A peek into the Revised Corporation Code of the Philippines

Photo via bworldonline.com

By Amicus Curiae/.bworldonline.com – On 20 February 2019, President Rodrigo Duterte signed into law Republic Act No. 11232, otherwise known as the Revised Corporation Code of the Philippines (the “New Code”), which may be considered as a landmark legislation updating the 38-year-old Corporation Code of the Philippines (the “Old Code”) to adjust to modern times.

The New Code aims to improve ease of doing business and modernize procedures to improve and elevate the standards in the country’s corporate setting in line with existing international best practices. According to Senator Franklin M. Drilon, the principal sponsor and author of the Code, the amendments are focused on “removing barriers hindering the entry of both small and large enterprises into the Philippine market” as it aims to foster smoother transactions in pursuing business in the Philippines.

Some notable amendments under the Code are: (1) One Person Corporation; (2) Perpetual Existence; (3) Minimum Capital Stock; (4) Incorporators, Directors, Trustees, and Officers; and (5) Remote Communication and In-Absentia Voting.

ONE PERSON CORPORATION
The Old Code required at least five (5) stockholders to form a corporation.

Under the New Code, a one person corporation (“OPC”) may now be formed by a single stockholder, who may be a natural person, trust or an estate. However, banks and quasi-banks, pre-need, trust, insurance, public and publicly listed companies, and non-chartered government-owned and controlled corporations may not incorporate as OPC. Further, as defined, it appears that a juridical entity, such as a corporation, may not be the stockholder in an OPC.

Similar to all other corporations, as provided by the New Code (unless a special law requires otherwise), an OPC is not required to have a minimum capital stock. It does not need to adopt corporate by-laws unlike an ordinary corporation. In lieu of the meetings, an OPC may simply prepare written resolutions, signed and dated by the single stockholder.

The single stockholder will act as the president and sole director of the OPC. He may also act as its treasurer, upon submission of a bond to the Securities and Exchange Commission (“SEC”) and a written undertaking to faithfully administer its funds, disburse and invest the same according to its registration. However, he may not act as its corporate secretary.

It is important to note though that the New Code requires the single stockholder to prove that the OPC is sufficiently financed, and its assets are independent from his personal property, in order to claim limited liability. Otherwise, he shall be jointly and severally liable for the liabilities of the OPC.

FULL STORY

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