Law

• Republic Act No. 11232, otherwise known as the "Revised Corporation Code of the Philippines" or "RCC", took effect on February 23, 2019
• The new law updates the almost 39-year old Corporation Code of the Philippines (BP 68) with the aim of improving the ease of doing business in the country
• Existing corporations affected by the new requirements of the RCC are given a period of two (2) years to comply (Sec. 185)
• Minimum number of incorporators

  Reduced from 5 to 1, but not more than 15 (Sec. 10)
• Incorporators


  • Can be a natural person, partnership, association or corporation, or a combination of them
• One-Person Corporation (OPC)


  Composed of a single shareholder, who may be a natural person, a trust or an estate
• A shareholder may acquire all the stocks of an ordinary stock corporation and apply that it be converted into an OPC
• Liability of single shareholder in OPC

  The single shareholder claiming limited liability has the burden to show that the corporation was adequately financed (Sec. 115, 116, 130, 131)
• Stock corporations are still not required to have a minimum capital stock, unless specifically provided by special law
• The capital may be in foreign currencies (Sec. 14)
• The 25%-25% requirement for incorporation was removed, but retained for any increase in the authorized capital stock (Sec. 27)
• The corporate term limit of 50 years has been removed. A corporation can now enjoy perpetual existence unless expressly limited by its Articles of Incorporation (AOI)
• The perpetual corporate term shall also apply to corporations incorporated prior to the RCC (i.e., those incorporated under BP 68). But said corporations may elect to retain a specific corporate term (E.g. 10 years)
• A corporation whose term has expired can apply with the Securities and Exchange Commission (SEC) for the revival of its corporate existence
• The allowable period for non-use of corporate charter has been extended from 2 years to 5 years from the date of incorporation
• A corporation that has commenced its business but subsequently becomes inoperative for a period of at least 5 years may be deemed a delinquent corporation and shall have a period of 2 years to resume operations. Failure to resume operations within the period given by the SEC shall cause the revocation of its certificate of incorporation (Sec. 21)
• Minimum number of directors for OPC

  Reduced from 5 to 1, while the maximum is retained at 15 directors (Sec. 22)
• The RCC has removed the maximum number of trustees who can be elected
• The RCC has removed the residency requirement for a majority of the board and the extension of the term of trustees from 1 year to 3 years (Sec. 22)
• Voting through remote communication or in absentia

  Stockholders or members, when authorized by the By-Laws or by a majority of the board of directors, can vote through remote communication methods or in absentia. A stockholder or member who participates through remote communication or in absentia will still be considered present for purposes of determining the existence of a quorum (Sec. 23)
• The SEC can, unilaterally or upon a verified complaint, and after due notice and hearing, remove members of the Board of Directors/Trustees who are determined to be disqualified to be elected to or to hold such position (Sec. 27)
• When there is a vacancy in the Office of the Director/Trustee which prevents the remaining directors from constituting a quorum and emergency action is required to prevent irreparable loss or damage to the corporation, the remaining directors are allowed to temporarily fill the vacancy from among the officers of the corporation, thereby constituting an emergency board, subject to certain requirements (Sec. 28)
• Corporations vested with public interest whose board shall have independent directors constituting at least 20%


  • Publicly-held corporations under the Securities Regulation Code whose securities are registered with the SEC, corporations listed with an exchange or with assets of at least P50,000,000.00 and having 200 or more holders of shares, each holding at least 100 shares of a class of its equity shares
  • Banks and quasi-banks, non-stock savings and loan associations, pawnshops, corporations engaged in money service business, preneed, trust and insurance companies, and other financial intermediaries
  • Other corporations engaged in businesses vested with public interest similar to the above, as may be determined by the SEC
• Corporations vested with public interest are mandated to appoint a Compliance Officer, in addition to the mandatory positions of President, Treasurer and Corporate Secretary
• The Treasurer must be a resident of the Philippines (Sec. 24)
• The election or non-holding of election of the directors, trustees and officers of the corporation is required to be reported to the SEC, which is empowered under certain conditions to summarily order that an election be held (Sec. 25)
• Additional powers granted to corporations

  • The power to enter into a partnership, joint venture or any other commercial agreement with a natural person or another corporation (Sec. 35 (h))
  • For domestic corporations, the power to donate to a political party or candidate or for purposes of partisan political activity (Sec. 35 (j)). Note: Foreign corporations still cannot make such donations.
• If the date of the regular meeting of the stockholders or members is not fixed in the By-Laws, the same shall be held on any date after April 15 of every year as determined by the Board of Directors/Trustees
• Written notices of regular meetings may now be sent to stockholders and members through electronic mail and such other means as may be allowed by the SEC
• The right of stockholders or members to vote may now also be exercised through remote communication or in absentia, taking into account the company's scale, number of shareholders or members, structure, and other factors consistent with the protection and promotion of shareholders' or members' meetings (Sec. 49 and 57)
• The law allows an arbitration agreement to be included in the AOI or By-Laws of a corporation (Sec. 181)
• If the corporation denies or does not act on a demand for inspection and/or reproduction of corporate records, the aggrieved stockholder or member may report such denial or inaction to the SEC. Within 5 days from receipt of such report, the SEC shall, conduct a summary investigation and issue an order directing the inspection or reproduction of the requested records. The right to inspect is subject to confidentiality rules under prevailing laws (Sec. 73)
• If the paid-up capital of the corporation is less than P600,000.00 or such other amount as may be determined appropriate by the Department of Finance, the financial statements may be certified under oath by the President and the Treasurer. It need not be certified by an independent certified public accountant (Sec. 74)
• Within 60 days from issuance by the SEC of a license to transact business to a branch office of a foreign corporation, said branch must deposit acceptable securities to the SEC with an actual market value of at least P500,000.00 for the benefit of present and future creditors of the licensee
• Within 6 months after the fiscal year of the licensee, the SEC may require the licensee to deposit additional securities or financial instruments equivalent in market value to 2% of the amount by which the licensee's gross income exceeds P10,000,000.00 (Sec. 143)
• A domestic corporation who acts as a resident agent of a foreign corporation must be of sound financial standing and must show proof that it is in good standing as certified by the SEC (Sec. 144)