SEC welcomes approval of bill seeking to revise Corporation Code

The Securities and Exchange Commission (SEC) welcomed the House of Representatives' recent approval, on third reading, of The Revised Corporation Code of the Philippines.

"We at the SEC are enthused with the Congress' approval of the bill amending the Corporation Code,” said SEC Chairman Emilio B. Aquino.

Aquino said the amendments contain provisions for perpetual corporate term, ease of doing business, sustainable development, and good corporate governance.

“With these amendments, we look forward to contributing better to the country's business and economic goals," said Aquino.

Notable among the amendments is the provision for a perpetual corporate term considering the global trend for perpetual corporate existence.

"A 'forever' term of corporate existence would mean that a corporation is a stable enterprise, investors are assured of a safer investment option," Chairperson Aquino explained. As an ease of doing business factor, there will be no need to amend the articles of incorporation to extend corporate life beyond the 50-year term in the present Corporation Code.

Many corporations continue to extend their corporate terms showing determination to pursue business beyond the 50-year initial term.

Providing for a perpetual corporate term, will not only help remove possibility of expiration of the registration of legitimate and productive businesses but will also foster a sense of longevity in corporations which will translate to sustainable, well- thought out projects.

In connection with the shift to perpetual corporate term, Aquino bared the SEC proposal that all corporations whose corporate existence have lapsed due to failure to extend corporate terms, be given an opportunity to revive their corporations.

Another amendment of note is the new chapter on the "One Person Corporation" or OPC. Essentially, the chapter provides for the formation of an OPC, a corporation with a single stockholder, as it is not uncommon that the capital of a corporation emanates from a single investor. The present Corporation Code only provides for a corporation sole, which is a corporation associated with the clergy and may be formed by one person only.

Forming an OPC allows more flexibility, wherein the lone stockholder may pursue his/her business decisions without need for a board consensus.

Further, the proposed OPC hybrid gives rise to a new entity separate and distinct from the person of the stockholder and, hence, limits the liability of the OPC to the corporate entity.

"These are exciting times for the corporate sector, with these innovations as approved by the Senate of the Philippines and now the House of Representatives, more people will be encouraged and see the advantages of incorporating their businesses. We only hope that the President will also support the amendments to the Corporation Code and sign it into law," Aquino concluded.