Republic Act No.

11232, otherwise known as the “Revised Corporation Code of the Philippines”

or “RCC”, was signed into law by President Rodrigo Duterte on 20 February 2019. The RCC took
effect on 23 February 2019, following the completion of its publication in the Manila Bulletin and the
Business Mirror. The new law updates the almost 39-year old Corporation Code of the Philippines
with the aim of improving the ease of doing business in the country. Existing corporations affected by
the new requirements of the RCC are given a period of two (2) years to comply (Sec. 185).

Organization of Corporation
 Removal of absolute minimum requirements of having 5 individual or member in formation of a
corporation

 The law now allows the establishment of a One-Person Corporation (OPC) composed of a single
shareholder, who may be a natural person, a trust or an estate.
 A shareholder may acquire all the stocks of an ordinary stock corporation and apply for the
conversion thereof into an OPC. In terms of liability, the single shareholder claiming limited
liability has the burden of affirmatively showing that the corporation was adequately financed
(chap 3 ; title13

 Stock corporations are still not required to have a minimum capital stock, unless specifically
provided by special law. Notably, in the revised form of the Articles of Incorporation (AOI), it is no
longer required that the capitalization be in “lawful money of the Philippines

 the RCC removed 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 as previously mandated
under Section 13 of the Corporation Code, which was deleted in its entirety (Sec. 12).However,
the 25%-25% requirement was retained for any increase in the authorized capital stock (Sec. 27).

 The corporate term limit of 50 years has been removed such that a corporation can now enjoy
perpetual existence unless expressly limited by its AOI. Such perpetual corporate term shall also
apply to corporations incorporated prior to the RCC, unless said corporations elect to retain a
specific corporate term

 The new law also states that a corporation whose term has expired can apply with the Securities
and Exchange Commission (SEC) for the revival of its corporate existence, with all the rights and
privileges under its certificate of incorporation and subject to all of its duties, debts and liabilities
existing prior to its revival. Upon the SEC’s approval, 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 (Sec. 11)

 The RCC also extends the allowable period for non-use of corporate charter from 2 years to 5
years from the date of incorporation. The certificate of incorporation shall be deemed revoked as
of the day following the end of the 5-year period. Meanwhile, a corporation which has
commenced its business but subsequently becomes inoperative for a period of at least 5 years
may be deemed a delinquent corporation and shall have a period of 2 years to resume operations.
Failure to resume operations within the period given by the SEC shall cause the revocation of its
certificate of incorporation (Sec. 21).

New Classifications of “Corporations Vested with Public Interest”

In lieu of the expansion of application of the system of Independent Directors under the Securities
Regulation Code (SRC), the RCC has classified the following corporations vested with public
interest, whose board shall have independent directors constituting at least 20% of such board:

a. Publicly-held corporations under the SRC whose securities are registered with the SEC,
corporations listed with an exchange or with assets of at least P50,000,000.00 and having 200
or more holders of shares, each holding at least 100 shares of a class of its equity shares;
b. Banks and quasi-banks, non-stock savings and loan associations, pawnshops, corporations
engaged in money service business, preneed, trust and insurance companies, and other
financial intermediaries; and
c. Other corporations engaged in businesses vested with public interest similar to the above, as
may be determined by the SEC.

Board of Directors/Trustees
 With the introduction of the OPC, the minimum number of directors to incorporate is reduced
from 5 to 1, while the maximum is retained at 15 directors.
 For trustees, however, the RCC has removed the maximum number which can be elected. Some
of the changes in the qualification and term of the board of director or trustees include the
removal of the residency requirement for a majority of the board and the extension of the term of
trustees from 1 year to 3 years (Sec. 22).
 The new law allows stockholders or members, when authorized by the By-Laws or by a majority of
the board of directors, to vote through remote communication methods or inabsentia. A
stockholder or member who participates through remote communication or inabsentia will still
be considered present for purposes of determining the existence of a quorum (Sec. 23).
 The RCC empowers the SEC, unilaterally or upon a verified complaint, and after due notice and
hearing, to remove members of the Board of Directors/Trustees who are determined to be
disqualified to be elected to or to hold such position (Sec. 27).
 When there is a vacancy in the Office of the Director/Trustee which prevents the remaining
directors from constituting a quorum and emergency action is required to prevent irreparable loss
or damage to the corporation, the remaining directors are allowed to temporarily fill the vacancy
from among the officers of the corporation, thereby constituting an emergency board, subject to
certain requirements (Sec. 28).

Corporate Officers
 RCC mandates a corporation vested with public interest to appoint a Compliance Officer, in
addition to the mandatory positions of President, Treasurer and Corporate Secretary. The law now
also expressly requires that the Treasurer be a resident of the Philippines (Sec. 24).
 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 (Sec. 25).

Corporate Powers
 Under Section 35 of the RCC, additional powers are expressly granted to corporations, namely: the
power to enter into a partnership, joint venture or any other commercial agreement with a
natural person or another corporation [Sec. 35 (h)]
 for domestic corporations, the power to donate to a political party or candidate or for purposes of
partisan political activity [Sec. 35 (j)].

Shareholder Actions
  The RCC now provides that if the date of the regular meeting of the stockholders or members is
not fixed in the By-Laws, the same shall be held on any date after April 15 of every year as
determined by the Board of Directors/Trustees. 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. The right of stockholders or members to vote may now also be exercised
through remote communication or in absentia, under rules and regulations to be issued by the
SEC governing participation and voting through remote communication or in absentia, taking
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
(Sec. 49 and 57).
 The law also allows an arbitration agreement to be included in the AOI or By-Laws of a corporation
(Sec. 181

Corporate Books and Records

 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, which shall, within 5 days from receipt of such report, conduct a summary investigation and
issue an order directing the inspection or reproduction of the requested records. This right to
inspect is expressly made subject to confidentiality rules under prevailing laws (Sec. 73).

 With regard to the financial statements of a corporation, the RCC provides that if the paid-up
capital of the corporation is less than P600,000.00 or such other amount as may be determined
appropriate by the Department of Finance, the financial statements may be certified under oath
by the President and the Treasurer, and need not be certified by an independent certified public
accountant (Sec. 74)

Foreign Corporations
 The new law provides that within 60 days from issuance by the SEC of a license to transact
business to a branch office of a foreign corporation, said branch must deposit acceptable
securities to the SEC with an actual market value of at least P500,000.00 for the benefit of present
and future creditors of the licensee. In addition, within 6 months after the fiscal year of the
licensee, the SEC may require the licensee to deposit additional securities or financial instruments
equivalent in market value to 2% of the amount by which the licensee’s gross income exceeds
P10,000,000.00 (Sec. 143).

 domestic corporation who acts as a resident agent of a foreign corporation must be of sound
financial standing and must show proof that it is in good standing as certified by the SEC (Sec.
144).

Investigations, Offenses and Penalties

 Under the new law, jurisdiction over party-list organizations is transferred from the SEC to the
Commission on Elections (COMELEC), subject to the implementing rules to be jointly promulgated
by the SEC and the COMELEC (Sec. 182).

 The RCC also enumerates the various specific offenses and their corresponding penalties,
with special emphasis on fraud and graft and corrupt practices:
a. Unauthorized Use of Corporate Name (Sec. 159);
b. Violation of Disqualification Provision (Sec. 160);
 c. Violation of Duty to Maintain Records, to Allow Inspection or Reproduction (Sec. 161);
d. Willful Certification of Incomplete, Inaccurate, False or Misleading Statements or Reports
(Sec. 162);
e. Independent Auditor Collusion (Sec. 163);
f. Obtaining Corporate Registration Through Fraud (Sec. 164);
g. Fraudulent Conduct of Business (Sec. 165);
h. Acting as Intermediaries for Graft and Corrupt Practices (Sec. 166);
i. Engaging Intermediaries for Graft and Corrupt Practices (Sec. 167);
j. Tolerating Graft and Corrupt Practices (Sec. 168);
k. Retaliation Against Whistleblowers (Sec. 169); and
l. Other Violations of the Code (Sec. 170).

Technological Updates
 Aside from recognizing stockholder or member votes cast in absentia via remote communication
methods, the new law also allows the AOI and applications for amendments thereto to be filed
with the SEC in the form of electronic documents, in accordance with the rules on electronic filing
that the SEC will promulgate (Sec. 13).

 SEC is further mandated to implement an electronic filing and monitoring system to expedite
corporate name reservation and registration, incorporation, submission of reports, notices and
documents required by the RCC (Sec. 180)