AMICUS CURIAE

On 20 February 2019, President Rodrigo Duterte signed into law Republic Act No. 11232, otherwise known as the Revised Corporation Code of the Philippines (the “New Code”), which may be considered as a landmark legislation updating the 38-year-old Corporation Code of the Philippines (the “Old Code”) to adjust to modern times.

The New Code aims to improve ease of doing business and modernize procedures to improve and elevate the standards in the country’s corporate setting in line with existing international best practices. According to Senator Franklin M. Drilon, the principal sponsor and author of the Code, the amendments are focused on “removing barriers hindering the entry of both small and large enterprises into the Philippine market” as it aims to foster smoother transactions in pursuing business in the Philippines.

Some notable amendments under the Code are: (1) One Person Corporation; (2) Perpetual Existence; (3) Minimum Capital Stock; (4) Incorporators, Directors, Trustees, and Officers; and (5) Remote Communication and InAbsentia Voting.

ONE PERSON CORPORATION and severally liable for the liabilities of the OPC.

PERPETUAL EXISTENCE

Under the Old Code, a corporation has a term limit of 50 years, unless extended. Its existence is deemed dissolved upon expiration of the term.

Under the New Code, the default rule is that a corporation shall have perpetual existence, unless otherwise specified in the Articles of Incorporation. As transition, corporations existing prior to the effectivity of the New Code shall have a perpetual term unless the corporation, upon the required vote of its stockholders, notifies the SEC that it elects to retain its specified term.

In this connection, the New Code incorporates a “Lazarus” provision which allows the revival of a corporation whose term has expired by filing an application with the SEC. Upon approval, the corporation shall be deemed revived together with all the rights and privileges under its certificate of incorporation and subject to all of its duties, debts, and liabilities existing prior to its revival, giving it perpetual existence unless otherwise specified. non-stock savings loan associations, etc., and (c) other corporations as may be determined by the SEC. The independent directors shall constitute at least 20% of the entire board membership.

The New Code also allows the creation of an “emergency board” when the vacancy in the board prevents the remaining directors from constituting a quorum and emergency action is required to prevent grave, substantial, and irreparable loss or damage to the corporation. During an emergency, the remaining directors or trustees may fill the vacancy temporarily from among the officers of the corporation to pass the necessary emergency action.

Section 24 of the New Code retained the officers and its qualifications under the Old Code, except for the treasurer, who is now required to be a resident of the Philippines. In addition, corporations vested with public interest are now obliged to appoint a compliance officer.