March 27, 2019

Salient Features of the Revised Corporation Code of the Philippines

 

The Revised Corporation Code
Of The Philippines
(Republic Act No. 11232)

 

On 20 February 2019, President Rodrigo Duterte signed into law Republic Act No. 11232, otherwise known as the Revised Corporation Code of the Philippines (“RCC”). It took effect on 23 February 2019 after it was published in Manila Bulletin and the Business Mirror.

The RCC introduced major changes to the 38-year-old Corporation Code, which was signed into law in 1 May 1980. The business sector welcomed the changes as the Philippines tries to keep up with the faster pace of global trade and commerce and promotes ease of doing business in the country.

The following is a brief discussion of the notable features of the RCC.

Corporate Term

Corporations now have perpetual existence unless otherwise stated in their articles of incorporation. Existing corporations with certificates of incorporation issued prior to the effectivity of the RCC shall also have perpetual existence, unless its stockholders representing a majority of its outstanding capital stock choose otherwise.

Corporations whose terms have expired may also apply for a revival of its corporate existence.

Remote Communication

Stockholders and members are now allowed to participate and vote through electronic means – such as video conferencing or in absentia.

Emergency Board

An emergency board may be constituted when a vacancy prevents the remaining directors from constituting a quorum and an emergency action is required to prevent grave, substantial, and irreparable loss or damage to the corporation.

Amount of capital stock subscribed and paid for purposes of incorporation

The RCC removed the provision in the Old Corporation Code (“OCC”) requiring that at least 25% of the authorized capital stock stated in the articles of incorporation be subscribed and at least 25% of it be paid upon subscription. In this regard, the requirement (Section 14, OCC) of a sworn statement by the Treasurer stating that such has already been complied with, has been deleted.

Donations to Political Parties and Candidates

Domestic Corporations may now donate to political parties and candidates for purposes of partisan political activity subject to certain exceptions.

Electronic Service

Notices to stockholders or members prior to regular meetings or special meetings may now be sent through e-mail.

One Person Corporations

A single person may now constitute a corporation. A One Person Corporation (“OPC”) can be composed of a single stockholder who can be a natural person, or a trust, or an estate. OPCs are not required to have a minimum authorized capital stock and they are not required to submit and file bylaws.

Corporate Liability

Administrative sanctions and fines will now be imposed against corporations for their unauthorized use of corporate name, fraudulent conduct of business, and for graft and corrupt practices.

Arbitration for Corporations

An arbitration agreement may be provided in the articles of incorporation or in the bylaws. Such arbitration agreement shall cover disputes between the corporation, its stockholders or members, which arise from the implementation of the articles of incorporation or bylaws, or from intra-corporate relations.

Applicability to Existing Corporations

Corporations existing and doing business in the Philippines who are affected by the new requirements imposed by the RCC are given 2 years from the effectivity of the RCC to comply.

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