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Below are some of the key reform features introduced by the Revised Corporation Code (“RCC”): 

1. One Person Corporation 

The law allows the formation of a One-Person Corporation (“OPC”) where a single stockholder can establish and form a corporation without the necessity of multiple incorporators.  Accordingly, the law removed the requirement of having a minimum of five (5) individuals in the formation of a corporation.

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2. Perpetual Corporate Existence

Previously, corporations were required to have a term limit of fifty (50) years. Now, the RCC allows corporations to enjoy perpetual existence unless otherwise specifically stated in their Articles of Incorporation. In line with this, the RCC grants corporations whose term has expired to revive its corporate existence before the Securities and Exchange Commission (“SEC”).

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3. Introduction of Corporations vested with Public Interest

Corporations vested with Public interest are those: (a) whose securities are registered with the SEC; (b) listed with an exchange; (c) Corporations with assets of at least Php 50 million and having 200 or more holders of shares; and (d) Financial institutions such as banks, quasi-banks, non-stock savings and loan associations, pawnshops, money service businesses, preneed, trust and insurance companies, and financial intermediaries. These corporations are required to elect and designate a Compliance Officer and an Independent Director.

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4. Removal of the Capital Requirement

Stock corporations are not required to have a minimum capital stock unless specifically provided by another law. Moreover, the RCC removed the requirement that twenty-five percent (25%) of the authorized capital stock be subscribed and that twenty-five percent (25%) of the subscribed capital stock be paid for purposes of incorporation. However, the foregoing requirement is retained when the corporation intends to increase its authorized capital stock. 

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5. Remote Participation and Voting in Absentia

The RCC allows the Board Members and Trustees to conduct their meetings using videoconferencing, teleconferencing, and other technologies that will enable them to participate in board meetings remotely. Furthermore, shareholders are now allowed to vote in absentia when provided by the By-laws or allowed by a majority of the Board. 

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Clearly, the foregoing reforms were done to streamline the incorporation process, to protect business owners, including start-ups, small and medium enterprises (“SMEs”), and to enhance corporate transparency and governance. 

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Disclaimer: This article is for informational purposes only and should not be considered legal advice. For specific guidance on the Revised Corporation Code, consult with a legal professional.

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Padin & Partners Law Offices is a full-service law firm based in Cebu City, Cebu Philippines, that offers legal services such as the incorporation of domestic and foreign corporation, and stock and non-stock corporations, and corporate housekeeping in Cebu City, Cebu, Philippines. For consultations: book an appointment or reach us at +63 (32) 316-1540 or +63 917 188 0361.

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