By James A. Loyola
The Securities and Exchange Commission (SEC) lauded the enactment of The Revised Corporation Code of the Philippines which it has been pushing for years with the aim of improving ease of doing business in the country.
In a statement, the SEC said the revised law affords more protection to corporations and stockholders and promoting good corporate governance.
“We thank President Duterte, the Senate and the House of Representatives as well as our partner agencies and organizations for pushing for and supporting the amendments necessary to make our legal framework in tune with the fast-evolving business landscape,” SEC Chairperson Emilio B. Aquino said.
He added that, “we look forward to a more competitive corporate sector, as the Revised Corporation Code adopts international best practices and standards, tailored to address the needs and realities of the Philippine corporate setting, and introduces new concepts and mechanisms to help the Philippines keep up with the changing times.”
“Collectively, the amendments are aimed at encouraging entrepreneurship and the formation of new businesses, improving the ease of doing business in the country, promoting good corporate governance, increasing protection afforded to corporations and stockholders, and deterring corporate abuses and fraud,” Aquino noted.
Among the notable amendments to the Corporation Code is the grant of a perpetual corporate term for existing and future corporations.
This will eliminate the possibility of legitimate and productive businesses prematurely closing down only because they failed to renew their registration. It will also foster a sense of longevity that can translate to long-term and sustainable projects and investments.
The Revised Corporation Code also allows for the formation of one-person corporation, a corporation with a single stockholder and without a minimum authorized capital stock required to allow for more flexibility in pursuing business because the lone stockholder can make decisions without having to seek board consensus.
It also affords greater protection to the stockholder by limiting liability to the corporate entity. In contrast, the old Code required at least five stockholders in the formation of corporations.
Another salient feature of the Revised Corporation Code is the provision for an emergency board when a vacancy in a corporation’s board of directors prevents the remaining directors from constituting a quorum and consequently from making emergency actions required to prevent grave, substantial and irreparable loss or damage.
The Revised Corporation Code also allows corporations to adopt alternative dispute resolution mechanisms for intra-corporate issues except those involving criminal offenses and interests of third parties.
An arbitration agreement may be provided in the articles of incorporation or bylaws of a corporation.
As part of efforts to improve ease of doing business in the country, the Revised Corporation Code mandated the Commission to develop and implement an electronic filing and monitoring system.
To ensure optimal stockholder participation, meanwhile, the Revised Corporation Code will allow the use of remote communication such as such as videoconferencing and teleconferencing during stockholder meetings.
Stockholders may also participate and vote in absentia.