CALAUAG CENTRAL COLLEGE INC.

Rizal St. corner Arguelles St.

Calauag, Quezon 4318

THE SPECIFIC CHANGES UNDER THE

REVISED CORPORATION CODE

Johnmar A. Regidor
BSBA IV
CHAPTER 2
The Specific changes under the revised corporation code
1.01 KINDS OF CORPORATIONS.
a. One Person Corporations.
The RCCP added a new type of corporation, the One Person Corporation. One
Person Corporation (OPC) is a corporation with a single stockholder, who may
be a natural person, a trust, or an estate (Sec. 116, RCCP). The specific rules
that apply OPCs are discussed in Chapter 3.

b. Corporations Vested with Public Interest

In addition, The RCCP contains a number of rules dealing with” corporations

vested with public interest”. These special rules imposed on corporations
vested with public interest include the following:
ONE-PERSON CORPORATION
1.) Requirement that there must be an independent director (Sec, 22, RCCP);

2.) Right of stockholders/ members to vote in the election of directors/trustees

through remote communication or in absentia in corporations vested with
public interest, notwithstanding the absence of a provision in the bylaws of
such corporations (Sec.23, RCCP);

3.) Requirement that a compliance officer is elected by the Board (Sec. 24

RCCP);

4.) Requirement to submit to the shareholders and to the SEC an annual report
of the total compensation of each of the directors or trustees
Sec.29, RCCP);
5.) Additional requirement is imposed for self-dealing directors – material
contracts shall be approved by at least two third (2/3) of the entire
membership of the board, with at least a majority of the Independent
directors voting to approve the material contract (Sec. 31 RCCP);

6.) With respect to independent trustees of nonstock corporations vested with

public interest, they need not be a member/s of the corporation to be
elected as a trustee/s (Sec.91, RCCP);

7.) A corporation vested with public interest cannot be incorporated as a

close corporation (Sec.95,RCCP);
8.) The congress of the Philippines may set maximum limits for stock
ownership of individuals or groups of individuals related to each other by
consanguinity, affinity, or by close business interest, in corporations declared
to be vested with public interests, or whenever necessary to prevent anti-
competitive practice as provide in Republic Act no. 10667, otherwise known
as the “Philippine Competition Act”. Or to implement national economic
policies designed to promote general welfare and economic development,
as declared in laws, rules and regulations (Sec.176, RCCP); and

9.) In addition to reportorial requirements applicable to all corporations,

corporations vested with public interest must also submit to the SEC the
following: (a) A director or trustee compensation report; and (b) A director or
trustee appraisal or performance report and the standards or criteria used to
assess each director or trustee (Sec.177, RCCP).
In addition, Section 22 of the RCCP enumerates the following as corporations
vested with public interest:

a) Corporation covered by Section 17.2 of Republic Act No. 8799, otherwise

known as “The Securities Regulation Code,” namely those whose securities
are registered with the SEC. corporations listed with an exchange or with
assets of at least Fifty million pesos (50,000,000.00) and having two
hundred (100) shares of a class of its equity share;

b) Banks and quasi-banks, nonstock 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 the SEC may determine, taking into account relevant
factors which are germane to the objective and purpose of requiring the
election of an independent director, such as the extent of minority ownership,
type of financial products or securities issued or offered to investors, public
interest involved in the nature of business operations and other analogous
factors.
c. Financial Intermediaries and Money Service

There are also special rules for financial intermediaries;Certain actions of

financial intermediaries require the approval of the appropriate regulatory
agencies like the Bangko Sentral ng Pilipinas and the Insurance Commission.
The special rules include:

1) For corporations with expired corporate terms, no application for revival of

certificate of incorporation of banks, banking and quasi-banking institutions,
preneed, insurance and trust companies, nonstock savings and loan
associations (NSSLAs), pawnshop, corporations engaged in money service
business, and other financial intermediaries shall be approved by the SEC
unless accompanied by a favorable recommendation of the appropriate
government agency (Sec.11 RCCP);
2) No articles of incorporation or amendment to articles of incorporation of
banks, banking and quasi-banking institutions, preneed, insurance an trust
companies, NSSLAs, pawnshops and other financial intermediaries shall be
approved by the SEC unless accompanied by a favorable recommendation
of the appropriate government agency to the effect that such articles or
amendment is in accordance with law (Sec.16, RCCP);

3) Banks and quasi-banks, NSSLAs, pawnshops, corporations engaged in

money service business, preneed, trust and insurance companies, and other
financial intermediaries must have independent directors constituting at least
twenty percent (20%) of their board (Sec.22 RCCP);
4) No application for dissolution of banks, banking and quasi-banking
institutions preneed, insurance and trust companies, NSSLAs, pawnshops, and
other financial intermediaries shall be approved by the SEC unless
accompanied by a favorable recommendation of the appropriate
government agency (Sec.134. RCCP);

5) In the issuance of license to do business, foreign banking, financial, and

insurance corporations shall, in addition to other requirements, comply with
the provisions of existing laws applicable to them (meaning banking laws and
the Insurance Code). In the case of all other foreign corporations, no
application for license to transact business in the Philippines shall be
accepted by the SEC without previous authority from the appropriate
government agency, whenever required by law (Sec.142, RCCP);
6) The RCCP shall not be constructed as amending existing provisions of
special laws governing the registration, regulation, monitoring and
supervision of supervision of special corporations such as banks, nonbank
financial institutions and insurance companies (Sec.183, RCCP); and

7) Notwithstanding any provision to the contrary, regulators such as the

Bangko Sentral ng Pilipinas and the Insurance Commission shall exercise
primary authority over special corporations such as banks, nonbank financial
institutions, and insurance companies under their supervision and regulation
(Sec. 183, RCCP).
1.02 SEPARATE PERSONALITY

A corporation is being, it has separate juridical personality

(Sec. 2, RCCP). The Personality of the corporation is separate
and distinct from its stockholders, members, directors,
trustees and officers. The separateness of its personality is
present even if a corporation is a One Person Corporation
(Sec.130, RCCP).
1.03 PIERCING THE VEIL OF CORPORATE FICTION AND LIMITED LIABILITY
The RCCP provisions have no effect on one of the core features of corporations
– the Limited Liability Rule- applies to a One Person Corporation. In addition, it
is expressly stated that the doctrine of piercing the veil of corporate fiction
applies with equal force to a one person corporation (Sec.130, RCCP).

However, for the limited liability rule to apply in the case of an OPC, the RCCP
impose upon the sole shareholder claiming limited liability the “burden of
affirmatively showing that the corporation was adequately financed” (Sec.130
RCCP) if there is non-compliance with this requirement, the sole shareholder
shall be jointly and severally liable for the debts and other liabilities of the OPC
(Ibid). Section 130 provides: