Legal Work

What’s New? – All About the Revised Corporation Code

A couple of weeks ago, I attended a business forum sponsored by a prestigious law firm. The timing was perfect. I had a relatively lighter than usual work schedule that time and my boss gave the go signal.

The forum was entitled “The Future of Businesses: A Forum on Revised Corporation Code and the Ease of Doing Business Act.”

The first part of the forum was all about the Revised Corporation Code of the Philippines (“RCC”, for brevity). Who else would be the best person to discuss the topic but one of the Commissioners of Securities and Exchange Commission (SEC), Atty. Kevin Lester K. Lee?

One of the purposes of the amendment of the Corporation Code is to improve the ease of doing business in the country.

The RCC, also known as R. A. No. 11232, was signed by Pres. Duterte last February 20, 2019 and was published in the Manila Bulletin and Business Mirror on February 23, 2019.

It is worth to note that the RCC is self-executing. However, to operationalize the RCC provisions, SEC will issue out Memorandum Circulars (MC) whenever necessary.

Here are the salient points of the new provisions of the RCC, in a nutshell:

1. 2-15 Incorporators allowed (Sec. 10, RCC)

Any combination of natural person/s, SEC-registered partnership/s, SEC-registered domestic corporation/s or association/s, as well as foreign corporation/s, may now become incorporators. [SEC MC No. 16, Series of 2019]

2. Perpetual Corporate Term (Sec. 11, RCC)

A corporation with certificate of existence issued prior to effectivity of the RCC shall have perpetual existence, unless the corporation, upon vote of its stockholders representing majority of the Outstanding Capital Stock, notifies the SEC that it elects its specific corporate term.

3. Minimum capital stock not required of stock corporations (Sec. 12, RCC)

4. Corporate Officers (Sec. 24, RCC)

President (Director)

Treasurer (Resident)

Secretary (Citizen and Resident)

Compliance Officer (if corporation is vested with public interest)

Any two (2) posts may be held concurrently EXCEPT President and Secretary OR President and Treasurer at the same time, unless otherwise allowed in the RCC.

5. Directors and Stockholders allowed to participate and vote in absentia or through remote communication (Sections 49 and 52, RCC)

The right to vote of stockholders or members may be exercised in person, through a proxy, or when so authorized in the by-laws, through remote communication or in absentia.

Directors or trustees who cannot physically attend or vote at board meetings can participate and vote through remote communication such as videoconferencing, teleconferencing, or other alternative modes of communication that allow them reasonable opportunities to participate. Unlike stockholders and members, directors or trustees cannot attend or vote by proxy at board meetings.

6. Creation of One Person Corporation (Sec. 115, RCC)

A One Person Corporation (OPC) is a corporation with a single stockholder, who must be a natural person, trust, or an estate.

Question: Who are not allowed to incorporate as OPC under the RCC?

Answer: Banks and quasi-banks, pre-need, trust, insurance, public and publicly-listed companies and non-charted government owned and controlled corporations may NOT incorporate as OPC.

Question: May a foreign natural person form an OPC?

Answer: YES. Subject to the applicable constitutional and statutory restrictions on foreign participation in certain investment areas and activities.

Question: How do you incorporate an OPC?

Answer: An OPC only needs to submit its Articles of Incorporation, setting forth its:

  • primary purpose
  • principal office address
  • term of existence
  • names and details of the single stockholde, the nominee and alternate nominee
  • details of the authorized, subscribed and paid-up capital
  • such other matters consistent with law and which may be deemed necessary and convenient

Take note!

* OPC is not required to submit and file its By-Laws.

* OPC is not required to have a minimum authorize capital stock except as otherwise provided by special law.

7. Development and Implementation of Electronic Filing and Monitoring System (Sec. 189, RCC)

8. Arbitration for Corporations (Sec. 181, RCC)

An arbitration agreement may be provided in the articles of incorporation or by-laws of a corporation. The purpose of this is for faster dispute resolution.

To know more about the latest updates from the SEC, you may visit their website at www.sec.gov.ph.

We should welcome these changes with positive mind and open arms. As you can see, our government exerts earnest efforts to make it easier for all of us to open up and conduct business in the Philippines.

With less requirements to prepare and with a more streamlined process of business registration to accomplish, I am sure many of us will be more inspired and more determined to register our own businesses and start the journey to becoming full fledged entrepreneurs.

I am one with you in this journey. Good luck to all of us!

I  hope you find this post helpful. You may check out my other LEGAL posts below:

Things You Need to Know About the Bawal Bastos Law

Things You Need to Know About the 105-Day Expanded Maternity Leave Law

Things You Need to Know About the Child Safety in Motor Vehicles Act

To Change or Not to Change Your Surname After Marriage

Collect Debts Faster and Easier by Filing a Small Claims Case
You’re Fired

This is Attorney Mommy, at your service!

This is Attorney Mommy, at your service!

AttyMommy

Hello! I am Camille, a.k.a Attorney Mommy. I am a happy wife, a proud mom, and a full time attorney. I feel blessed that I am able to take care of my family while I practice my profession. I see to it that I enjoy and have fun in whatever I do. This blog keeps me sane, alive and excited for greater things ahead. Thank you for taking the time to read my posts!

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