Signifi cant Changes and Introducti ons

But there are signifi cant changes on corporati on law and principles introduced by the Revised Corp.
Code. The substanti ve changes in the Revised Corp. Code may be classifi ed into the following main
categories:
 Ease in doing business;
 Process improvements in corporate acti viti es;
 Corporate conti nuity and stability;
 Corporate Governance; Directors’ and offi cers’ accountability;
 SEC jurisdicti on and authority expansion.

Contributi ons to Ease in Doing Business

 Incorporati on facilitated :
 Partnerships, associati ons or corporati ons, singly or jointly with others but not more than
15 may now be incorporators – 10; but if singly or to be a One Person Corporati on (“OPC”),
incorporator must be a natural person, trust or an estate – Sec. 116;
 No more residency requirement for incorporators and directors – 10 and 22
 Professionals or partnerships or associati ons organized for the practi ce of a profession are
not allowed to organize as a corporati on – 10
 Changes in the contents of the Arti cles of Incorporati on (AOI) – 13 and 14 and related
secti ons
 Corporate Name – must be disti nguishable from a name that is already reserved or
registered for the use of another corporati on, or is not protected by law; or is not contrary
to existi ng law, rules and regulati ons. – 17
 Requires online verifi cati on – 18
 If a One Person Corporati on (“OPC”), the lett ers “OPC” must be indicated either below or at
the end of its corporate name – 120
 Principal Offi ce Address – now allows general reference to city or municipality and not a
specifi c offi ce address;
 Corporate Term – now with a perpetual existence unless its AOI provides otherwise – 11
 For existi ng corporati ons – automati cally now have perpetual existence, unless by a majority
vote of its stockholders, noti fi es the SEC that it elects to retain its specifi c corporate term
under its present AOI – 11, 2 n d par.
 Eff ect of non-use of corporate charter, failure to organize or commence business is now for a
period of fi ve (5) years (no longer for 2 years) from its date of incorporati on – deemed
revoked certi fi cate of registrati on – 21
 Incorporators – May be partnerships, associati ons or corporati ons; may be only one (1)
incorporator but sti ll not more than 15; and no more residency requirement – 10
 Directors/Trustees – No more minimum number of fi ve (5) and no more residency
requirement – 22
 If a corporati on vested with public interest – at least 20% of the Board must be independent
directors, i.e. independent of management and free from any business or relati onship that
could aff ect exercise of independent judgment – 22 –
 No required minimum capital stock except if required by special law – 12; – see, e.g. FIA on
minimum paid up capital of foreign corporati ons in the domesti c market.
 No more required 25% minimum subscripti on and paid up capital stock at
incorporati on – previous Sec. 13 deleted – but in an increase of authorized capital stock the
25% subscripti on and 25% paid up requirements are sti ll imposed – 37
 Arbitrati on Agreement – to govern dispute resoluti on between the corporati on, its
stockholders or members arising out of the implementati on of the AOI or by-laws, or from
intra-corporate relati ons; criminal off enses and interests of third parti es are not arbitrable;
binding on the corporati on, its directors, trustees, offi cers, executi ves and managers; should
indicate number of arbitrators and procedure for appointment; power to appoint granted to
a designated independent third party; or failing which, the SEC; other usual arbitrati on
provisions– 181
 Treasurer’s Certi fi cati on in Arti cle Ninth of the AOI, the Treasurer is named and he is a
signatory to the AOI thereby certi fying the informati on in the seventh and eighth clauses of
the AOI – 14. – seems to imply no need for Treasurer’s Affi davit.
 Treasurer must be a resident – Sec. 40
 Tenth Arti cle – contains undertaking to change the name of the corporati on
 Electronic fi ling – in accordance with SEC rules Sec. 13
 The requirement for “favorable recommendati on of appropriate government agency to the
eff ect such arti cles or amendment is in accordance with law” for incorporati on or
amendment for public uti liti es, educati onal insti tuti on and other corporati ons governed by
special law was deleted
 Adopti on of By-laws – no longer required to be done within one (1) month from the
incorporati on, may sti ll be adopted and fi led prior to incorporati on (along with the AOI)- 45
 By-laws may provide for the modes by which a stockholder, member, director, or trustee
may att end meeti ngs and cast their votes – in person; by proxy; by remote communicati on
or in absenti a – 46
 May provide for arbitrati on agreement – 46
Introducti on of OPC as a type of corporati on
Secs. 115 to 132 – corporati on with a single stockholder; stock corporati on; cannot be a non-stock
corporati on;
 Who may form – only natural persons, trust, or an estate may form an OPC; banks; quasi-
banks, preneed, trust, insurance, public and publicly-listed companies, and non-chartered
GOCCs may NOT incorporate an OPC; professionals wanti ng to exercise their profession
cannot form an OPC; foreigners and non-residents may form an OPC.
 How much capital – no minimum authorized capital stock except as otherwise required by
special law; open to foreigners but need to comply with FIA requirement of US$200,000 for
domesti c market enterprise.
 What should be fi led – AOI; no need for By-laws; name should indicate “OPC” either below
or at the end of the corporate name.
 Who consti tute the OPC –
 the single stockholder shall be the sole director and president of the OPC;
 within 15 days from issuance of certi fi cate of incorporati on, the OPC shall appoint a
treasurer, corporate secretary, and other offi cers as necessary, and SEC is noti fi ed of
appointments within 5 days;
 single stockholder cannot be corporate secretary;
 but can be treasurer, provided, he posts a bond to the SEC in a sum required by SEC, with a
writt en undertaking to faithfully administer the OPC’s funds, and to invest and disburse the
same according to the AOI; bond is renewed every 2 years or as oft en required by SEC;
 nominee and alternate nominee stockholders are required to be designated who shall take
the place of the single stockholder as director and manage the corporati on’s aff airs in the
event of death of the single stockholder. Writt en consent of the nominee or alternate
nominee is att ached to the applicati on for incorporati on; consent may be withdrawn in
writi ng before death or incapacity of the single stockholder; may be changed at any ti me.
 Corporate secretary has special functi ons to maintain minutes and noti fy in case of death of
single stockholder.
 Reports to be fi led by OPC – AFS; disclosure of self-dealings and related party transacti ons;
others required; failure to fi le for 3 consecuti ve ti mes or intermitt ently within a period of 5
years will result in delinquent status.
 Liability of OPC – Sole shareholder has burden of proving that the OPC was adequately
fi nanced; and that the property of the OPC is independent of the stockholder’s personal
property – otherwise, the sole shareholder shall be jointly and severally liable for the debts
and other liabiliti es of the OPC. Principle of piercing the veil of corporate fi cti on applies.
 Conversion from an Ordinary Corporati on to an OPC – when a single stockholder acquires
all the stocks of an ordinary stock corporati on, he may apply for conversion into an OPC;
thus, a certi fi cate of fi ling of amended arti cles of incorporati on is issued by the SEC to
refl ect the conversion. OPC becomes legally responsible for the latt er’s outstanding
liabiliti es as of the date of conversion.
 Conversion from an OPC to an Ordinary Stock Corporati on – may also be applied for and
granted through an amendment of the AOI.
 Eff ect of death of single shareholder – the nominee or alternate nominee transfers the
shares to the duly designated legal heir or estate within 7 days from receipt of either an
Affi davit of heirship or self-adjudicati on executed by the sole heir; then the heirs shall noti fy
the SEC of the decision to either wind up and dissolve the OPC or to convert into an ordinary
stock corporati on.

Process improvements in corporate acti viti es

 Stockholders/Members Meeti ngs – Writt en noti ce of regular meeti ngs may be sent through
the means of communicati ons provided by bylaws, by electronic mail or other SEC allowed
manner – 49 – at least 21 days (instead of 2 weeks)
 Noti ce of meeti ng is now required to be accompanied by:
1. Agenda;
2. Proxy form to be submitt ed to corporate secretary prior to meeti ng;
3. When att endance, parti cipati on, and voti ng are allowed by remote communicati on or in
absenti a, the requirements and procedures to be followed when a stockholder or member
elects either opti on; and
4. When the meeti ng is for the electi on of directors or trustees, the requirements and
procedure for nominati on and electi on.
 Voti ng of Stockholders/Members – stockholders or members are allowed to vote through
remote communicati on or in absenti a in electi on of directors, and in shareholders
meeti ngsShareholders who parti cipate through remote communicati on or in absenti a are
deemed present for purposes of quorum. The right of a stockholder to vote by remote
communicati ons or in absenti a is recognized in corporati ons vested with public interest,
even if provision is absent in its by-laws. – 23.– SEC to issue rules and regulati ons re
parti cipati on and voti ng through remote communicati on or in absenti a, taking into account
the company’s scale, number of shareholders or members, structure and other factors
consistent with the protecti on and promoti on of shareholders’ or members’ meeti ngs.
  Noti ce of Special Meeti ngs – may be sent electronically when allowed by the bylaws or done
with the consent of the stockholders, and in accordance with the rules and regulati ons of the
SEC – following purposes to: extend or shorten corporate term – 36, increase or decrease its
capital stock, or incur, create or increase any bonded indebtedness – Sec. 37, approve the
sale of all or substanti ally assets of the corporati on – Sec. 39, or invest the corporate funds
in another corporati on or business – Sec. 41.
 Directors/Trustees Meeti ngs – Noti ce of meeti ngs must be sent at least two (2)days prior to
the scheduled meeti ng – no longer one (1) day
 Directors or trustees who cannot physically att end or vote at board meeti ngs can parti cipate
and vote through remote communicati on such as videoconferencing, teleconferencing, or
other alternati ve modes of communicati on. Directors or trustees cannot att end or vote by
proxy at board meeti ngs. – Sec. 52
 Electronic Filing of AOI and applicati ons for amendments – 13 The SEC is required to
develop and implement an electronic fi ling and monitoring system. It shall promulgate rules
to facilitate and expedite corporate name reservati on and registrati on, incorporati on,
submission of reports, noti ces, and documents required under the Revised Corp. Code, and
sharing of perti nent informati on with other government agencies – Sec. 180

Corporate conti nuity and stability

 Perpetual Existence – Corporati ons now have a perpetual existence or corporate term,
unless the AOI provides otherwise, or in the case of existi ng corporati ons, unless majority of
the stockholders elect to retain the specifi c corporate term provided in its AOI and advised
the SEC – 11
 Revival of Corporate Term – A corporati on whose term has expired may apply for a revival
of its corporate existence, together with all the rights and privileges under its certi fi cate of
incorporati on and subject to all of its duti es, debts and liabiliti es existi ng prior to its revival.
Upon approval by the SEC, the corporati on shall be deemed revived and a certi fi cate of
revival of existence shall be issued – 11
 Electi on of Replacement Directors/Trustees – when vacancy due to term expirati on, the
electi on should be held no later than the day of such expirati on; when vacancy is due to a
removal, the electi on may be held on the same day as the removal; but in both cases, no
later than 45 days from the vacancy; term of replacement director or trustee is only for the
unexpired term – 28
 Electi on of an emergency director/emergency board – is now allowed when there is no
quorum in the board of directors due to resignati on, death or
disqualifi cati on and emergency acti on is required to prevent grave, substanti al, and
irreparable loss or damage to the corporati on, the vacancy may be temporarily fi lled from
among the offi cers of the corporati on by unanimous vote of the remaining directors. The
emergency director serves only to address the emergency and ceases when a replacement
director is elected. The SEC must be noti fi ed – 28
 Corporati ons are empowered to enter into partnerships , joint venture or any commercial
agreements – 35(h) – expands rule in jurisprudence that corporati ons can only enter into
joint ventures and not partnerships.