I'm Giancarlo Enrico S. Pozon, a Wushu instructor, investor and Barrister... That's right, Barrister; I graduated from law school and took the Bar Exams, now I'm waiting for the results. I created this blog to make Philippine Law easy to understand for the average person. It's all about free legal advice. There are many law blogs. But the problem is that many of them are written for lawyers and law students. They use words that can't be understood by ordinary people.
Many lawyers, judges and law students consider themselves as superior to most human beings because of their knowledge of the law. It bothers me since the law is supposed to serve society. Since the law is meant to serve society as a whole, it is important that is must be understood by everybody.
This does not mean that we should all become lawyers. It means that although law is a highly specialized profession, the first duty of everybody in this profession is to make the law understandable to all; that's why all these articles are free legal advice.
Like I said, this blog is about law -but it's for the ordinary people, not the lawyers. It's for the ordinary folk so they will know what is good and bad for them, and that making them aware of the law will help us all improve society as a whole. This is free legal advice for everybody!
Now that we've taken up issuance and transfer of stocks, let's look at the shares of stock themselves. There are 7 kinds of shares of stock:
1.) Common
Common shares are equal in rights and privileges and have no fixed/definite ROI. If the corporation issues only one kind of stock, then it's common.
2.) Preferred
Preferred shares, on the other hand, enjoy preferences on dividends (or assets in case of liquidation.) They also have a fixed or limited ROI.
3.) Redeemable/Callable
Preferred (usually) shares that can be redeemed by the corporation on a fixed date and redemption price, regardless of whether there were unrestricted earnings or not. The corporation won't, however, become insolvent by their redemption because a sinking fund deposited at a trustee bank is always prepared for the purpose.
4.) Treasury
Shares that were issued and fully paid for but bought back by the corporation by purchase, redemption or any other legal means. They're not retired, so they can be sold again (and at a price lower than par value.) They can't be distributed as cash or stock dividends but they can be property dividends.
5.) Convertible
Shares that can be converted from one class to another (preferred to common, or no-par to par) at a certain price and within a certain period.
6.) Shares in Escrow
Shares held in a third party's custody until they're fully paid. The buyer isn't their owner yet, so he doesn't have the rights and privileges of a stockholder.
7.) Founders' Shares
Shares issued to the founders and promoters of the corporation. They can be given certain rights and privileges that the other shares don't enjoy. If the exclusive right to vote and be voted for in the election of directors is granted them, it can't be longer that 5 years after the date of approval by the SEC.
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