Shunning Bureaucratic Layers Through Revised Corporation Code of the Philippines
Underscoring the need to enhance business efficiency accessibility in the Philippines, the Philippine Congress approved Republic Act 11232, which was later referred to as the Revised Corporation Code of the Philippines.
Primarily designed to simplify doing business in the Philippines, the Revised Corporation Code of the Philippines suggest provisions cutting the bureaucratic layers. These method layers are usually considered as the reason why many investors pick on two choices –turning away, or going to “brokers.”
The Revised Corporation Code of the Philippines, which took effect on February 23, 2019, radically trimmed down the long checklist of government requirements before one could possibly register with the Securities and Exchange and Commission. The short cut embarks on the use of modern-day technology in the facilitation and completion of what used to be a tiresome process for both local and foreign investments.
One Size Fits All
The revised code provides convenience regardless of the type of corporation.
With a simplified system in place, incorporation — 100 percent Filipino-owned corporations, or even those 60 percent domestic and 40 percent foreign-owned corporations could easily adapt to the company incorporation process, while embarking on corporate governance standards.
The same principle applies to foreign corporations defined by the revised code as those organized under the laws of the country from where the company was first established or has an existing business operation (branch or representative office, as it may be).
The revised code further allows a one-man corporation, unless before when the Philippine government requires a minimum of five incorporators. Under the new law, a corporation could refer to just one person or at the most, 15 incorporators.
No More Minimum Residency
Another good thing about the revised code is the termination of the residency section which used to require the majority of the corporate board to be residents in the Philippines.
Under this condition, foreign investors and multinational companies seeking to establish a presence in the Philippines need not compete with what is consider the precious time spent unprofitably.
For safety, corporate treasurers must be somebody who lives in the country for good.
Aptly referred to as One Person Corporation, a company president could as well be the only director. However, the president and concurrent director of the company should at least have two persons backing him up – a nominee and an alternate nominee, just in case the one-man company becomes incapacitated in the event of an ailment or demise.
Aside from being a company president and director, he too could also appoint himself as the treasurer provided he posts a cash bond with the Securities and Exchange Commission, which serves as a regulatory agency overseeing the corporate sector, securities, and investment instruments market, capital market participants and investing public, as part of their mandate to implement the Revised Corporation Code of the Philippines.
Interestingly, an investment company may also opt to downgrade as a one-man corporation.
No Minimum Capital Requirement
Under a downgraded corporate structure, there would no longer be a minimum capital requirement unlike in a company with more than one incorporator. The old system requires corporations to have at least 25% of subscribed capital paid-up at incorporation with at least 25% of the authorized capital stock subscribed by the incorporators.
The provisions of the Revised Corporation Code of the Philippines, stock corporations no longer need to impose upon the company a minimum capital stock.
As such, a business gets the leverage and flexibility to easily adjust under different conditions, including recession.
An Eternity of Business
On top of the eased requirements in doing business in the Philippines, the Revised Corporation Code of the Philippines also eliminated corporate existence, allowing expansive room for growth that could see the future generation reaping fruits in terms of government taxes, employment, convenience services, and quality products.
A provision under the revised code certifies a check and balance giving the most shareholder a choice to keep the original business duration or to keep it rolling through the Articles of Incorporation.
Shout-out to Investors
Days gone, when investors made to drop more than what they should. They need not suffer the burden of having to get past multi-layered bureaucratic requirements. No need to kill time just to comply with the unjustifiable residency. There’s no more captivating reason to worry about other concerns that captivate investors to pick on other countries year back.
Doing business in the Philippines is as easy as A-B-C.
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