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Highlights of The Revised Corporation Code v2 PDF
Highlights of The Revised Corporation Code v2 PDF
• The law promotes ease of doing business, hence, the provisions, among others, on one-person corporation,
the option of the corporation to have perpetual existence and the elimination of the minimum subscription
requirement upon incorporation.
• It also adopted best practices on good corporate governance. For instance, the RCC requires certain
items to be contained in the bylaws, minutes and agenda of regular stockholders’ meetings all aimed at
fostering transparency.
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Historical Background of the
Revised Corporation Code
• The RCC also afforded greater protection to minority stockholders. Thus, it expanded the list of books
and records required to be kept by the corporation available for examination and expanded the remedies
available in case of violation of stockholders’ right of inspection
• It also codified internationally- accepted practices and norms on conducting business. Allowing the
right to vote through electronic communication and sending notices of meeting electronically and
provisions for arbitration mechanism to resolve disputes within the corporation are good examples.
• Finally, it strengthened the powers of the Securities and Exchange Commission (hereafter “SEC”) to
be able to fully exercise its regulatory authority over corporations. Specifically, it enumerated
enforcement provisions and authorized the SEC to administer, investigate and prosecute violation of the
RCC provisions.
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1. The RCC made it clear that exclusive right of the
holders of the founders shares to vote and be voted as
SECTION 7: directors shall not be allowed if its exercise will
violate Commonwealth Act No. 108 (Anti-Dummy
Founder’s Shares Law), Republic Act No. 7042 (Foreign
Investments Act of 1991), and other pertinent laws.
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1. Unlike the old Corporation Code, which required
incorporators to be natural persons numbering not
less than five, the Code allows partnership,
association or corporation to organize a corporation
without any minimum number of incorporators. In
fact, there can be a corporation with only one
SECTION 10: stockholder, other than a corporation sole, in the
form of a one-person corporation.
Number and
2. The RCC likewise eliminated the residency
Qualifications of requirement for incorporators and expectedly,
retained the legal age requirement for natural-
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1. A corporation shall have perpetual existence unless its
articles of incorporation provides otherwise.
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4. Extension of the corporate term shall take effect only
on the day following the original or subsequent expiry
date(s).
SECTION 11:
5. A corporation whose term has expired is not ipso
Corporate Term facto dissolved but may apply for a revival of its
corporate existence. Upon approval by the SEC, the
corporation shall be deemed revived and a certificate
of revival of corporate existence shall be issued, giving
it perpetual existence, unless its application for
revival provides otherwise.
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SECTION 12: 1. The RCC dispensed with the minimum subscription
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1. Arbitration agreement may be provided in the articles
of incorporation.
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4. It provides that the corporation shall have perpetual
existence or a fixed term as may be indicated in the
articles of incorporation.
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1. Detailed guidelines and more requirements for a
corporate name were added.
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1. The period to organize and commence business is fixed at
five years from incorporation. Under the OCC, the
corporation must organize within two years from
incorporation.
SECTION 21: 2. The SEC is given the authority to place a corporation under
Effects of Non-Use delinquent status but only after due notice and hearing, that
is, if a corporation has commenced its business but
subsequently becomes inoperative for a period of at least five
4. The SEC shall also give reasonable notice to, and coordinate
with the appropriate regulatory agency prior to the
suspension or revocation of the certificate of incorporation
of companies under their special regulatory jurisdiction.
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SECTION 22:
The Board of 1. The term of a trustee was modified for a period not
exceeding three years from its term of one year in the
Directors or Old Corporation Code.
and Term
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4. The RCC enumerated the corporations that are vested
with public interest; to wit,
The Board of
Directors or 5. It defines an independent director as a person who,
apart from shareholdings and fees received from the
Trustees of a corporation, is independent of management and free
from any business or other relationship which could,
or could reasonably be perceived to materially
Corporation; interfere with the exercise of independent judgment
in carrying out the responsibilities as a director.
Qualification
and Term
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1. The right of each stockholder or member to nominate
any director or trustee is subject to the exclusive right
reserved for holders of founders’ shares to be voted as
directors.
SECTION 23:
2. When so authorized in the bylaws or by a majority of
Election of the board of directors, the stockholders or members
may also vote through remote communication or in
Directors or absentia: Provided, That the right to vote through
such modes may be exercised in corporations vested
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SECTION 24: 1. The treasurer is required to be a resident.
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SECTION 25:
Officers
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2. If no new date has been designated, or if the
rescheduled election is likewise not held, the SEC
may, upon the application of a stockholder, member,
director or trustee, and after verification of the
SECTION 25: unjustified non-holding of the election, summarily
order that an election be held. The SEC shall have the
Report of Election power to issue such orders as may be appropriate,
including orders directing the issuance of a notice
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1. The SEC has been given the authority, motu
proprio or upon verified complaint, and after due
SECTION 27: notice and hearing, to order the removal of a director
or trustee elected despite the disqualification, or
Removal of whose disqualification arose or is discovered
subsequent to an election.
Directors or 2. The removal of a disqualified director shall be without
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There are now fixed periods within which the
corporations must hold their elections to fill up vacancies
in the director or trustee positions, viz:
Vacancies in the 1. The vacancy prevents the remaining directors from constituting a
quorum;
Office of Director 2.
3.
Emergency action is required to prevent grave, substantial, and
irreparable loss or damage to the corporation;
The vacancy may be temporarily filled from among the officers of the
corporation;
or Trustee; 4. The appointment must be made by unanimous vote of the remaining
directors or trustees; and,
5. The action by the designated director or trustee shall be limited to
Emergency Board the emergency action necessary, and the term shall cease within a
reasonable time from the termination of the emergency or upon
election of the replacement director or trustee, whichever comes
earlier.
The corporation must notify the SEC within three (3) days from
the creation of the emergency board, stating therein the reason
for its creation.
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SECTION 29: 1. Section 29 of the RCC clarified that directors or
trustees shall not participate in the determination of
Compensation of their own per diems or compensation.
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SECTION 31: 1. It expands the coverage of self-dealing provision to
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SECTION 35: 1. Corporations are now expressly allowed to enter into a
partnership, join venture or any other commercial
Corporate Powers agreement with natural and juridical persons.
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SECTION 37:
Power to Increase
or Decrease 1. The RCC prescribed a period – six (6) months from
Capital Stock; date of approval of the board and stockholders, to file
the application with the SEC. Such period may be
extended provided there are justifiable reasons for
Incur, Create or such extension.
Increase Bonded
Indebtedness
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SECTION 39:
Assets
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1. It removed the option of adopting and submitting the
bylaws of the corporation to the SEC within a period
of one month from the former’s incorporation but,
nevertheless, allows filing of the bylaws after
incorporation.
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1. It specified that if the bylaws is silent, the regular
SECTION 48: stockholders’ meeting shall be held on any date after
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4. At each regular meeting of stockholders or members,
the board of directors or trustees shall endeavor to
present to stockholders or members the following:
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4. At each regular meeting of stockholders or members,
the board of directors or trustees shall endeavor to
present to stockholders or members the following:
(Meetings of directors, d. A financial report for the preceding year, which shall include
financial statements duly signed and certified in accordance
trustees, stockholders, or with this Code and the rules the Commission may prescribe, a
statement on the adequacy of the corporation’s internal
members may be regular controls or risk management systems, and a statement of all
external audit and non-audit fees;
or special) e. An explanation of the dividend policy and the fact of payment
of dividends or the reasons for nonpayment thereof;
(Meetings of directors, h. Appraisals and performance reports for the board and the
criteria and procedure for assessment;
trustees, stockholders, or i. A director or trustee compensation report prepared in
members may be regular accordance with this Code and the rules the Commission may
prescribe;
or special) j. Director disclosures on self-dealings and related party
transactions; and/or
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SECTION 48: 5. The right to vote of stockholders or members may be
exercised in person, through a proxy, or when so
Kinds of Meetings authorized in the bylaws, through remote
communication or in absentia. The Commission shall
(Meetings of directors, issue the rules and regulations governing
participation and voting through remote
trustees, stockholders, or communication or in absentia, taking into account
the company’s scale, number of shareholders or
members may be regular members, structure, and other factors consistent with
the protection and promotion of shareholders’ or
or special) members’ meetings.
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1. The RCC added shares of stock in another corporation
SECTION 61: and other generally accepted form of consideration in
Consideration for the enumeration of consideration for stocks.
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1. It required all information about the corporation to
be preserved, and expanded the list of records
required to be kept by the corporation in its principal
office.
SECTION 73:
2. Inspecting/reproducing party is bound by
Books to be Kept; confidentiality rules. However, a person who is not a
stockholder or member of record, a competitor, or
a. RCC
b. Intellectual Property Code of the Philippines;
c. Data Privacy Act of 2012.
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4. The SEC may require presence of an independent
transfer agent in case the stock transfer corporation
SECTION 73: transfers or trades stocks in secondary markets.
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The articles of merger should now include:
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1. It provides that non-stock corporations shall, at all
times, keep a list of its members and their proxies in
the form the SEC may require. Further, the list shall
be updated to reflect the members and proxies of
SECTION 87: record twenty (20) days prior to any scheduled
Purposes election.
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TITLE XIV
Dissolution
1. The affirmative votes of stockholders needed to effect a dissolution (where no creditors are affected) were
decreased from two-thirds (2/3) to a mere majority of the outstanding capital stock or majority of the
members of the meeting.
2. To apply for dissolution with the Commission, a verified request for dissolution must be filed by the
Corporation, in addition to a certified and countersigned copy of the resolution, proof of publication, and
favorable recommendation from the appropriate regulatory agency, when necessary. The Commission
must also act within fifteen (15) days from receipt of the request.
4. It distinguished the effectivity of dissolution in case of expiration of shortened term and expiration of the
original term. Upon the expiration of the shortened term, as stated in the approved amended articles of
incorporation, the corporation shall be deemed dissolved without any further proceedings, subject to the
provisions of this Code on liquidation. In the case of expiration of corporate term, dissolution shall
automatically take effect on the day following the last day of the corporate term stated in the articles of
incorporation, without the need for the issuance by the Commission of a certificate of dissolution.
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TITLE XIV
Dissolution
5. It includes a provision for withdrawal of request for dissolution . The withdrawal shall be submitted no
later than fifteen (15) days from receipt by the SEC of the request for dissolution. Upon receipt of a
withdrawal of request for dissolution, the SEC shall withhold action on the request for dissolution and
shall, after investigation:
b. direct a joint meeting of the board of directors or trustees and the stockholders or members for the
purpose of ascertaining whether to proceed with dissolution; or
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TITLE XIV
Dissolution
6. It expanded the grounds for involuntary dissolution to include:
b. Upon finding by final judgment that the corporation procured its incorporation through fraud;
i. Was created for the purpose of committing, concealing or aiding the commission of securities
violations, smuggling, tax evasion, money laundering, or graft and corrupt practices;
ii. Committed or aided in the commission of securities violations, smuggling, tax evasion, money
laundering, or graft and corrupt practices, and its stockholders knew; and
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TITLE XIV
Dissolution
7. Repeatedly and knowingly tolerated the commission of graft and corrupt practices or other fraudulent or
illegal acts by its directors, trustees, officers, or employees.
8. It allows the SEC to dissolve the corporation motu proprio or upon filing of verified complaint by any
interested party for any of the involuntary grounds for dissolution.
It allows for forfeiture of assets of those corporations dissolved involuntarily for commission of fraud and
other specified offenses.
1. It provided that the liquidation of banks shall be covered by the New Central Bank Act and the Philippine
Deposit Insurance Corporation Charter.
2. In case of escheat, the properties shall revert to the national government based on RCC. The Old Code,
however, previously provided that such properties will be escheated to the city or municipality where such
are located.
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TITLE XV
Foreign Corporations
1. A foreign corporation, except if it is a foreign banking or insurance corporation, is required to deposit
shares of stock, debt securities or any financial instrument determined suitable by the Commission within
sixty (60) days after the issuance of the license to transact business in the Philippines.
2. The actual market value of the deposit requirement was increased from ₱100,000.00 to ₱500,000.00. The
threshold within which the foreign corporation must deposit additional securities was also increased from
₱5 Million to ₱10 Million.
3. If the resident agent is a domestic corporation, it must also be of sound financial standing and must
provide a certification from the Commission that it is in good standing
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RCC Penalizes the Following Acts
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RCC Penalizes the Following Acts
PROVISION CONTENT PENALTY
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RCC Penalizes the Following Acts
PROVISION CONTENT PENALTY
The unjustified failure or refusal by the
corporation, or by those responsible for
keeping and maintaining corporate records, to
comply with Sections 45, 73, 92, 128, 177 and
other pertinent rules and provisions of this
Code on inspection and reproduction of
records shall be punished with a fine ranging
from Ten thousand pesos (₱10,000.00) to Two
SECTION 161. hundred thousand pesos (₱200,000.00), at the
Penalty for unjustified failure or refusal to
discretion of the court, taking into
keep, maintain, and allow inspection or
consideration the seriousness of
Violation of Duty to Maintain Records, the violation and its implications. When the
reproduction of records. The fine ranges
to Allow their Inspection or from ₱10,000.00 to ₱400,000.00, without
violation of this provision is injurious or
Reproduction; Penalties. prejudice to the contempt powers of the SEC.
detrimental to the public, the penalty is a fine
ranging from Twenty thousand pesos
(₱20,000.00) to Four hundred thousand
pesos (₱400,000.00).
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RCC Penalizes the Following Acts
PROVISION CONTENT PENALTY
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RCC Penalizes the Following Acts
PROVISION CONTENT PENALTY
An independent auditor who, in collusion
with the corporation’s directors or
representatives, certifies the corporation’s
financial statements despite its
incompleteness or inaccuracy, its failure to
give a fair and accurate presentation of the
corporation’s condition, or despite containing
SECTION 163. false or misleading statements, shall be
Fine for colluding independent auditors.
punished with a fine ranging from Eighty
The fine ranges from ₱80,000.00 to
Independent Auditor Collusion; thousand pesos (₱80,000.00) to Five
₱600,000.00.
Penalties. hundred thousand pesos (₱500,000.00).
When the statement or report certified is
fraudulent, or has the effect of causing injury
to the general public, the auditor or
responsible officer may be punished with a
fine ranging from One hundred
thousand pesos (₱100,000.00) to
Six hundred thousand pesos (₱600,000.00).
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RCC Penalizes the Following Acts
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RCC Penalizes the Following Acts
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RCC Penalizes the Following Acts
PROVISION CONTENT PENALTY
A corporation used for fraud, or for
committing or concealing graft and corrupt
practices as defined under pertinent statutes,
shall be liable for a fine ranging from One
hundred thousand pesos (₱100,000.00) to
Five million pesos (₱5,000,000.00).
When there is a finding that any of its
SECTION 166. directors, officers, employees, agents, or
Fine for using the corporation for fraud or
representatives are engaged in graft and
for committing or concealing graft and
Acting as Intermediaries for Graft and corrupt practices, the corporation’s failure to
corrupt practices. The fine ranges from
Corrupt Practices; install:
₱100,000.00 to ₱5 Million.
Penalties.
a. safeguards for the transparent and lawful
delivery of services; and
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RCC Penalizes the Following Acts
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RCC Penalizes the Following Acts
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RCC Penalizes the Following Acts
PROVISION CONTENT PENALTY
Violations of any of the other provisions of
this Code or its amendments not otherwise
specifically penalized therein shall be
punished by a fine of not less than Ten
thousand pesos (₱10,000.00) but not
more than One million pesos
(₱1,000,000.00). If the violation is committed
by a corporation, the same may, after notice
Fine for other violations. The range of
SECTION 170. and hearing, be dissolved n appropriate
fines was increased from ₱1,000.00 –
proceedings before the SEC: Provided, That
₱10,000.00 (Corporation Code of the
such dissolution shall not preclude the
Other Violations of the Code; Separate Philippines) to ₱10,000.00 – ₱1 Million.
institution of appropriate action against the
Liability. The penalty of imprisonment was also
director, trustee, or officer of the corporation
removed.
responsible for said violation: Provided,
further, That nothing in this section shall be
construed to repeal the other causes for
dissolution of a corporation provided in this
Code. Liability for any of the foregoing
offenses shall be separate from any other
administrative, civil, or criminal liability
under this Code and other laws.
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What is a
One-Person
Corporation?
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ONE-PERSON CORPORATION
Characteristics
1. It has a single stockholder;
2. It is not required to have a minimum authorized capital stock except as otherwise provided by special law.
Further, no portion of the authorized capital is required to be paid up at the time of the incorporation,
unless otherwise required by applicable laws or regulations. (Sec. 117 of the RCC and Sec. 8 of MC No. 7);
3. It is not required to submit and file corporate bylaws. (Section 119, RCC);
1. It is required to indicate the letters “OPC” either below or at the end of its corporate name (Section 120, RCC);
2. The single stockholder shall be the sole director and president of the One Person Corporation (Section 121, RCC);
3. The single stockholder is required to designate a nominee and an alternate nominee who shall, in the event of the
single stockholder’s death or incapacity, take the place of the single stockholder as director and shall manage the
corporation’s affairs (Section 124, RCC);
4. The liability of the single stockholder shall be limited to his subscription to the corporation; provided that the
corporation is adequately financed;
5. He must prove that the property of the One Person Corporation is independent of the stockholder’s personal
property; and,
6. There is no ground to pierce the veil of corporate fiction
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ONE-PERSON CORPORATION
Characteristics
1. It has a single stockholder;
2. It is not required to have a minimum authorized capital stock except as otherwise provided by special law. Further, no
portion of the authorized capital is required to be paid up at the time of the incorporation, unless otherwise required by
applicable laws or regulations. (Sec. 117 of the RCC and Sec. 8 of MC No. 7);
3. It is not required to submit and file corporate bylaws. (Section 119, RCC);
1. It is required to indicate the letters “OPC” either below or at the end of its corporate name (Section 120, RCC);
2. The single stockholder shall be the sole director and president of the One Person Corporation (Section 121, RCC);
3. The single stockholder is required to designate a nominee and an alternate nominee who shall, in the event of the single
stockholder’s death or incapacity, take the place of the single stockholder as director and shall manage the corporation’s
affairs (Section 124, RCC);
4. The liability of the single stockholder shall be limited to his subscription to the corporation; provided that the corporation
is adequately financed;
5. He must prove that the property of the One Person Corporation is independent of the stockholder’s personal property;
and,
6. There is no ground to pierce the veil of corporate fiction
Otherwise, the sole stockholder shall be jointly and severally liable for the debts and other liabilities of the One Person Corporation.
(Section 130, RCC)
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Sole Proprietorship One Person Corporation
Has no separate legal personality from the proprietor Has a legal personality separate and distinct from the sole
conducting the business. stockholder of the corporation.
The assets of the one person corporation are not owned by its
The assets of the sole proprietorship are similarly owned by
sole stockholder unless the one-person corporation is not
the proprietor conducting the business.
adequately-financed and/or the assets.
The obligations that the sole proprietorship incurred in The obligations of the corporation can not be enforced against
conducting the business may be enforced against the its sole stockholder unless the situation warrants piercing the
proprietor. veil of corporate fiction.
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Thank you.