MCLE Lecture on the

Updates In Corporation Law

By:

Dean Sergio M. Ceniza

I. Statement of the Objective of the Lecture

This lecture is designed to give the attendees valuable insights on

the recent amendments to the Philippine corporation law, as now
incorporated in R. A. No. 11232, a.k.a. Revised Corporation Code.

By the end of the lecture, it is expected that the attendees shall have
strengthened understanding of the revisions introduced in Revised
Corporation Code as well reinforced awareness of the rationale for the
changes introduced in the newly revised corporation law.

II. Statement of the Coverage and Methodology

The lecture will be limited to the discussion of the significant

amendatory provisions of the Revised Corporation Code. For better
understanding of the rationale for the amendments in the law though,
comparison will be made between these amendatory provisions as against
the provision of the B. P. 68 or the previous corporation code.

III. Discussion of the Significant Amendments incorporated in R. A. No. 11232

as compared B.P. Blg. 68

ü Incorporation and Organization of Corporations;

Þ Removal of the absolute requirement of having a minimum of five

(5) individuals in the formation of corporations.

Þ Removal of the requirement that 25% of the authorized capital stock

be subscribed and that 25% of the subscribed capital stock be paid
for purposes of incorporation.

Þ The retention of 25% / 25% requirement for any increase in the

authorized capital stock

Þ The removal of the corporate term limit of 50 years.

 Þ Allowing a corporation whose term has expired to apply with the
SEC for the revival of its corporate existence.

Þ Extension of the allowable period for non-use of corporate charter

to 5 years from the date of incorporation.

Þ Extension of the allowable period for inactivity of a corporation to

five years plus additional two years from delinquency

ü Introduction of the Concept of “Corporations Vested with Public Interest”

Þ Corporations deemed vested with public interest

Þ Mandates on corporations vested with public interest

ü Introduction of the Concept of a One Person Corporation;

Þ Concept
Þ Who may form an OPC?
Þ Those who may not form an OPC
Þ No authorize capital required
Þ Requirement in the Use of Corporate Name
Þ Corporate Structure and Officers
Þ Designation of Nominee and Alternate Nominee
Þ Liability of Single Shareholder
Þ Conversion of an Ordinary Stock Corporation to OPC
Þ Conversion of an OPC to an Ordinary Stock Corporation

ü Board of Directors/Trustees

Þ The minimum number of directors to incorporate is reduced from

five to one.

Þ For trustees, the maximum number which can be elected was

removed.
Þ The removal of the requirement that a majority of the board should
be Philippine residents.
Þ The term of trustees was extended of the from 1 year to 3 years.
Þ Stockholders or members, when authorized by the By-Laws or by a
majority of the board of directors, are allowed to vote through
remote communication methods or in absentia.
Þ A stockholder or member who participates through remote
communication or in absentia is considered present in determining
the presence of a quorum
Þ Expanded the grounds for disqualification of Directors, Trustees or
Officers
 Þ The SEC is empowered, unilaterally or upon a verified complaint, to
remove members of the Board of Directors/Trustees who are
determined to be disqualified to be elected to or to hold such
position.
Þ Allowed the constitution of an emergency board, subject to certain
requirements.
Þ Required a corporations vested with public interest to appoint a
independent directors.

ü Corporate Officers
Þ Required a corporations vested with public interest to appoint a
Compliance Officers
Þ Required that the Treasurer be a resident of the Philippines
Þ The election or non-holding of election of the directors, trustees
and officers of the corporation is required to be reported to the
SEC, which is empowered under certain conditions to summarily
order that an election be held

ü Corporate Powers

Þ Corporations are now empowered to enter into a partnership, joint

venture or any other commercial agreement with a natural person
or another corporation
Þ domestic corporations are now empowered to donate to a political
party or candidate or for purposes of partisan political activity.

ü Meetings

Þ Provided a default date of the regular meeting of the stockholders or

members if the same is not fixed in the By-Laws.
Þ Written notices of regular meetings may now be sent to stockholders
and members through electronic mail and such other means as may
be allowed by the SEC
Þ The right to vote may now also be exercised through remote
communication or in absentia.

ü Corporate Books and Records

Þ If the corporation denies or does not act on a demand for inspection

and/or reproduction of corporate records, the aggrieved
stockholder or member may report such denial or inaction to the
SEC.
 Þ No certification of financial statements from an independent certified
public accountant is required for corporations with less than P600K
paid-up capital.

ü Foreign Corporations
ü Significant Powers of SEC

Þ Power to Investigate Violations of the Revised Corporation Code

(Sec. 154)
Þ Power to Administer Oaths and Affirmations (Sec. 155)
Þ Power to Issue subpoena and subpoena duces tecum
Þ Contempt Power (Sec. 157)
Þ Power to Issue Cease and Desist Order (Sec. 156)
Þ Power to Impose Administrative Sanctions (Sec. 158)
Þ Visitorial Power (Sec. 178)
Þ Power to Suspend or Revoke the Certificate of Incorporation (Sec.
179)

ü Offenses and Penalties;

Þ Unauthorized Use of Corporate Name (Sec. 159)

Þ Violation of Disqualification Provision (Sec. 160)
Þ Violation of Duty to Maintain Records, to Allow Inspection or
Reproduction (Sec. 161)
Þ Willful Certification of Incomplete, Inaccurate, False or Misleading
Statements or Reports (Sec. 162)
Þ Independent Auditor Collusion (Sec. 163)
Þ Obtaining Corporate Registration Through Fraud (Sec. 164)
Þ Fraudulent Conduct of Business (Sec. 165)
Þ Acting as Intermediaries for Graft and Corrupt Practices (Sec. 166)
Þ Engaging Intermediaries for Graft and Corrupt Practices (Sec. 167)
Þ Tolerating Graft & Corrupt Practices (Sec. 168)
Þ Retaliation Against Whistleblowers (Sec. 169); and
Þ Other Violations of the Code (Sec. 170)

IV. Concluding Statement

V. Q&A