Did somebody give you 1 share or 1% share as an incorporator, just because they needed to complete the minimum number of shareholders?
We see this a lot in family corporations and businesses. Stockholders whose names are placed in the corporation as owners. When in fact, they don’t have any investment in the corporation, or they’re not even involved in the corporation at all.
Many times we find that the owners of a corporation include the names of the owner’s children as incorporator. Sometimes you will even see secretaries, drivers, or even household helpers named as part owners of the company.
So, our question for today comes from Marie G, and she writes:
“Attorney, my friend started a corporation many years back and he asked me if I can be a dummy stockholder for him along with his girlfriend, his mom, and tita (auntie). I agreed. I think he gave me 1%. Since then, I do not have any update on what happened to the company. Sometimes my friend makes me sign things. But, when I ask him about it, he tells me that these are routine documents. I’m worried I might get sued someday. What are my rights as a dummy? ”
If you were wondering about the same thing as Marie, stick around.
But, before we proceed, we want to give a shoutout to Carlo Sito of Seller Gateway Inc who said:
"Every video content is very valuable! I think Legal Guide Philippines fb page is the only legal page na I spend more than 1 hour, na didnt get bored. I hope you can have more videos pra sa mga Entrepreneurs na kagaya ko."
Thank you so much, Carlo! If you want to give us feedback as well go to info.legalguide.ph/feedback
This episode is brought to you by the "Putting up a Corporation" Workshop, an online course that orients you on the basics of starting a company in the Philippines.
It talks about what is a corporation exactly- what are the things you should decide on first before making the leap, and what is the procedure to expect when processing the papers.
Get your business started right. Go to info.legalguide.ph/corporation to learn more.
Welcome to Legal Guide Philippines where we simplify the law to help you make better choices. I'm Atty. Erwin Zagala and I'm with my partner, Atty. Ramon Ramirez.
So today, we're talking about dummy incorporators... What is this?
Here are the things you will learn about Dummy Incorporator
- Nominees not dummies
- Incorporator
- Shareholders
- Board Members
- Officers
Additional Resources
For most of you, this lesson was more than enough, and if it makes your life easier then you're welcome.
But there are those of you who will watch this lesson and end up asking more questions such as
- Papers do we need to submit to the SEC
- The primary purpose and how do we choose one for our company,
- Right capitalization
If that's you then I invite you to check out the "Putting up a corporation" workshop where we orient you on the things you need when starting a company in the Philippines. Get the workshop at info.legalguide.ph/corporation today.
Now, to add to that, if you want us to tackle your question in our show, as we did for Marie, go to www.legalguide.ph and click the submit topic button.
Next, we'd like to know what's your biggest takeaway from today's video, so please write it down in the comments and let's talk about it.
Last, if you feel we've earned a good rating, please give us a like and subscribe because it gives us feedback that we're doing a good job, and it encourages us to do more videos.
One last thing, clearly, there are a lot of risks that go into being a nominee shareholder in someone else’s business. If you decide to be one, be sure you know these risks. If you really want to do it, at least make sure it’s worth your while…or you’re protected.
If you’re an entrepreneur, the passage of RCCP has made the old ways of filling in your company with nominees has become a thing of the past.
This has made it a lot easier for you to set up your business in such a way that reflects your true intentions. This is truly an exciting time to be an entrepreneur in the Philippines. Let’s make the most of it.
So wasn’t that simple? Now go make better choices!
