The Revised Corporation Code (RCC) was approved on February 20, 2019, 39 years after the last corporation code amendments in 1980. The RCC’s main objective is to make doing business much easier and simpler, and to keep up with changing developments.
Are you planning to form a company? Now you can do it by yourself and you alone. YES! The One-Person Corporation (OPC) is now a reality! An OPC is a corporation with a single stockholder provided that only a natural person, trust or an estate may form an OPC. You don’t have to look for 4 other incorporators to form a corporation. You can be the incorporator, sole shareholder, director, and president of the corporation. As former SEC Chair Tess Herbosa said, you don’t need to add four (4) of your friends or relatives, who can even give you headaches later.
Within 15 days of incorporation, you’ll need to appoint a Treasurer, (which can also be you as the sole owner), a Corporate Secretary (sorry but need a separate individual) and other officers. Since you’re only one director, what about board meetings? Former SEC Chair Tess Herbosa says that since you’re a one-person director, it is best that the corporate secretary be advised of all major decisions and actions done in the company for the record. The date of recording in the Minutes book shall be deemed to be the date of the board meeting
The limited liability concept is the very essence of a corporation, (whether it is one person or more) as distinguished from a single proprietorship. Ms. Herbosa, however, said It is very important to identify and segregate exactly which assets goes in the corporation from the personal assets, otherwise “the stockholder shall be jointly and severally liable for the debts and other liabilities of the OPC.” Now with the OPC, what happens if the corporation fails financially? It goes without saying that a corporation, one man or more, should be adequately capitalized. The RCC states that “the sole shareholder has the burden of affirmatively showing that the corporation was adequately financed.” The OPC is required to have audited financial statements by an independent certified public accountant If total assets are below P600,000, the financial statements can be certified under oath by the President and Treasurer.
What happens if the one-person corporation owner, stockholder, director is temporarily incapacitated or eventually dies? The code requires that the single stockholder designate a nominee and an alternate (if the nominee becomes incapacitated too) who takes his place as director and manage the corporate affairs clearly stating the extent and limitations of their authority. The nominee and alternate may be changed at any time by just advising the SEC of the change
The term of the nominee shall be until the sole owner returns or, in case of death, until the legal heirs have designated one of them or have agreed that the estate shall be the single stockholder of the OPC.
These should encourage more SMES to incorporate making it easy and so simple as well as getting them to be diligent with the reporting requirements.
The RCC has other progressive provisions in addition to the establishment of a One Person Corporation. Among them are:
The Corporation has perpetual existence. Thus, corporations no longer have a term limit unless the corporation itself decide otherwise.
There is now no capitalization requirement; and equity can be in foreign currency. While there is no capitalization requirement, it is expected that the shareholders will put in adequate capital required to sustain the company operations.
Stockholders can now vote in person, via proxy, or through remote communication/ in absentia and
Also allows participation / voting via remote communication during directors’ meeting
Some provisions in the RCC to strengthen Corporate Governance are the following:
Independent Directors (IDs) are required for publicly-listed companies, banks and quasi-banks, non-stock savings and loan associations, pawnshops, corporations engaged in money service business, pre-need, trust and insurance companies and other financial intermediaries.
IDs are required for other corporations engaged in business vested with public interest (at least 20% of the Board).
Corporation vested with public interest should also appoint a Compliance Officer.
Required reports for a regular meeting are minutes of the most recent regular meeting; list of members or stockholders and voting rights; detailed assessment of corporation’s performance; financial report for breeding year and explanation for dividend policy and fact of payment or non-payment.
Contracts with related parties of the corporation now also includes spouses and relatives within the 4th civil degree of consanguinity or affinity.
Material contracts between related parties and corporations vested with public interest must be approved by at least 2/3 of the entire membership of the Board with the least majority of IDs voting to approve.
Truly the RCC is considered a Landmark Law as it promotes the ease of doing business, strengthen corporate governance principles and introduction of progressive provisions.
Ms. Flor Gozon Tarriela is the Chairman of Philippine National Bank. She is former Undersecretary of Finance and the First Filipina Vice President of Citibank N.A. She is Go Negosyo 2018 Woman Intrapreneur Awardee. She is a FINEX Foundation Trustee and an Institute of Corporate Directors (ICD) Fellow.firstname.lastname@example.org