Key changes in the Revised Corporation Code

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 authorizes 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.

If you want to learn more about the new rules and regulations that apply to
starting and owning a corporation, let Duran & Duran Schulze serve as your
reliable guide. Contact us today at (+632) 478 5826 or info@duranschulze.com
to get started.