On February 20, 2019, the Revised Corporation Code of the Philippines was signed into law as Republic Act No. 11232. The legislation amends Batas Pambansa Blg. 68, the original Corporation Code which governs all corporations operating in the Philippines.

Below is part 1 of our in-depth overview of how the Revised Corporation Code improves the ease of doing business in the Philippines:

Corporations can now be formed by just one person or stockholder

The Revised Corporation Code introduced the One Person Corporation as a new corporate vehicle. Through this provision, the minimum number of incorporators needed to form a corporation was removed.

Whereas the original Corporation Code required at least five stockholders (for a stock corporation) or members (non-stock), now a single person or stockholder can establish a corporation.

The Revised Corporation Code also expands its definition of incorporators to include legal persons and entities. The new legislation allows “any person, partnership, association or corporation” to organize a corporation. In its original form, the Corporation Code only describes incorporators as “natural persons.”

The total number of incorporators, however, is still limited at fifteen (15)

One person corporations are not required to have a minimum authorized stock, unless a special law states otherwise. Previously, all corporations needed to subscribe to at least 25% of the company’s authorized capital stock at the time of incorporation.

All corporations are granted perpetual existence.

In the original Corporation Code, corporations were allowed to operate or exist for 50 years, before being subject to extension. Extensions can only be made five years before the original or upcoming expiry date, and must comply with the provisions of the original Code.

With the Revised Code, corporations have perpetual existence unless its Articles of Incorporation state otherwise. This means a corporation will continue to exist even after its owners, shareholders, and board of directors decide to leave.

Due to perpetual existence, corporations can avoid closing down prematurely if they fail to renew their registration. This also allows them to come up with long-term strategies for growth. The change is expected to attract more investors to view the corporation as a more stable investment.

The Revised Code also gives corporations with expired registration papers a chance to operate again. Once approved by the Securities and Exchange Commission (SEC), the corporation is revived with perpetual existence.

Stricter rules imposed on corporate names

The Revised Corporation Code has stricter guidelines when it comes to choosing a corporation name. If a corporation has a name that is noticeably similar to that of another existing corporation’s name, the SEC will issue a cease and desist order. The SEC will also have all labels, signage, prints, and advertisements that exhibit the said name removed.

Corporate names that are already protected by law or contrary by law also fall under the criteria for disallowed names.

Need further information and assistance regarding Revised Corporation Code? Talk to our team at Duran & Duran-Schulze Law to know more about the requirements and process. Call us today at (+632) 8478 5826 or +63 917 194 0482, or send an email to info@duranschulze.com for more information.

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