I. Introduction

The authorized capital stock of a corporation represents the total amount of capital that the corporation is authorized to raise through the issuance of shares as stated in its Articles of Incorporation. In the Philippine legal system, this concept is central to the formation of stock corporations. The Revised Corporation Code of the Philippines (Republic Act No. 11232), which took effect on 23 February 2019, introduced significant reforms to capitalization rules, removing the rigid minimum authorized capital stock requirement that existed under the old Corporation Code (Batas Pambansa Blg. 68). This article examines in exhaustive detail the minimum and maximum authorized capital requirements for new corporations, the governing legal provisions, historical evolution, exceptions under special laws, subscription and payment rules, procedural requirements, compliance consequences, and all related practical and doctrinal considerations.

II. Legal Framework

The primary statute is the Revised Corporation Code of the Philippines (RCC), Republic Act No. 11232. Key provisions include:

Section 12: “Stock corporations shall not be required to have any minimum authorized capital stock, except as otherwise provided by special laws.”
Section 14: Contents of the Articles of Incorporation, which must state the authorized capital stock (for par-value shares) or the number of no-par-value shares.
Section 15: Form and contents of Articles of Incorporation for stock corporations.
Sections 60–65: Rules on subscription, issuance, and payment of shares.
Section 6: Classification of shares (par-value or no-par-value).

These provisions apply uniformly to all domestic stock corporations, including One Person Corporations (OPCs) under Title XIII of the RCC. Non-stock corporations are outside the scope of authorized capital stock requirements, as they do not issue shares with capital value; they operate on membership contributions or donations.

III. Definition and Components of Authorized Capital Stock

Authorized capital stock is the maximum amount of capital (for par-value shares) or the maximum number of shares (for no-par-value shares) that the corporation may issue. It is fixed in the Articles of Incorporation and may only be increased or decreased through formal amendment approved by the Securities and Exchange Commission (SEC).

Par-value shares: Authorized capital stock is expressed in Philippine pesos (e.g., “Five Million Pesos (P5,000,000.00) divided into 50,000 shares with a par value of P100.00 each”).
No-par-value shares: The Articles state only the number of shares (e.g., “50,000 no-par-value shares”). The total consideration received upon issuance constitutes the capital stock. No minimum par value is prescribed by the RCC.

The authorized capital stock sets the ceiling for share issuances; any issuance beyond this amount requires prior amendment of the Articles of Incorporation.

IV. Historical Evolution of Minimum Capital Requirements

Under the old Corporation Code (B.P. Blg. 68, 1980):

Section 14 required a minimum authorized capital stock of Five Thousand Pesos (P5,000.00) for all stock corporations.
At least twenty-five percent (25%) of the authorized capital stock had to be subscribed, and at least twenty-five percent (25%) of the subscribed capital had to be paid upon incorporation.

This fixed minimum was widely viewed as insufficient to ensure meaningful capitalization yet still imposed an unnecessary barrier for micro-enterprises and startups. The RCC deliberately eliminated this floor to promote ease of doing business, aligning with the Philippine government’s policy under Republic Act No. 11032 (Ease of Doing Business and Efficient Government Service Delivery Act of 2018).

The removal of the minimum authorized capital stock took effect immediately upon the RCC’s promulgation. All new corporations incorporated after 23 February 2019 are governed by the new rule unless a special law expressly imposes a different requirement.

V. General Rule: No Minimum Authorized Capital Stock

Pursuant to Section 12 of the RCC, a new domestic stock corporation may be formed with any authorized capital stock amount, including nominal or symbolic amounts (e.g., P1,000.00 or even lower, subject to the practicalities of share division and par value). There is no statutory floor. The SEC accepts and approves Articles of Incorporation containing authorized capital stock of any amount, provided all other formal requirements are met.

VI. Mandatory Subscription and Payment Rules (Even Without Minimum Authorized Capital)

Although there is no minimum authorized capital, the RCC imposes strict rules on initial subscription and payment that indirectly affect capitalization:

At least twenty-five percent (25%) of the authorized capital stock must be subscribed at the time of incorporation (Section 60).
At least twenty-five percent (25%) of the total subscription must be paid in cash or property at the time of subscription, with the balance payable within the period stipulated in the subscription agreement or upon call by the board (Section 62).
Treasury shares or previously issued shares cannot be used to satisfy the 25%/25% requirements.
For no-par-value shares, the entire consideration paid is treated as capital and subject to the same subscription thresholds.

These percentages are minimums; incorporators may subscribe and pay a higher percentage (up to 100%) at incorporation. Failure to meet the 25%/25% thresholds at incorporation renders the Articles defective and may lead to SEC rejection or subsequent revocation.

VII. Exceptions: Minimum Capitalization Required by Special Laws

Section 12 of the RCC expressly carves out exceptions where special laws or regulations prescribe minimum capital requirements. In such cases, the minimum is typically expressed as “minimum capital,” “minimum paid-up capital,” or “minimum capitalization,” and the SEC requires the authorized capital stock to be set at a level that allows full compliance with the subscription and payment rules while meeting the special-law threshold.

Key categories and examples include:

A. Banking and Quasi-Banking Institutions
Regulated by the Bangko Sentral ng Pilipinas (BSP) under Republic Act No. 8791 (General Banking Law of 2000) and subsequent BSP Circulars. Minimum capital requirements vary by type:

Universal banks: prescribed minimum capital (currently in the billions of pesos).
Commercial banks, thrift banks, rural banks, and digital banks: tiered minimums based on category and location. The BSP requires the minimum to be fully paid-up before the grant of a banking license. The authorized capital stock in the Articles must therefore be sufficient to accommodate the required paid-up amount after applying the 25%/25% rules.

B. Insurance and Pre-Need Companies
Regulated by the Insurance Commission under Republic Act No. 10607 (Insurance Code). Minimum paid-up capital ranges from several hundred million pesos depending on the type of insurance (life, non-life, reinsurance) or pre-need plan.

C. Investment Houses, Financing Companies, and Securities Broker-Dealers
Regulated by the BSP or SEC under Republic Act No. 11765 (Financial Products and Services Act) and related rules. Minimum paid-up capital is prescribed (e.g., P300 million or higher for investment houses).

D. Other Regulated Industries

Public utilities (electricity, water, telecommunications) – minimum capitalization under their respective charters or the Public Service Act.
Mining companies – minimum under the Philippine Mining Act.
Real estate developers (for certain projects) – minimum under housing and real estate regulations.
Pawnshops, lending investors, and money remitters – BSP-prescribed minimums.

In all such cases, the special law’s minimum capital requirement overrides the general “no-minimum” rule of Section 12. The SEC will not approve the Articles of Incorporation until proof of compliance (e.g., bank deposit for paid-up capital) is submitted.

E. Foreign-Owned or Foreign-Invested Corporations
Domestic corporations with foreign equity participation are subject to the Foreign Investments Act (Republic Act No. 7042, as amended). Minimum paid-in capital requirements apply depending on the activity:

For activities in the negative list (foreign equity restricted): minimum paid-up capital of US$200,000 (or US$100,000 if the corporation exports or employs at least 50 direct employees).
For export-oriented or pioneer enterprises: lower thresholds. These are paid-in capital requirements, not authorized capital stock per se. However, the authorized capital must be structured to allow the required paid-in amount to be achieved while satisfying the RCC’s 25%/25% subscription and payment rules.

VIII. Absence of Maximum Authorized Capital Stock

The Revised Corporation Code and all related statutes impose no upper limit on authorized capital stock. Incorporators may specify any amount they deem appropriate for present and future business needs. The only practical constraints are:

SEC filing and legal research fees, which are computed as a percentage of the authorized capital stock (higher authorized capital results in higher fees).
The business judgment of the incorporators and the realistic capital-raising capacity of the enterprise.
For regulated entities, any maximums that may be indirectly imposed by licensing authorities (rare).

There is no statutory ceiling, and corporations have successfully incorporated with authorized capital in the hundreds of millions or billions of pesos when warranted by the scale of operations.

IX. Procedural Aspects at Incorporation

Statement in Articles of Incorporation – The exact amount (or number of no-par shares) must be clearly stated.
Treasurer’s Affidavit – Must certify that at least 25% of the authorized capital has been subscribed and at least 25% of the subscription has been paid in cash or property.
Bank Deposit Requirement – For the paid-up portion, cash must be deposited in a bank in the name of the corporation, with the bank certificate attached to the Articles.
SEC Review – The SEC Corporate Finance Department examines compliance with Section 12 and any applicable special-law minimums.
One Person Corporation (OPC) – The single stockholder may set any authorized capital; the same subscription/payment rules apply, with the sole stockholder executing the required affidavits.

X. Amendment of Authorized Capital Stock

Although not required at formation, any subsequent increase or decrease requires:

Majority vote of the board and two-thirds vote of outstanding shares.
Filing of amended Articles with the SEC.
Payment of new filing fees based on the increase (for increases).
For decreases, compliance with creditor protection rules (notice to creditors, etc.).

XI. Consequences of Non-Compliance

Rejection of Articles – If the 25%/25% subscription and payment rules are not met, or if a special-law minimum is violated, the SEC will not issue the Certificate of Incorporation.
Grounds for Revocation or Suspension – Post-incorporation, failure to maintain required minimum paid-up capital (where mandated by special law) may lead to revocation of the corporate franchise or license by the regulatory agency (BSP, Insurance Commission, etc.).
Personal Liability – Incorporators or directors who falsely certify compliance may face administrative, civil, or criminal liability under the RCC (Sections 144–150) and the Securities Regulation Code.
Ultra Vires Acts – Issuance of shares beyond authorized capital is void.

XII. Practical and Doctrinal Considerations

Choice of Amount: Many incorporators elect a nominal authorized capital (e.g., P1,000,000) to minimize initial SEC fees while retaining flexibility to issue additional shares later. Others set a much higher authorized capital to avoid frequent amendments.
Tax and Accounting Implications: Authorized capital has no direct tax consequence at incorporation, but paid-up capital affects equity accounts, future dividend declarations, and capital gains tax on share transfers.
Creditor Protection: The doctrine of limited liability is reinforced by adequate capitalization; courts may pierce the corporate veil in cases of grossly inadequate capitalization that amounts to fraud.
No-Par-Value Shares Advantage: Allows greater flexibility in pricing subsequent issuances and avoids par-value rigidity.
Comparison with Foreign Jurisdictions: The Philippine approach post-RCC is among the most liberal in Southeast Asia, similar to Singapore and Malaysia’s low or no-minimum models, but with stricter industry-specific safeguards.

In summary, for ordinary new stock corporations in the Philippines, there is no statutory minimum authorized capital stock under the Revised Corporation Code, subject only to the 25%/25% subscription and payment rules and any overriding special-law requirements. There is likewise no maximum. The framework balances ease of entry with regulatory oversight for protected industries, ensuring that capitalization serves the twin goals of entrepreneurial facilitation and financial system stability. All incorporators and their counsel must carefully calibrate the authorized capital stock against both general RCC rules and any applicable special statutes or regulations to achieve seamless incorporation and long-term operational compliance.