, these can include positions such as:
President
Treasurer
Corporate Secretary
Other officers provided for in the bylaws or corporate structure
These roles are not interchangeable.
Why It Matters
Corporate officers may be responsible for areas such as:
Management
Corporate records
Financial matters
Certifications
Regulatory documentation
Common Mistake
Giving someone a title without understanding the legal and operational responsibilities attached to it.
Field #9: Authorized Capital Stock
Now we reach the section that confuses many founders.
Authorized capital stock generally refers to the maximum amount of capital stock the corporation is authorized under its Articles to issue, based on its approved capital structure.
It does not necessarily mean that the entire amount has already been invested in cash.
Simplified Example
Suppose a corporation has:
Authorized Capital Stock: ₱1,000,000
divided into:
10,000 shares
with:
₱100 par value per share
That establishes the authorized share structure.
It does not automatically mean all 10,000 shares have already been issued and fully paid.
Common Mistake
Thinking:
“If our authorized capital is ₱10 million, we need ₱10 million sitting in the bank immediately.”
Authorized, subscribed, and paid-up capital are different concepts.
Field #10: Number of Shares
The authorized capital stock may be divided into shares.
For example:
Authorized Capital: ₱1,000,000
Number of Shares: 10,000
Par Value: ₱100
The arithmetic is:
10,000 × ₱100 = ₱1,000,000
Why It Matters
Shares represent ownership interests in the corporation.
If Founder A owns 6,000 shares and Founder B owns 4,000 shares of the same class in this simplified example, their ownership would generally correspond to:
Founder A: 60%
Founder B: 40%
assuming all relevant shares are issued and there are no other factors affecting the calculation.
Common Mistake
Choosing the number of shares randomly without thinking about ownership allocation or future investment.
Field #11: Par Value
Par value is the value assigned to each share in the corporation’s capital structure when shares are issued with par value.
Example:
10,000 shares × ₱100 par value = ₱1,000,000 authorized capital stock
Par value should not automatically be confused with the current economic or market value of the company.
A corporation may grow substantially while the par value stated in its Articles remains unchanged.
Common Mistake
Thinking a ₱100 par value means the share can never be worth more than ₱100.
Corporate valuation and par value are different concepts.
Field #12: Subscribed Capital
This is another important distinction.
Subscribed capital generally represents the portion of the corporation’s capital stock that subscribers have committed to take.
Simplified Example
The corporation has:
₱1,000,000 Authorized Capital Stock
but the founders subscribe to shares representing:
₱500,000
The ₱500,000 represents the subscribed amount in this simplified illustration.
Why It Matters
Subscriptions help establish who is taking shares and how much capital has been committed.
Field #13: Paid-Up Capital
Paid-up capital refers generally to the portion of subscribed capital that has actually been paid to the corporation.
Using a simplified illustration:
Subscribed Capital: ₱500,000
Amount Paid: ₱250,000
Then the paid-up amount would be ₱250,000.
However, minimum capitalization and subscription/payment requirements can depend on the corporation’s structure, activity, foreign ownership, and applicable special laws or regulations.
Important Warning
Don’t copy capital figures from another corporation.
A business involving foreign investment or a regulated activity may face considerations that don’t apply to an ordinary domestic corporation.
Authorized vs. Subscribed vs. Paid-Up Capital
Here’s the easiest way to remember the difference:
Authorized
How much capital stock is the corporation authorized to issue under its Articles?
Subscribed
How much have subscribers committed to take?
Paid-Up
How much of the subscription has actually been paid?
They are related.
But they are not the same thing.
Field #14: Subscriber Information
The Articles or related incorporation documents identify relevant information regarding subscriptions.
This can include matters such as:
Subscriber identity
Nationality
Number of shares subscribed
Subscription amount
Amount paid
These figures need to reconcile with the company’s overall capital structure.
Common Mistake
Entering percentages first and trying to make the share numbers fit afterward.
A better approach is to design the ownership structure systematically.
Field #15: Nationality
Nationality becomes particularly important when foreign ownership is involved.
Philippine law permits foreign investment in many business activities, but certain activities remain subject to foreign equity restrictions or other conditions.
That means nationality isn’t simply an identification field.
It can have regulatory implications.
Before Filing
For a corporation with foreign investors, determine:
What activity will the company conduct?
Is foreign ownership permitted?
Is there a foreign equity limit?
Are special capitalization requirements applicable?
Are additional approvals or licenses required?
Do this before finalizing the ownership percentages.
What About a One Person Corporation?
The One Person Corporation (OPC) changed an important feature of Philippine corporate formation by allowing a qualifying single stockholder to establish a corporation under the Revised Corporation Code.
An OPC has its own requirements and governance framework.
For entrepreneurs who previously considered adding nominal shareholders simply to form a corporation, an OPC may provide an alternative where appropriate.
But an OPC is still a corporation.
It still requires proper:
Corporate registration
Tax registration
Accounting
Recordkeeping
Local permits
Regulatory compliance
“One person” does not mean “no compliance.”
Articles of Incorporation vs. Bylaws
These two documents are often confused.
Articles of Incorporation
Establish fundamental information about the corporation.
Bylaws
Generally provide internal rules for the corporation’s governance and procedures, where applicable.
Think of it this way:
Articles = What the corporation fundamentally is
Bylaws = How the corporation internally operates
The exact requirements depend on the corporation and current law.
Can the Articles Be Changed Later?
Certain provisions can be amended after incorporation, subject to the Revised Corporation Code, SEC requirements, appropriate corporate approvals, and other applicable laws.
But the fact that something can be amended doesn’t mean you should register carelessly.
Amendments can involve:
Corporate approvals
Documentation
SEC filings
Government fees
Professional costs
Processing time
Updates with other agencies
It is usually better to make informed decisions at formation than to assume:
“We’ll just change everything later.”
The Biggest Mistake: Filling Out Fields You Don’t Understand
Corporate-registration portals have made company formation more accessible.
But technology doesn’t eliminate the need to understand the information you’re submitting.
If a field asks for:
Authorized Capital Stock
don’t guess.
If it asks for:
Primary Purpose
don’t blindly copy another corporation.
If it asks for:
Ownership
don’t choose percentages before reviewing foreign-equity considerations.
If it asks for:
Principal Office
don’t enter an address before checking whether it works for your business.
The correct mindset is:
Understand → Decide → Document → Verify → Submit
Not:
Guess → Submit → Correct Later
Your Pre-Filing Articles of Incorporation Checklist
Before finalizing your incorporation documents, review:
Corporate Identity
☐ Corporate name verified
☐ Principal office confirmed
☐ Corporate term reviewed
Business Activities
☐ Primary purpose accurately reflects the business
☐ Secondary purposes are relevant
☐ Regulated activities identified
Ownership
☐ Incorporators identified correctly
☐ Stockholders/subscribers identified
☐ Foreign ownership reviewed where applicable
☐ Ownership percentages verified
Governance
☐ Directors identified
☐ Officer requirements understood
☐ Governance responsibilities reviewed
Capital
☐ Authorized capital understood
☐ Number of shares verified
☐ Par value verified where applicable
☐ Subscriptions reconcile
☐ Paid-up amounts reconcile
☐ Applicable capitalization requirements checked
Documents
☐ Names are consistent
☐ Addresses are consistent
☐ Share figures reconcile
☐ Supporting documents are complete
☐ Final documents have been reviewed before submission
If you’re uncertain about what a field means, don’t guess simply to move to the next page.
Your Articles Build the Foundation of Your Corporation
The Articles of Incorporation shouldn’t be frightening.
But they should be taken seriously.
They help define:
Who owns the corporation.
What the corporation does.
Where it is located.
How its capital is structured.
Who initially governs it.
Getting these decisions right at the beginning can reduce the need for corrections and restructuring later.
Corporate registration isn’t simply about receiving an SEC certificate.
It’s about creating a legal structure that actually fits the business you intend to build.
Need Help Understanding Your Corporate Registration?
CBOS Business Solutions Inc. assists entrepreneurs, startups, corporations, and foreign investors with business-registration requirements in the Philippines.
Whether you’re establishing a domestic stock corporation, One Person Corporation, or a business involving foreign investment, understanding your corporate structure before filing can help prevent unnecessary mistakes.
From SEC registration and corporate setup to BIR registration, local business permits, and other applicable registrations, CBOS can help you navigate the steps involved in establishing your business.
Don’t fill in your Articles of Incorporation by guessing what the fields mean.
Understand the structure before you submit it.
Planning to establish a corporation in Cebu, Davao, or elsewhere in the Philippines? Contact CBOS today and let our team help simplify your corporate-registration process.
Disclaimer: This article provides general educational information and is not legal, tax, accounting, or investment advice. Corporate-registration procedures and requirements can vary according to the type of corporation, business activity, capitalization, foreign ownership, and applicable special laws. SEC rules and systems may also change. Verify current requirements with the Securities and Exchange Commission and qualified Philippine professional advisers before filing.
Navigating the business landscape in the Philippines can be both rewarding and intricate. Whether you’re embarking on a new venture or scaling up, ensuring that your corporate endeavors are in line with local regulations is paramount.
At CBOS Business Solutions Inc., we pride ourselves on simplifying these processes for our clients. As a seasoned professional services company, we offer comprehensive assistance with SEC Registration, Visa processing, and a myriad of other essential business requirements. Our team of experts is dedicated to ensuring that your business is compliant, well-established, and ready to thrive in the Philippine market.
Why venture into the complexities of business registration and compliance alone? Allow our team to guide you every step of the way. After all, your success is our commitment.
Get in touch today and let us be your partner in achieving your business goals in the Philippines.
Email Address: gerald.bernardo@cbos.com.ph
Mobile No.: +639270032851
You can also click this link to schedule a meeting.
Leave a Reply