Doing business in the Philippines just got easier with the Revised Corporation Code (Republic Act 11232). The recently signed legislation is well on its way towards improving, maintaining, and attracting businesses in the Philippines.
Here are some of the key changes:
Perpetual existence to all corporations
Under the Revised Corporation Code, current corporations can now exist indefinitely, unless stated otherwise in its Certificate of Incorporation. The previous code restricted the existence or operations of the corporation to a maximum of 50 years before being subject to extension.
Corporations whose terms have expired can also be revived under the new code. The expired corporation only needs to file a verified petition for revival with the Securities and Exchange Commission (SEC).
Formation of one-person corporations
At least five stockholders used to be required to form a corporation in the previous Corporation Code. Now, one-person corporations (OPCs) can be created with just a single stockholder. This stockholder could be a natural person, trust, or estate. The single stockholder automatically takes on the role of the corporation’s president and director.
Single stockholders may be the OPC’s treasurer as well. However, they must post a surety bond to the SEC, based on the corporation’s authorized capital stock. This bond ensures the correct usage of funds and may be renewed every two years. Regardless of whether the corporation’s treasurer is the single-stockholder or another individual, anyone holding this particular position must be a resident of the Philippines.
One-person corporations cannot be formed by banks, quasi-banks, trust, insurance, public and publicly-listed companies, and non-chartered government-owned and controlled corporations. Licensed professionals are also not allowed to exercise their profession through the one-person corporation.
Converting to a one-person corporation
Ordinary stock corporations and domestic corporations may convert to a one-person corporation, provided that their Articles of Incorporation are amended to reflect the change. The corporation’s current name must also add the suffix “OPC.” Any suffix such as “Corporation” and “Incorporation” must be removed.
Aside from the name, other portions to be amended in the corporation’s Articles of Incorporation include reducing the number of directors, naming a nominee and alternate nominee who can stand in place of the single-stockholder in cases of death or incapacity, and other provisions that are unique to ordinary stock corporations.
Stricter guidelines on corporate names
Corporations must also be aware of their chosen business name. Should your corporation’s name be noticeably similar to that of an existing corporation, you will receive a cease and desist order from the SEC. Any labels, signage, prints, and advertisements with the said name will also be removed by the SEC.
That’s why corporations are being encouraged to check online to determine whether their desired corporation name is available or not.
No minimum for subscribed and paid-in capital stock
A one-person corporation is also not required to have a minimum capital stock. In the previous code, corporations must have at least 25% of their authorized capital stock subscribed and at least 25% of these subscribed shares paid up.
If you have questions about the Revised Corporation Code and how it benefits your business, contact FilePino at +1.806.553.6552 (USA) or +63.917.892.2337 (Philippines).