What Are Share Classifications in the Philippines With the SEC?

February 13, 2026

The Articles of Incorporation serve as the foundational charter for any stock corporation in the Philippines that seeks to establish, acting as the primary legal instrument that defines the entity’s existence, purpose, and internal governance. Under the regulatory oversight of the Securities and Exchange Commission (SEC), this document is not merely a procedural requirement for SEC registration in the Philippines but a binding contract between the state and the corporation, and among its stockholders. Navigating the complexities of company registration in the Philippines, the SEC requires a meticulous approach to drafting these articles, particularly when addressing capital structures and the rights of those providing the investment. As the Revised Corporation Code (RCC) governs the lifecycle of a business, the specific declarations made in the Articles of Incorporation—from the corporate name and principal office to the intricate classification of shares—determine the enterprise’s long-term operational flexibility and legal compliance. For those looking to incorporate in the Philippines, mastery of these provisions is essential to ensure the business is built on a stable, legally sound foundation that aligns with both statutory requirements and the investors’ strategic goals.

Core Elements to Include in Your Articles of Incorporation

Before a business can legally operate as a corporate entity, it must meet the rigorous requirements for SEC business registration in the Philippines. The Articles of Incorporation must contain specific mandatory information as prescribed by Section 13 of the Revised Corporation Code. This document serves as the “constitution” of the company, and any omissions or errors can lead to the rejection of the application or future legal disputes. To ensure a smooth business registration process in the Philippines, the following elements must be clearly defined in list form:

The Corporate Name: The name must be distinguishable from any other name already registered or reserved for use by another entity. It must also not be contrary to law, morals, or public policy.
The Specific Purpose Clause: This clause identifies the corporation’s primary and secondary purposes for which it is formed. While a corporation has the power to engage in any lawful business, clearly defining the primary objective is essential for determining the scope of its authority.
The Principal Office Location: The document must state the specific address of the principal office, which must be located within the Philippines. This determines the venue for legal actions and the jurisdiction of the local SEC office.
Corporate Term: Under the Revised Corporation Code, corporations now have perpetual existence unless otherwise specified in the Articles of Incorporation.
Names and Residences of Incorporators: Incorporators are the persons who initially form the corporation. They must be natural persons, but the RCC now allows juridical entities to be incorporators in specific contexts for stock corporations.
Number and Names of Directors: The board of directors is the governing body of the corporation. The articles must specify the number of directors, who must be stockholders, and identify those who will serve until the first regular election.
Capital Structure and Share Data: This is the most critical section for investors. It must state the amount of authorized capital stock, the number of shares into which it is divided, the par value of each share (if any), and the specific share classification in the Philippines that the company will adopt.

Navigating Share Classification in the Philippines and Capital Structure

A central component of the articles of incorporation involves the precise definition of the company’s capital. The SEC requires a detailed breakdown of how ownership is distributed and the rights attached to those stakes. The classification of shares in the Philippines allows for a high degree of customization to suit the needs of different types of investors, from those seeking high-risk, high-reward equity to those preferring stable, debt-like dividends.

Common Shares: These represent the basic ownership interest in a Philippine stock corporation. Common shareholders usually have voting rights and are the last to receive assets in the event of liquidation, but they benefit most from the company’s growth.
Preferred Shares: These shares are given preference in the distribution of dividends and assets upon liquidation. The rights of preferred shares in the Philippines often include a fixed dividend rate, making them attractive to conservative investors.
Par Value vs No Par Value Shares Philippines: Par value shares have a specific minimum price stated in the articles, whereas no-par value shares do not have a stated value but must be issued for a consideration of at least five pesos. It is important to note that banks, insurance companies, and public utilities are prohibited from issuing no-par value shares.
Treasury Shares: Shares that have been issued and fully paid for but subsequently reacquired by the corporation. They do not have voting rights or dividend rights while held by the company.
Founders’ Shares: These are shares classified to give the original incorporators certain rights and privileges, such as the exclusive right to vote and be voted for in the election of the Board of Directors for a limited period, not exceeding five years.
Redeemable Shares: These are shares that may be purchased by the corporation from the holders upon the expiration of a fixed period, regardless of the existence of unrestricted retained earnings.

Analyzing Voting Rights and Restrictions in Philippine Stock Corporations

The power dynamic within a corporation is defined by how voting rights are allocated in the Articles of Incorporation. While the general rule is “one share, one vote,” the Revised Corporation Code allows for the creation of non-voting shares in the Philippines, provided that certain fundamental corporate acts remain subject to the vote of all shareholders.

Shares with Voting Rights Philippines: Unless otherwise stated in the Articles of Incorporation and the certificate of stock, every share is presumed to have the right to vote. This is the standard for most common shares.
Non-voting Shares: These are usually preferred or redeemable shares. However, even non-voting shares are entitled to vote on specific matters such as amendments to the articles, adoption of bylaws, sale or lease of all or substantially all corporate property, and the dissolution of the corporation.
Cumulative Voting: In the Philippines, the law protects minority stockholders through cumulative voting in the election of directors. This allows a stockholder to cast all their votes for a single candidate or to distribute them among several candidates.
Restrictions on Transfer: The Articles of Incorporation may also include specific restrictions on the transfer of shares, such as “Right of First Refusal” clauses, which require a shareholder to offer their shares to existing stockholders before selling to outsiders.
Class Voting: In some instances, a corporation may require that certain decisions be approved by a majority of a specific class of shares, ensuring that common shareholders do not override the interests of preferred shareholders on particular issues.

Detailed Mechanics of Common, Preferred, and Redeemable Shares

Delving deeper into the types of shares in the Philippines, it becomes evident that the SEC articles of incorporation must be drafted with foresight. Each class of shares serves a specific financial and legal purpose, and the way they are described in the articles will dictate how the corporation raises capital and manages its internal relationships.

Common vs. Preferred Shares in the Philippines: The distinction lies primarily in risk and control. Common shares provide the primary engine for voting control, while preferred shares act as a hybrid between equity and debt, offering a safer return through preferential dividends.
Participating vs Non-participating Preferred Shares: Participating preferred shares allow the holder to receive their fixed dividend and then participate further in the remaining profits alongside common shareholders. Non-participating shares are limited to their fixed dividend.
Cumulative vs Non-cumulative Preferred Shares: Cumulative shares require that any missed dividend be paid in the future before any dividends are paid to common shareholders. Non-cumulative shares do not “carry over” missed dividends.
Redeemable Shares Philippines Requirements: The articles must explicitly state the terms of redemption. These shares provide an exit strategy for investors or a means for the company to reduce its future capital obligations.
Convertible Shares: Some articles may specify that preferred shares can be converted into common shares at the option of the holder or the corporation, providing flexibility as the company matures.

How to File Articles of Incorporation in the Philippines with Expert Guidance

The path to a successful incorporation is fraught with technical requirements and regulatory scrutiny. Understanding how to file articles of incorporation in the Philippines involves more than just filling out a form; it requires a strategic layout of the company’s future. The process of company registration in the Philippines SEC is inherently complicated, involving intricate legal nuances that can delay operations if mishandled. Errors in share classification or failure to meet the requirements of the Articles of Incorporation of the Philippines can lead to costly revisions or legal challenges.

Drafting the Document: This stage requires careful alignment with the Revised Corporation Code. Every clause must be vetted for legal compliance.
The SEC Express Research and Name Reservation: Before filing, the corporate name must be verified and reserved through the SEC’s online portal.
Preparation of Supporting Documents: This includes the Treasurer’s Affidavit, the Bylaws, and other documentary requirements for SEC registration in the Philippines, depending on the industry.
The Trusted Role of Triple i Consulting: In this complex landscape, Triple i Consulting stands as a trusted provider of this service. We provide end-to-end support, ensuring your share classifications are optimized for your business model and that your filings are handled with precision.
Submission and Review: Once the documents are filed, the SEC conducts a thorough review. Having an expert team like Triple i Consulting manage this ensures that any queries from the commission are addressed promptly and professionally.
Post-Registration Compliance: After the SEC issues the Certificate of Incorporation, the work continues with local government permits and tax registrations, a process that is significantly streamlined with professional assistance.

Key Takeaways

The Articles of Incorporation serve as the definitive legal blueprint for any enterprise seeking a permanent foothold in the Philippine market, transcending their role as mere administrative requirements to become a vital instrument of corporate strategy. By precisely defining the nuances of share classification in the Philippines and aligning with the rigorous standards set by the Revised Corporation Code, a company establishes a transparent governance framework that protects investor interests and facilitates seamless capital mobility. As the Securities and Exchange Commission maintains a high bar for SEC registration in the Philippines, the accuracy of these foundational documents remains a prerequisite for avoiding regulatory hurdles and internal disputes. A well-structured set of Articles of Incorporation not only secures the legal status of a stock corporation in the Philippines but also communicates a commitment to transparency and professionalism, which are essential for attracting domestic and foreign investment. Ultimately, the foresight applied during the drafting process ensures the corporation remains resilient and adaptable, providing a stable platform for growth while maintaining strict compliance with the country’s evolving legal landscape.

Is Assistance Available?

Yes, Triple i Consulting can help you navigate every step of the business incorporation process and ensure your business is legally compliant. Our team of experts specializes in SEC registration and corporate structuring to help your business succeed in the Philippine market. Contact us today to schedule an initial consultation with one of our experts: