Understanding the Changes in the Corporation Code
President Rodrigo R. Duterte signed into law the amendments in Section 11 of the Revised Corporation Code of the Philippines. Last February 20, the changes stated that instead of corporations having a 50-year limit, it can now operate forever. Thus, perpetuity in the Philippine corporations is now allowed as provided by the law.
These changes align with the president’s 10-point economic agenda, which aims to boost the economy’s competitiveness. Moreover, this amendment allows incorporators and entrepreneurs ease of doing business in the country, protection for both corporations and shareholders and ultimately, promote good governance.
Aside from granting perpetuity, the newly-signed amendments came with features such as: granting the formation of a corporation with a single shareholder, the implementation of an electronic filing and monitoring system, allowing alternative dispute resolution mechanisms, and the provision for an emergency board.
The changes in the Corporation Code also covers both existing and future corporations. In a press statement following the signing of the amendment, Securities and Exchange Commission (SEC) Chair Emilio Aquino said, “We look forward to a more competitive corporate sector, as the Revised Corporation Code adopts international best practices and standards, tailored to address the needs and realities of the Philippine corporate setting, and introduces new concepts and mechanisms to help the Philippines keep up with the changing times.”
Benefits of a Revised Corporation Code
Upon granting the perpetuity amendment, there are a lot of benefits a corporation can enjoy. Here are some of them.
Long-term Operations and Sustainability Options
One of the primary issues that the perpetuity amendments answers is the possible closure of a corporation. Some concerns revolve around corporations being able to register their businesses, or because it has come to the end of a 50-year lifeline.
Since the amendment now allows perpetuity, businesses can strategize long-term plans and even take on sustainable investments and projects. All of these are now possible because of the amendments made to the nearly-four decade-old Batas Pambansa Blg. 68.
Corporations Allow Existence Despite Changing of Key Personnel
Corporations rely on investors to fund their operations. Now that perpetuity is granted, the corporation will continue to operate despite having changes in shareholders, officers and directors. Such stability is a good site for potential investors who want to take part in the corporation’s profitability.
Perpetuity Allows Corporations to Innovate Services and Products
Perpetuity in Philippine corporations allows an organization to utilize the time for profit-racking strategies like innovations and modifications. Long-term plans now have the chance to be realized, and investors can see the long-term gains from their investments.
Ease of Transactions and Filing for Continued Operations
When it comes to registration and renewals, businesses have a hard time coping with requirements and not to mention, the cost of such transactions. By granting perpetuity in Philippine corporations, companies don’t need to continually file for registration or renewal documents that will cost them valuable time and money.
How 3E Accounting Helps With Incorporation in the Philippines
When it comes to establishing your corporation, there’s no better time than to do it now. Especially when the law now allows perpetuity in Philippine corporations, you can take advantage of its long term and sustainable life. However, before you go into the process of incorporation, you should consult with the experts to guarantee your corporation’s sustainability and profitability.
3E Accounting has the best incorporation specialists in the Philippines. These professionals can help you identify opportunities and risks to make sound financial and operational decisions that are sure to guarantee your corporation’s perpetuity. Contact us for more information.