To install StudyMoose App tap and then “Add to Home Screen”
Save to my list
Remove from my list
To further improve our country's economy competitiveness, to improve the ease of doing business in the country, to promote the advantages brought to us by entrepreneurial program and business climate, to simplify the procedures and requirements in formulating and organizing businesses, to assure the safety of every corporator and entrepreneur in the Philippines and to encourage good corporate governance, President Rodrigo Duterte has finally signed into law the Republic Act no. 11232, otherwise known as the Revised Corporation Code of the Philippines on the 20th day of February, 2019, effective on the 23rd day of the same month and year.
This act has paved way to finally amend the 38-year old Batas Pambansa Blg. 68 or the Corporation Code of the Philippines which was enacted way back May 1, 1980. In line with this, various fundamental and notable revisions were initiated to the legal framework for the registration and operation of the corporations in our country.
Upon reading the whole chapter of the old and revised corporation code of the Philippines, including a lot of news, opinions and comparative matrix regarding this topic, I've come to realize the following changes.
Verified writer
Proficient in: Corporate governance
4.9 (984)
“ Ok, let me say I’m extremely satisfy with the result while it was a last minute thing. I really enjoy the effort put in. ”
Well, I have subdivided the revisions initiated into three main points which include the corporate registration, corporate competitiveness and corporate governance.
First and foremost, the revised code was initiated in order to simplify corporate registration. This revisions aim to simplify the requirements and procedures needed by each entrepreneur in setting up and registering a business to the Securities of Exchange and Commission (SEC). To make this possible, these changes were made under the revised code of the Philippines.
First, the revised code removed the required minimum number of shareholders, directors, trustees and minimum capital stock, including the number of shares required to be subscribed and paid, unless specifically provided under special law. Prior to the amendment, the old code required at least five shareholders and 25% of the authorized stock must be subscribed and at least 25% of the subscribed capital must be paid in at the time of incorporation in order to establish a new corporation. Second, the stipulation of the revised code gives way to the permission of a natural individual to form one man corporation wherein only one shareholder will become the sole owner, director and president, at the same time. However, they are required to pay a minimum capital stock of 1,000,000 in a lump sum at the time of incorporation. Third, the revised code grants a perpetual existence to corporations whose corporate terms have not yet expired as opposed to the prior 50-year maximum corporate term written on the old code, unless the corporation intends to set a specific corporate term. In that case, they need to make sure that it has been notified and approved by SEC and if ever their corporate term has already expired, they have the option whether to revive its corporate existence by simply submitting an application to the latter, together with their certificate of incorporation and other significant details related to the corporation or to simply end it. Fourth, the changes went from being "no corporation, domestic or foreign" under the old code to "no foreign corporation" under the new code as the latter lifted the ban on corporate donations for any political party or candidate. Fifth, the new code extended the period to commence a business operation of a business that became inoperative for a period of at least five consecutive years. It has been extended to five years under the new code as opposed to only two years of the old code.
Secondly, the provisions of the revised code encourage corporate global competitiveness. Thus, it adheres to the modernization of the current century to better suit modern times and to be globally competitive. Hence, the new law did the following practices that were not recognized in the old law. First, the new code implemented provisions that permit the electronic filing and monitoring system for the pre-processing of business organizations. Second, the new law also allows the use of technology in participating in regular and special meetings as well as participation and voting in absentia, through remote communication such as videoconferencing and teleconferencing.
Thirdly, the stipulation of the revised code of the Philippines was also initiated for the purpose of strengthening corporate governance through protecting all shareholders, either majority or minority. Thus, the following amendments were made: First, emergency board was created under the new code. The SEC permits the appointment of a temporary director to fill in the vacancy through unanimous vote by the remaining board of directors in order to prevent grave, substantial and irreparable loss or damage to the corporation, provided that such action shall only be limited for emergency purposes and the temporary director's term shall only be limited until a legal election has been made. When it happens, the corporation must then notify the SEC within three days from the creation of the emergency board. Second, the new law requires a corporation to have a board with independent directors occupying at least 20% of its board seats and a compliance officer. The compliance officer will serve as a mandatory corporate officer who is on top of the president, treasurer and corporate secretary. Third, the code was made to empower the SEC to remove and disqualify members of the board of directors or trustees. Fourth, the articles of incorporation is required to an inclusion of arbitration agreement in order to resolve intra-corporate issues in a corporation, except those involving criminal offenses and interests of third parties. Fifth, the revised code required additional reporting requirements which include the submission of a director compensation report and a director appraisal or performance report, together with the standards or criteria used in assessing the director aside from the annual financial statements and general information sheets required for all corporations.
The corporation code of the Philippines might possess numerous changes and revisions, but let us all bear in mind that these provisions were made for the betterment of a greater number of people and not to jeopardize us. In return, we are advised to familiarize ourselves with these changes and to accept it with all our heart and mind.
Revised Corporation Code. (2019, Nov 26). Retrieved from https://studymoose.com/revised-corporation-code-example-essay
👋 Hi! I’m your smart assistant Amy!
Don’t know where to start? Type your requirements and I’ll connect you to an academic expert within 3 minutes.
get help with your assignment
