The Philippines has enacted Republic Act No 11232, or 'An Act Providing for the Revised Corporation Code of the Philippines' (RA No 11232). It repealed the country's almost-four-decade-old Corporation Code (Batas Pambansa Bilang 68). According to proponents of RA No 11232, it is intended to improve the ease of doing business in the Philippines.
Important changes introduced by RA No 11232 include the following:
- A corporation may exist perpetually. Under the old Corporation Code, the maximum corporate term was 50 years;
- Juridical persons, such as partnerships, associations and corporations, may serve as incorporators of a corporation. Under the old Corporation Code, only natural persons could be incorporators;
- The minimum paid-up capital requirement for corporations has been abolished. Under the old Corporation Code, at least 25% of the authorised capital stock had to be subscribed at the time of incorporation and at least 25% of the subscription had to be paid at the time of subscription. The paid-up capital could not, in any circumstances, be less than PHP 5000 ($96); and,
- The formation of a one-person corporation (i.e., a corporation with a single stockholder) is permitted.
Apart from easing barriers to establishing corporations, RA No 11232 also promotes corporate and stockholder protection. Reforms in this regard include the following:
- The requirement of having independent directors has been expanded to cover corporations engaged in businesses vested with public interest, as identified in RA No 11232 and as may be later identified by the Securities and Exchange Commission; and,
- The grounds for the disqualification of corporate directors, trustees, and officers have been expanded.
The law took effect on February 23 2019 after it was published in two newspapers in general circulation.
|Jose Florante |
|Paolo Dominic |
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