SEC drafts circulars for Corporation Code changes - EcoFinBiz Blog

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SEC drafts circulars for Corporation Code changes


By Arra B. Francia, Reporter

THE COUNTRY’S corporate regulator is set to release memorandum circulars for certain provisions of the newly signed Revised Corporation Code, as the law itself will be self-executory.

Securities and Exchange Commission (SEC) Chairperson Emilio B. Aquino said the Revised Corporation Code — which President Rodrigo R. Duterte signed into law on Feb. 20 — will not require implementing rules and regulations (IRR).

“Except for memorandum circulars on certain provisions, there will be no IRR for it. It will be self-executory,” Mr. Aquino told BusinessWorld via text.

“Example would be the manner corporations will inform SEC if they opt to stick to a fixed term. The general rule now is perpetual existence except when they inform SEC they prefer to have a term. This applies retroactively to all existing corporation.”

Among the salient provisions in the Revised Corporation Code is the grant of a perpetual corporate term for existing and future corporations unless otherwise provided in their articles of incorporation.

The 38-year old Batas Pambansa Blg. 68 previously limited corporations to a 50-year term. The SEC said the revised code will eliminate the possibility of legitimate and productive businesses from prematurely closing down just because they failed to renew their registration.

Companies with expired registration papers may also apply for the revival of their corporate existence due to the passage of the new law.

The SEC Office of Commission Secretary said they will also be releasing guidelines for the use of remote communication in stockholder and board meetings.

The Revised Corporation Code will allow videoconferencing and teleconferencing during stockholder meetings, also allowing them to participate and vote in absentia.

The rules and regulations regarding stockholders’ participation and voting will take into account the company’s scale, number of shareholders or members, structure, and other factors consistent with the protection and promotion of shareholders’ or members’ meetings.

The commission has yet to give a timeline on when these memorandum circulars will be released.

Other provisions in the Revised Corporation Code include the one-person corporation, where the SEC will allow for the formation of a company with a single stockholder without a minimum authorized capital stock required. The old code required at least five stockholders to form a company.

The new law also mandates the commission to develop and implement an electronic filing and monitoring system to improve the ease of doing business in the country.

This includes the process of corporate name reservation and registration, incorporation, submission of reports, notices, and other documents required under the code.

The SEC already has a fully automated and online company registration system for pre-processing of corporations and partnerships and amendments of the articles of incorporation, among others.

“Collectively, the amendments are aimed at encouraging entrepreneurship and the formation of new businesses, improving the ease of doing business in the country, promoting good corporate governance, increasing protection afforded to corporations and stockholders, and deterring corporate abuses and fraud,” Mr. Aquino said in a statement.

Mr. Aquino added in a text message that the commission plans to focus on regulations that improve the ease of doing business, protect minority investors, and promote good corporate governance moving forward.

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