Published 18 March 2019, The Daily Tribune
Upon your request my dear readers and to heed the clamor of my students, I hereby present in outline form the significant provisions of Republic Act 11232, otherwise known as the Revised Corporation Code (RCC). The law was approved by Congress on 20 February 2019 and became effective on 21 February 2019.
A. FORMATION OF CORPORATION
1. Number and Qualifications of Incorporators.
•Partnership, association or corporation now allowed to organize a corporation.
•No minimum number of incorporators.
•Residency requirement eliminated.
2. Corporate Term.
•Perpetual term allowed.
•Existing corporations as of the effectivity of the RCC shall have perpetual existence unless the corporations, upon the vote of their stockholders representing at least majority of the outstanding capital stock, notify the Security and Exchange Commission (SEC) they elect to retain their specific corporate term.
•Stockholders not in favor of any change of corporate term may exercise their appraisal right, meaning to demand the payment of the fair value of their shares and exit from the corporation.
•For corporations with specific term under the Articles of Incorporation (AoI), the extension should be done not earlier than three years prior to the original or subsequent expiry date(s) unless there are justifiable causes that warrant earlier extension as may be determined by the SEC.
•Corporation whose term has expired may apply for revival of corporate existence but shall be subject to all its duties, debts and liabilities prior to revival. Upon approval of the SEC, the corporation shall be revived with right to perpetual existence unless the application for revival provides otherwise.
•No application for revival of financial intermediaries shall be allowed without the favorable endorsement of the appropriate government agency.
3. Subscribed and Paid Up-Capital Stock.
•Minimum subscription and minimum paid-up capital no longer required except as otherwise provided by special law.
•After incorporation, in case of increase, at least 25 percent of the increase in capital stock must be subscribed and at least 25 percent of the amount subscribed should be paid in cash or property the valuation of which is equivalent to at least 25 percent of the subscription.
4. Contents of the AoI.
•Number of trustees not limited to 15.
•Number of directors not more than 15.
•Arbitration agreement may be provided in the articles of incorporation.
• Filing of AoI or amendments thereto may be in the form of an electronic document.
•Treasurer’s Affidavit no longer required.
•Undertaking to change corporate name (if it is not distinguishable from a name which is previously reserved or registered for the use of another corporation) is now a mandatory provision in the AoI.
5. Corporate Name.
•The name has to be distinguishable from a corporate name already reserved or registered for the use of another corporation.
•SEC was granted the power to summarily order the corporation to cease and desist from using a corporate name which did not observe the guidelines under the RCC.
•In case of failure to comply, corporation and its responsible officers may be criminally, civilly and administratively liable. Registration of the corporation may also be revoked.
• Person/s desiring to incorporate is/are required to submit the intended corporate name to the SEC for verification.
6. Effects of Non-Use of Corporate Charter and Continuous Non-Operation.
•In case of failure to formally organize and commence business within five years from the date of its incorporation, the certificate of incorporation shall be deemed revoked.
•Delinquent status — corporation has commenced business but becomes inoperative for a period of at least five consecutive years occurring after the corporation has commenced its business.
•Delinquent corporation has two years to resume operations, otherwise, the SEC shall cause the revocation of the certificate of incorporation.
To be continued
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