b. Subscription Contract

Subscription Contracts Under the Revised Corporation Code

Any contract for the acquisition of unissued stock in an existing corporation or a corporation still to be formed is deemed a subscription, notwithstanding the fact that the parties refer to it as a purchase or some other contract¹.

A subscription of shares in a corporation still to be formed is irrevocable for a period of at least six (6) months from the date of subscription, unless all of the other subscribers consent to the revocation, or the corporation fails to incorporate within the same period or within a longer period stipulated in the contract of subscription². In addition, subscribers to stock are liable to the corporation for interest on all unpaid subscriptions from the date of subscription if the subscription contract requires interest, at the rate fixed in the contract or, if the contract fixes no rate, at the prevailing legal rate³.

With respect to regulatory and accounting compliance, the Supreme Court ruled in Abacus Coal Exploration and Development Corporation v. Securities and Exchange Commission, G.R. No. 262484, 22 October 2025, that issued capital, as a minimum, must be disclosed in the Balance Sheet pursuant to Securities Regulation Code Rule 68⁴. Disclosures in the notes to financial statements that fail to accurately report acquired assets and issued shares improperly understate corporate assets and equity, constituting sanctionable material deficiencies and misstatements⁴.