The Revised Corporation Code of the Philippines (Republic Act No. 11232) was enacted in 2019, replacing the Corporation Code of 1980. The new law introduced significant reforms aimed at making business registration easier, improving corporate governance, and encouraging entrepreneurship. Understanding these changes is crucial for business owners, investors, and corporate stakeholders. This blog discusses key provisions of the Revised Corporation Code and their impact on business registration in the Philippines.
1. Key Reforms in the Revised Corporation Code
A. Perpetual Corporate Existence
Under the old law, corporations had a 50-year corporate lifespan, which had to be renewed.
The Revised Corporation Code grants perpetual existence unless the corporation’s Articles of Incorporation specify a different duration.
This change eliminates the need for corporate renewal, reducing administrative burdens.
B. One-Person Corporation (OPC)
The new law allows for the formation of a One-Person Corporation (OPC), where a single stockholder can establish a corporation without the need for multiple incorporators.
This reform simplifies business registration, particularly for small and medium enterprises (SMEs) and sole proprietors looking to expand.
C. No Minimum Capital Requirement
The Revised Code removed the minimum capital stock requirement, except for industries with specific regulations.
This makes it easier for startups and small businesses to incorporate without needing substantial capital upfront.
D. Electronic Filing and Transactions
The new law allows corporations to submit registration documents and compliance reports electronically.
The Securities and Exchange Commission (SEC) has since developed eSPARC (Electronic Simplified Processing of Application for Registration of Company) to streamline online business registration.
E. Streamlined Incorporation Process
The requirement for five incorporators was reduced to two, making incorporation more flexible.
The corporation’s by-laws are now optional, reducing paperwork and expediting registration.
2. Impact of the Revised Corporation Code on Business Registration
A. Faster and More Accessible Business Registration
The removal of unnecessary regulatory hurdles speeds up the incorporation process.
Entrepreneurs, especially startups, foreign investors, and SMEs, can now register their businesses with minimal requirements.
B. More Protection for Small Business Owners
The OPC structure ensures limited liability, protecting personal assets of single proprietors.
This reform encourages sole entrepreneurs to transition from sole proprietorships to corporations for better financial security.
C. Enhanced Corporate Transparency and Governance
The law mandates increased corporate governance measures, such as requiring corporations to disclose beneficial ownership.
Stricter rules on corporate records ensure accountability and legal compliance.
D. Strengthened Shareholder Rights and Remedies
Minority shareholders now have improved protection from unfair business practices.
Shareholders have greater access to corporate records and financial statements.
3. Compliance Requirements for New and Existing Corporations
Corporations must comply with the following under the Revised Corporation Code:
Annual Submission of General Information Sheet (GIS) to the SEC.
Updated Articles of Incorporation to reflect perpetual corporate existence.
Tax and Corporate Governance Compliance with the Bureau of Internal Revenue (BIR) and SEC.
Conclusion
The Revised Corporation Code has significantly improved the corporate landscape in the Philippines by making business registration easier and more investor-friendly. With reforms such as perpetual corporate existence, One-Person Corporations, and electronic filing, starting and maintaining a corporation is now more efficient. Business owners and investors should take advantage of these changes to structure their companies effectively and ensure compliance with corporate regulations. If you need assistance with corporate registration or compliance, consulting a corporate lawyer can help navigate the legal complexities of business incorporation in the Philippines.
Navigating the business landscape in the Philippines can be both rewarding and intricate. Whether you’re embarking on a new venture or scaling up, ensuring that your corporate endeavors are in line with local regulations is paramount.
At CBOS Business Solutions Inc., we pride ourselves on simplifying these processes for our clients. As a seasoned professional services company, we offer comprehensive assistance with SEC Registration, Visa processing, and a myriad of other essential business requirements. Our team of experts is dedicated to ensuring that your business is compliant, well-established, and ready to thrive in the Philippine market.
Why venture into the complexities of business registration and compliance alone? Allow our team to guide you every step of the way. After all, your success is our commitment.
Get in touch today and let us be your partner in achieving your business goals in the Philippines.
Email Address: gerald.bernardo@cbos.com.ph
Mobile No.: +639270032851
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