Aside from knowing about payment of balance of subscription, read also: WHAT IS A SUBSCRIPTION CONTRACT?
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Subscription is a contract for the acquisition of unissued stock in an existing or still to be formed corporation
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Payment of unpaid subscription shall be made on the date specified in the subscription contract
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The calls for the payment of the balance may be made by installment
Make sure to timely pay your subscription. Otherwise, you may be liable for the payment of accrued interests among others.
One way to invest one’s hard-earned money is to become a stockholder of a corporation. Any person could become a stockholder of a corporation through subscription of its shares.
In a previous article regarding a subscription contract, the considerations for stocks were discussed. When a person agrees and acquires a certain number of unissued shares of a stock corporation by paying the required consideration, a subscription contract is issued.
If the full amount of the subscription is not yet paid, the issuance of the corresponding certificate of stock will be put on hold. However, a subscriber, as soon as his subscription is accepted by the corporation, is entitled to all the rights and is subject to all the liabilities of a stockholder despite the non-issuance of a certificate of stock.
As can be gleaned from what was mentioned above, to be entitled of the certificate of stock, a subscriber must pay the full amount of his subscription. For the unpaid balance, the board of directors may, at any time, declare the same to be due and payable to the corporation and may collect the same or any percentage due with accrued interest, if any, as it may deem necessary.
When should the unpaid subscription be made?
The law says:
Payment of unpaid subscription shall be made on the date specified in the subscription contract or on the date stated in the call made by the board. Failure to pay the unpaid subscription on such date shall render the entire balance due and payable. The stockholder would now be liable for interest at the legal rate on such balance, unless a different interest is provided in the subscription contract. The interest will be computed from the date specified, until full payment of the subscription.
If no payment is made within thirty (30) days from the said date, all stocks covered by the subscription shall become delinquent and shall be subjected to sale unless the board of directors order otherwise.
May the calls for the balance of subscriptions be made by installment?
The law says:
Yes.
This was further explained in an opinion rendered by the Securities and Exchange Commission.
The calls for the payment of the balance of subscriptions may be made by installment because the provision of the Corporation Code (which was not amended by the Revised Corporation Code) provides that the contract of subscription or the call by the board of directors, as the case may be, may require the payment of the entire unpaid subscription or only a certain percentage on the date specified for payment.
Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/0917-5772207.
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