f. Doctrine of Equality of Shares

Doctrine of Equality of Shares

Each share shall be equal in all respects to every other share, except as otherwise provided in the articles of incorporation and in the certificate of stock. (sec. 6)¹

• Common and Preferred shares
• Common shares are also called ordinary shares and they share in profits pro-rata
• Preferred shares may be preferred (a) as to dividends, or (b) as to distribution of assets during liquidation, or (c) as to any other manner stated in the Articles, not contrary to the Revised Corporation Code². If authorized by Articles, Board may fix terms. It is ALWAYS with a stated par value.
• Par Value and No-Par Value
• Par value shares - with a pre-stated amount or denomination
• Non- par value - no pre-stated value

Non-par value shares are deemed fully paid and non-assessable, and their holders are not liable to the corporation or its creditors in respect of those shares.

The consideration received is treated as capital and cannot be declared as dividends.

Because they are vested with public interest, the following types of corporations may only issue par value shares:

• Banks
• Trust Companies
• Insurance Companies
• Pre-need Companies
• Public Utilities
• Building and Loan Associations.
• Other corporations authorized to obtain or access funds from the public
• Voting and Non- Voting Shares
• Voting share with complete voting rights
• Non - voting shares are preferred or redeemable shares that have limited voting rights.

Doctrine of Equality of Shares

Under the doctrine of equality of shares – all stocks issued by the corporation are presumed equal with the same privileges and liabilities, except as otherwise provided in the articles of incorporation and in the certificate of stock (CIR vs. CA, G.R. No. 108576)³

This is now indicated under Sec. 6 of the RCC⁴

Each share shall be equal in all respects to every other share, except as otherwise provided in the articles of incorporation and in the certificate of stock. (Sec. 6)⁵