The Philippine Congress finally approved the bill which would amend the 38-year old Corporation Code of the Philippines. The lawmakers hope that the President will sign the bill into law early this year. Thereafter, once published, the amendments under the law become effective.
Implications for business in the Philippines
The corporate reforms seek to streamline doing business in the Philippines and create a more business and investor-friendly environment. The various amendments introduce policies that would enhance ease of doing business; rules that would prioritise corporate and stockholder protection; provisions that would instill corporate and civic responsibility; and amendments that would strengthen the country’s policy and regulatory corporate framework.
The following are some of the key reforms under the bill vis-à-vis the current provisions of the Corporation Code:
One person corporation
A single person, natural individual or juridical entity, may form a one-person corporation.
There should be at least five incorporators who must be natural persons and majority of which must be residents of the Philippines.
A corporation shall have perpetual term as a default option.
Corporate life is for a maximum of 50 years only but may be extended for periods not exceeding 50 years in any single instance by an amendment of the articles of incorporation.
Increased capital requirement
Minimum paid-in capital for ordinary corporations (e.g., those without nationality restrictions) is PHP62,500 (approximately USD1,179).
Minimum paid-in capital for ordinary corporations is PHP5,000 (approximately USD94).
Voting in absentia
Alternative modes of communication in corporate meetings will be introduced and in some cases, votes may be cast in absentia.
Only the stockholders may cast votes through proxies; proxies are not allowed for directors. However, video/telephone conferences are permitted under certain conditions.
In the event that a vacancy in the Board prevents the directors from constituting a quorum and immediate action is required to prevent grave substantial and irreparable loss to the corporation, the remaining directors may fill up the vacancy from the existing officers of the Corporation.
No similar provision.
The bill will also require the adoption of an electronic filing system for reportorial requirements, and simplify the current name verification system of the Securities and Exchange Commission.
If you have any questions or require any additional information, please contact Felix Sy, Aubbrey Lim or the ZICO Law partner you usually deal with.
This alert is for general information only and is not a substitute for legal advice.