Amend Articles of Incorporation in the Philippines the Right Way
Being in business means you need to accept that change is inevitable.
This change could be as simple as relocating your office or as complex as changing the purpose of your business. Either way, you should amend articles of incorporation to reflect these proposed moves.
But what are the articles of incorporation? They refer to the legal documents being submitted to the Securities and Exchange Commission (SEC) to create a corporation. A corporation is being recognized once the regulator issued a Certificate of Incorporation.
Articles of incorporation, to put it simply, summarize the identity of your corporation. They include the name of the company, nature of the business, names of the officers and directors, and legal address, among others.
Incorporating your business also means it is a separate legal entity from its directors, officers, and owners.
What Can and Cannot Be Changed
Businesses can amend articles of incorporation depending on their needs, but not all items could be changed.
Items that can be altered are
- Corporate name
- Corporate life
- Share classes and rights or restriction over stock holdings
- Number of directors
- Nature of business
- Names of officers and directors
- Legal address
The following should leave untouched:
- Original directors and subscribers
- Original treasurer
- Date when the first articles of incorporation were consider effective
After ironing out your plans to amend articles of incorporation, other steps should be followed.
1. Presenting the proposal. A proposal outlining the changes in the articles of incorporation should be presented to the board of directors. The board would then adopt a resolution green lighting the proposed amendments.
2. Voting Take note that your company should secure the needed number of votes to push through with the amendments, as mandated in Section 16 of the Corporation Code of the Philippines.
- For stock corporations, the majority of the board of directors and two-thirds of the stockholders should agree on proposed changes.
- For non-stock corporations, the majority of two-thirds should vote for the amendments.
Stakeholders vote in a formal setup annual meetings of the corporation. They must be informed of the proposed revision beforehand.
3. Certifying the changes. The amended articles of incorporation must be authenticated by the corporate secretary should the shareholders approve the proposal.
4. Complying with regulatory requirements. The company should file the documents relating to the amendments made with the SEC.the company is consider to pay proper fees.
Apart from the amended articles of incorporation, the company should also submit the directors’ certificate containing the vote of the directors and stockholders, as well as the date and place of the meeting for voting, among others.
Additional documents may be necessary if the company requests a change in the corporate name or amount of authorized capital shares.
The Risk of Rejection
The documents submitted to the SEC will undergo further evaluation. This means that your plans to amend the articles of incorporation can still be thrown out. These are the possible reasons for rejecting your amendments:
- The amendment was not in a prescribed form.
- The nature of business is to consider unconstitutional, immoral, or against the law in general.
- The submitted copy of the treasurer’s affidavit—which details the amount of subscribed and paid capital shares—was fake.
- Public ownership did not meet the threshold prescribed by existing laws.
Do not worry right away, however, if the SEC rejected your proposal. You will be given time to make changes or correct the content of your amendments if such a thing happens.
Before making your move to amend articles of incorporation in the first place, you should consult a lawyer.
Your attorney will be able to tell you the benefits and downsides, if any, of your plans.
He or she has the knowledge of corporate law, which is necessary in drafting the proposed amendments.
Overall, your lawyer can guide you properly, through the whole process.
Contact 3E Accounting Philippines if you need advice on amending your company’s articles of incorporation. We are incorporation experts in the Philippines offering services in accounting, payroll, audit, and related advisory, accounting information systems design, management advisory and taxation as well. Our team will be glad to help you out.