Last February, President Rodrigo Duterteled a ceremonial signing of all laws previously enacted during the past several weeks. This included the Revised Corporation Code, which amends the 38-year old Corporation Code.
According to the Securities and Exchange Commission (SEC), the new law seeks to improve the ease of doing business, promote good corporate governance, and increase protection to stockholders and corporations in the country.
Provisions in the newly revised code includes removing the limit on the minimum number of required shareholders to register a corporation. Instead of requiring a minimum of five shareholders, the amendment now allows only one person to officially register a corporation as a business.
According to Leyte 2nd District Representative Henry Ong, the new law is designed to create more businesses across the Philippines due to the elimination of the minimum capitalization requirement for incorporation and the “one-person corporation” provisions. Ong, the chairman of the House committee on banks and financial intermediaries, was the principal author of the House bill.
Adopting international standards
SEC chairperson Emilio Aquino believes the new legal framework will be ideal for the dynamic and quickly evolving business landscape.
In an interview with the Philippine Star, Aquino says “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.”
Increased flexibility in pursuing business
For the SEC, allowing the formation of a one-person corporation instead of requiring a board of directors and several stockholders for a corporation gives more flexibility to those looking to establish a business.
Under the new provision, a lone stockholder now has the ability to make decisions without needing to acquire board consensus, which also gives the stockholder better protection by limiting liability to the corporation.
Additionally, while there is no minimum authorized capital stock requirement when forming a one-person corporation, at least 25% of the authorized capital stock must be subscribed, with the paid-up capital not lower than 5,000 PHP.
Improving the ease of doing business in the Philippines
Senator Franklin Drilon, the principal author of the Revised Corporation Code’s Senate version, said the revisions will help prevent the trend of entrepreneurs registering a corporation under the names of other members of their family.
“One of our difficulties today is our laws have not been updated. As a result, in terms of our ranking in the ease of doing business we are lagging behind,” said Drilon in a statement last November.
Better environment for legitimate businesses
Another notable amendment to the Corporation Code is the grant of a perpetual term for existing and future corporations, which was previously a 50-year term.
SEC chairperson Emilio Aquino says the amendment removes the possibility of legitimate businesses prematurely closing down due to failure to renew their registration. The amendment helps create a sense of longevity that can result to more sustainable, long-term projects and investments.
Want to find out more about the Revised Corporation Code and registering as a one-person corporation in the Philippines? Contact FilePino today at +1.806.553.6552 (USA) or +63.917.892.2337 (Philippines).