Understanding the

Business Impact of the

Revised Corporation Code
Christina Macasaet-Acaban
Partner, Quisumbing Torres
The material in this publication has been prepared by Quisumbing
Torres to provide general information only, and is subject to rules,
regulations, and guidelines that may be issued after effectivity of the
Revised Code. It is not offered as advice on any particular matter,
whether it be legal, procedural, commercial or otherwise, and should
not be taken as such. For this reason, the information contained in
this presentation should not form the basis of any decision as to a
particular course of action; neither should it be relied upon as legal
advice nor regarded as a substitute for detailed advice in individual
cases. The author expressly disclaim all liability to any person in
respect of consequences of anything done or omitted to be done
wholly or partly in reliance upon the whole or any part of the contents
of this presentation.
Introduction
 Revised Corporation Code (Revised Code) was signed into law on 20
February 2019 and took effect on 23 February 2019.
 Expressly repeals Batas Pambansa Blg. 68, otherwise known as the
Corporation Code of the Philippines (Old Code).
 Provides for a 2-year transition period.
 Does not amend special laws governing special corporations such as
banks, non-bank financial institutions.
Overview of Changes
 Improving the ease of
doing business,
Different types strengthening corporate
of amendments governance, protection
of minority shareholders,
and more robust
Scope of amendments:
Scope of Key Changes:

 Incorporation and organization of private corporations

 Corporate governance structure, requirements and processes
 One Person Corporation
 Dissolution of a corporation
 Powers of the Securities and Exchange Commission (SEC)
 Penalties
Key Changes
 Incorporation and
Organization of Corporations
 Incorporators
 Any person, partnership, association or corporation may be an
incorporator.
 Minimum of 5 incorporators under the Old Code has been removed.
 Licensed professionals and professional partnerships are not allowed
to organize a corporation, unless otherwise allowed under special laws.
 No residency requirement.
 Corporate name
Corporate names shall not A name is not distinguishable even if it
be allowed if: contains one or more of the following:
1. it is not distinguishable from that 1. The word “corporation” “company,
already reserved or registered for “incorporated”, “limited”, “limited
another corporation; liability” or an abbreviation of one of
2. protected by law, or such words; and
3. contrary to existing law, rules, and 2. Punctuations, articles, conjunctions,
regulations. contractions, prepositions,
abbreviations, different tenses,
spacing or number of the same word
phrase.
Power of SEC to issue cease and desist order.

Liability of corporation and its responsible officers for contempt,

or administrative, civil, or criminal liability if they fail to comply
with the SEC's order.
 Corporate term

 Perpetual term unless articles of incorporation provides otherwise.

 Existing corporations will have perpetual term
- a vote of majority of its stockholders may notify the SEC to retain
specific corporate term.
 Change in corporate term shall be subject to appraisal right.
 Extension of corporate term may be filed no earlier than 3 years
(previously 5 years) prior to expiry date.
 Revival of corporations with expired term

- Revival of corporate existence with the SEC.

- Banks, banking and quasi-banking institutions, preneed, insurance

and trust companies, nonstock savings and loan associations,
pawnshops, corporations engaged in money service business, and
other financial intermediaries cannot apply for revival without the
favourable recommendation of the appropriate agency.
 Capital stock

 No minimum capital stock requirement.

 Increase in capital stock must comply with the 25%/25% requirement.
 Special capitalization requirements under special laws and regulations
continue to apply.
 Articles of incorporation
 Applications for incorporation and amendments may be filed with the
SEC in the form of an electronic document.
 Arbitration agreement may be provided in the articles of incorporation.*
- Covers intra-corporate disputes

- Does not cover criminal offenses and interests of third parties

- Binding on the corporation, its directors, trustees, officers, executives or

managers.
 RTC shall dismiss an intra-corporate dispute case before the
termination of the pretrial conference, if there is an arbitration
agreement.

 Final arbitral award shall be executory after the lapse of 15 days from
receipt and stayed only by the filing of a bond or the issuance by the
appellate court of an injunctive writ.
 Non-use of corporate charter /
continuous inoperation

 Automatic revocation of the certificate of incorporation in case of failure

of the corporation to organize and commence business within 5 years
(increased from 2 years) from date of incorporation.
 Delinquent status, after notice and hearing, in case of continuous
inoperation for 5 years.
- 2 years to resume operations and comply with the requirements
of the SEC
- Revocation of incorporation in case of failure to comply with
SEC requirements.
Directors and Corporate Officers
 Directors

 Minimum of 5 directors under the Old Code has been removed.

 No residency requirement for directors.
 Independent directors
 Corporations vested with public interest (CPI) must have independent
directors constituting at least 20% of the Board of Directors (Board).
 CPIs cover:
- Corporations covered by the Securities Regulations Code
- 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
- Other corporations as may be determined by the SEC.
 An independent director
- apart from shareholdings and fees received from the corporation
- independent of management
- free from any business or other relationship
- which could, or could reasonably be perceived to materially interfere
with independent judgment as a director.

 SEC will issue rules and regulations governing qualifications,

disqualifications, voting requirements, duration and term limit of
independent directors.
 Election of directors
 Stockholders may elect directors through remote communication or in
absentia when authorized in the bylaws or by a majority of the board.

 In CPIs, voting through remote communication or in absentia even in the

absence of a provision in the bylaws.

 Stockholders who participate through remote communication or in

absentia shall be deemed present for purposes of quorum.
 Removal of directors

 The SEC, motu propio or upon verified complaint, may order the
removal of a disqualified director.
 Vacancies

Election no later than

Vacancy due to term expiration the day of expiration

Vacancy as a result of removal Election on the same day of the

by stockholders meeting authorizing the removal.

Election no later than forty-five (45)

Vacancy in all other cases days from the time of vacancy.
 Emergency Board

 Requirements
- Absence of quorum due to vacancy
- Emergency action is required to prevent grave, substantial and
irreparable loss or damage to the corporation
- Vacancy may be temporarily filled form among the officers of the
corporation
- Unanimous vote of the remaining directors or trustee
(Emergency Director).
 Limited to the emergency action.

 Term shall cease within a reasonable time from the termination of the
emergency or upon the election of the replacement director, whichever
comes earlier.

 Notice to the SEC within 3 days from the creation of the emergency
Board.
 Compensation

 Directors shall not participate in the determination of their own per

diems or compensation.

 CPIs shall submit to their shareholders and the SEC, an annual report
of the total compensation of each director.
 Corporate officers

 CPIs are required to have a Compliance Officer.

 The treasurer is expressly required to be a resident.

 Disqualification
 Additional grounds for disqualification of a director, trustee or officer of any
corporation:
- Within 5 years prior to the election or appointment, the person was:
a) Convicted by final judgment:
• offense punishable by imprisonment exceeding 6 years;
• violation of the Revised Code;
• violation of The Securities Regulation Code;
b) Found administratively liable for any offense involving fraudulent acts; and
c) By a foreign court or equivalent foreign regulatory authority, for acts,
violations or misconduct similar to those enumerated in (a) and (b) above.
 Report of election, non-holding and
cessation from office
 Report election of directors, officers to the SEC within 30 days from election

 Report non-holding of elections of directors, officers and the reasons to the

SEC within 30 days from the date of the scheduled election.

- New date for the election shall be within 60 days from the originally
scheduled date.
 - If no new date or the rescheduled election is not held, the SEC may,
upon application, summarily order that an election be held.

• Stockholders present shall constitute a quorum notwithstanding

requirement in articles of incorporation or by laws.

 In case a director, trustee or officer dies, resigns or ceases to hold office,

report to SEC within 7 days from knowledge.

- May be filed by secretary, or the director, trustee or officer to the SEC.

 Dealings of directors, trustees or officers

 Safeguards on self-dealing directors cover spouses and relatives within

the 4th civil degree of consanguinity or affinity.

 Material contracts with CPIs require approval by 2/3 of the entire

membership of the board, with at least a majority of the independent
directors.
 Special committees

 Board may create special committees and determine the members’ term,
composition, compensation, powers, and responsibilities.

 Committees (other than Executive Committee) do not require creation in

the by-laws.
 Meetings of directors or trustees

 Notice period for notice of regular or special meetings has been

increased to 2 days (previously 1 day) prior to the scheduled meeting.

 Participation and voting through remote communication such as

videoconferencing, teleconferencing, or other alternative modes of
communication.

 Expressly prohibited from attending or voting by proxy.

 Recusal from voting of director or trustee who has a potential interest in
any related party transaction.

 Chairman as presiding office at all meetings of the directors or trustees

and stockholders or members.
Rights of Stockholders
 Right to notice of meetings
 Notice of regular meetings at least 21 days (from 2 weeks), and notice of
special meetings at least 1 week prior to meeting, subject to the
provisions of the bylaws.
 Written notice of regular meetings may be sent through electronic mail or
such other manner that the SEC may allow.
 In some special corporate actions that require stockholder approval
(amendment of corporate term, sale of all or substantially all assets, etc.)
written notice sent electronically must be in the by-laws or with the
consent of the stockholder.*
*To be clarified in SEC guidelines to be issued on Revised Code.
 General waivers of notices in the articles of incorporation or the bylaws
are expressly prohibited.

 Attendance at a meeting shall constitute a waiver of notice, except when

attendance is for the express purpose of objecting to the transaction of
any business because the meeting is not lawfully called or convened.
 Notice of meeting shall be accompanied by:
- Agenda;
- Proxy form;
- Requirements and procedures for voting by remote communication or in
absentia; and
- Requirements and procedure for nominatioin and election of directors or
trustees.

 In case of postponement of regular meeting, written notice and the

reason shall be sent to all stockholders at least 2 weeks prior to the date
of the meeting, unless a different period is required in the bylaws, law or
regulation.
 Stockholder’s meetings
 Matters to be presented by the Board at each regular stockholders' meeting:
- The minutes of the most recent regular meeting which shall include, among
others
1. Voting and vote tabulation procedures used in the previous meeting;
2. Opportunity given to stockholders to ask questions and a record of the
questions and answers;
3. Matters discussed and resolution reached;
4. Voting results for each agenda item;
5. A list of attending directors, officers and stockholders or members; and
6. Other items as the SEC may require in the interest of good corporate
governance and the protection of minority stockholders.
 Material information on the current stockholders, and their voting rights;

 A detailed, descriptive, balanced and comprehensible assessment of

corporation's performance, any material change in business, strategy, and
other affairs;

 Financial report for the preceding year, including financial statements, a

statement on adequacy of internal controls or risk management system, and
all external audit and non-audit fees;

 Dividend policy, payment of dividends or the reason for nonpayment;

 Director profiles, qualifications and relevant experience, length of service,
trainings and continuing education, board representations in other
corporations;

 Director attendance report at each meeting of the Board and its committees
and in stockholder meetings;

 Appraisals and performance reports for the Board and the criteria and
procedure for assessment;

 Director compensation report;

 Director disclosures on self-dealings and related party transactions; and/or

 Profiles of directors nominated or seeking election or reelection.

 Attendance in meetings / right to vote
 Vote in person, through proxy, or when authorized in the by-laws or by
majority vote of Board, through remote communication or in absentia
(allowed in case of election of directors in CPIs regardless of by-laws and
majority Board).

 Stockholders attending meeting remotely or in absentia shall be counted

for quorum purposes.

 Proxy shall be in writing and in any form authorized in the by-laws.

 Stockholder that grants security interest (not limited to pledge or
mortgage) over shares shall have the right to attend and vote at meetings,
unless the secured creditor is given right in writing and recorded on the
corporate books.

 Voting trust agreements continue to be recognized provided that they are

not entered into the purpose of circumventing the law against anti-
competitive purpose, violation of nationality and capital requirements, or
fraud.
 Corporate books and records
Corporations must keep and preserve the following at its principal office:
1. Articles of incorporation and bylaws of the 5. Record of the resolutions of the board
corporation and all their amendments; of directors and of the stockholders;
2. Current ownership structure and voting 6. Copies of the latest reportorial
rights of the corporation, including lists of requirements submitted to SEC;
stockholders or members, group 7. Minutes of meetings of stockholders
structures, intra-group relations, and of the Board, with, among others,
ownership data, and beneficial ownership; time entered or left, yeas and nays,
3. Names and addresses of all the members protests on any action, upon demand
of the board of directors and the executive by director or stockholder;
officers; 8. Stock and transfer book
4. Record of all business transactions;
 Right of inspection
 Corporate records may be inspected in any form they are kept.
 Inspecting / reproducing party shall be bound by confidentiality under
prevailing laws.
 In case of refusal to allow inspection / reproduction of records:
- refusing officer / agent / director liable for damages, and under
Section 161, subject to defense of previous improper use, bad faith
or illegitimate purpose
- aggrieved party may request SEC to order inspection upon summary
investigation.
 The following shall have no right to inspect:

- Non-stockholder

- Competitor, director, officer, controlling stockholder or representative

of a competitor.

- Person who has improperly used information from previous

inspection of corporation or another corporation, absence of good
faith or lack of legitimate purpose.
 Financial statements

 Financial statements furnished to stockholders within 10 days from

receipt of written request, form and substance required by the SEC.

 Financial statements may be certified under oath by the president and

the treasurer if total assets or liabilities are less than P600,000
(previously P50,000 paid-up capital).
Powers of a Corporation
 Specific powers
 Enter into partnerships, joint ventures, or any other commercial agreements
with natural and juridical persons.
 Deleted prohibition against domestic corporations giving donations in aid of
any political party or candidate or for purposes of partisan political activity.
 Application for increase or decrease in capital stock:
- must be filed with SEC within a 6-month period from the date of approval of
the Board and the stockholders, but may be extended for justifiable
reasons
- subject to prior approval of the Philippine Competition Commission, where
applicable.
 Sale of all or substantially all of the corporation's properties and assets:
- computed based on its net asset value, as shown in its latest financial
statements
- subject to the Philippine Competition Act.
 Merger or consolidation requires additional information in the articles of
merger or consolidation:
- Carrying amounts and fair values of the assets and liabilities of the
respective companies as of the agreed cut-off date;
- Method to be used in the merger or consolidation of accounts of the
companies;
- Provisional or pro-forma values, as merged or consolidated, using the
accounting method; and
- Other information as may be prescribed by the SEC.
One Person Corporation
 Organization
 Corporation with a single stockholder, which must be a natural person, trust,
or an estate.

 The following cannot incorporate as OPC:

- Banks and quasi-banks, preneed, trust, insurance, public and publicly-

listed companies, and non-chartered government-owned and -controlled
corporations; and

- Licensed professionals, unless allowed under special laws.

 No minimum authorized capital stock.
 Articles of incorporation must include:
- “OPC” in corporate name
- If the single stockholder is a trust or an estate, the name, nationality, and
residence of the trustee, administrator, executor, guardian, conservator,
custodian, or other person exercising fiduciary duties together with the proof
of such authority
- Name, nationality, residence of the nominee and alternate nominee, and the
extent, coverage and limitation of the authority.
 Written consent of the nominee and alternate nominee (which may be
withdrawn at any time).
 No corporate bylaws.
 Nominee / Alternate nominee
 In the event of the single stockholder's death or incapacity, serve as
director and manage the OPC's affairs.
- In case of death or permanent incapacity, until the legal heirs of the single
stockholder have designated one of them or have agreed that the estate
shall be the single stockholder of the OPC.

 Alternate nominee shall assume role in case of the nominee's inability,

incapacity, death, or refusal to discharge the functions, only for the same
term and under the same conditions applicable to the nominee.
 Single stockholder may change its nominee and alternate nominee by
submitting new nominees and written consent to SEC.
 Officers
 Single stockholder shall be the sole director and president.

 OPC shall appoint a treasurer, corporate secretary, and other officers:

- Within 15 days from the issuance of its certificate of incorporation

- Notify the SEC within 5 days from appointment.

- Single stockholder may not be corporate secretary.

- If single stockholder is appointed treasurer, bond requirement to the SEC,

subject to renewal every 2 years.
 Additional functions of the OPC Corporate Secretary:
- Maintain minutes books and/or records
- Notify the nominee or alternate nominee of the death or incapacity of the
single stockholder, no later than 5 days
- Notify the SEC of the death of the single stockholder within 5 days,
including names, residence addresses, and contact details of all known
legal heirs
- Call meeting among nominee or alternate nominee and the known legal
heirs re election of a new director, amendment of the articles of
incorporation, and other ancillary and/or consequential matters.
 Corporate records / reports

 Minutes book which shall contain all actions, decisions, and resolutions
taken by the OPC.

 Approval by written resolution, signed and dated by the single

stockholder, and recorded in the minutes book.
 Reports to the SEC:
- Annual financial statements audited by an independent certified public
accountant.
- If total assets or total liabilities are less than P600,000, certified under oath by
the corporation's treasurer and president.
- Explanations or comments by the president on every qualification, reservation,
or adverse remark or disclaimer made by the auditor in the latter's report
- Disclosure of all self-dealing and related party transactions between the OPC
and the single stockholder
- SEC may place OPC under delinquent status in case of failure to submit the
reportorial requirements 3 times, consecutively or intermittently, within a period
of 5 years.
 Liability of single stockholder

 Single stockholder claiming limited liability has the burden of affirmatively

showing adequate financing of OPC.

 Joint and solidary liability for OPC liabilities in absence of proof that OPC
property is independent from property of single stockholder.

 Principles of piercing the corporate veil apply.

 Conversions
 Ordinary stock corporation may be converted into OPC when a single
stockholder acquires all the stocks of corporation.
- SEC shall issue a certificate of filing of amended articles of incorporation.
 OPC may be converted into an ordinary stock corporation
- SEC shall issue a certificate of filing of amended articles of incorporation.
- In case of death of the single stockholder, the nominee or alternate nominee
shall transfer the shares to legal heir or estate, and notify the SEC.
- Legal heirs shall notify the SEC of decision to wind up and dissolve OPC or
convert it into an ordinary stock corporation.
Dissolution
Where no creditors are affected

 majority stockholder vote

 detailed process and requirements for dissolution

 verified application to SEC stating and supported by, among others
1. the reason for the dissolution;
2. the form, manner, and time when the notices were given;
3. names of the stockholders and directors or members and the
trustees who approved the dissolution;
4. the date, place, and time of the meeting in which the vote was
made; details of publication.
5. a copy of the resolution authorizing the dissolution, certified by a
majority of the board of directors or trustees and countersigned by
the secretary of the corporation;
6. proof of publication; and
7. favorable recommendation from the appropriate regulatory agency,
when necessary.
Where creditors are affected

 2/3 stockholder vote

 detailed process and requirements for dissolution

 verified application to SEC shall include list of creditors

 Withdrawal of request
 Petition for dissolution may be withdrawn from SEC
- verified by any incorporator, director, trustee, stockholder, or member and
signed by the same number of incorporators, directors, trustees,
shareholders, or members necessary to request for dissolution.
- No later than 15 days from receipt by the SEC of the request for
dissolution.
- SEC shall withhold action on dissolution, determine whether to approve
withdrawal, direct a joint meeting of the Board and the stockholders to
ascertain whether to proceed with dissolution, or issue other orders as
appropriate.
Foreign Corporations
 Security deposit

 Initial security deposit has been increased from P100,000 to P500,000.

 Additional security deposit increased to 2% of gross income exceeding

P10,000,000 (from PhP5,000,000).
 Resident agent

 A domestic corporation acting as resident agent must provide proof of

sound financial standing.
Enforcement of Revised Code
 Powers of the
Securities and Exchange Commission
 Involuntary dissolution
 SEC may dissolve corporations motu proprio or upon verified
complaint:

1. Non-use of corporate charter;

2. Continuous inoperation of a corporation;

3. Lawful court order dissolving the corporation;

4. Final judgment that the corporation procured its incorporation

through fraud;
5. Final judgment that the corporation:

a. Was created for the purpose of committing, concealing or aiding the

commission of securities violations, smuggling, tax evasion, money
laundering, or graft and corrupt practices;

b. Committed or aided in the commission of securities violations,

smuggling, tax evasion, money laundering, or graft and corrupt
practices, and its stockholders knew of the same; and

c. Repeatedly and knowingly tolerates the commission of graft and

corrupt practices or other fraudulent or illegal acts by its directors,
trustees, officers, or employees.
 In case of (5), SEC may petition the court for forfeiture of assets in favor
of the national government

- after payment of liabilities and without prejudice to rights of innocent

stockholders and employees for services rendered.
 Investigation and prosecution

 Investigate a violation of Revised Code and rule, regulation, or order of

the SEC.

 Administer oaths and affirmations, issue subpoena and subpoena duces

tecum, take testimony in any inquiry or investigation, and may perform
other acts necessary to the proceedings or to the investigation.
 Issue a cease and desist order ex parte to enjoin a fraudulent act or practice
or can cause significant, imminent, and irreparable danger or injury to public
safety or welfare.
- Valid for a maximum period of 20 days, without prejudice to the order being
made permanent after due notice and hearing.

 Hold persons in contempt for failure or refusal to comply with order.

 Visitorial powers, including power of examination and inspection of records.
- In case of refusal or obstruction, without justifiable cause, the SEC may
revoke certificate of incorporation.
 Other powers
 Exercise supervision and jurisdiction over all corporations and persons acting
on their behalf;

 Retain jurisdiction over (i) pending cases involving intracorporate disputes

submitted for final resolution, and (ii) pending suspension of
payment/rehabilitation cases filed as of 30 June 2000 until fully disposed;

 Impose sanctions for the violation of the Revised Code

 Promote corporate governance and the protection of minority investors;

 Issue opinions to clarify the application of laws, rules and regulations;

 Other powers
 In appropriate cases, order the examination, search and seizure of documents,
papers, files and records, and books of accounts of any entity or person under
investigation;
 Suspend or revoke the certificate of incorporation after proper notice and
hearing;
 Issue writs of execution and attachment to enforce payment of fees,
administrative fines, and other dues collectible under the Revised Code;
 Other powers
 Prescribe the number of independent directors and the minimum criteria in
determining the independence of a director;
 Impose or recommend new modes by which a stockholder, member, director, or
trustee may attend meetings or cast their votes, as technology may allow;
 Formulate and enforce standards, guidelines, policies, rules, and regulations to
carry out the provisions of the Revised Code;
 Collect retain, and use fees, fines, and other charges which shall form a fund
for its modernization and to augment its operational expenses.
No court below the Court of Appeals shall have jurisdiction to issue
a restraining order, preliminary injunction, or preliminary
mandatory injunction in any case, dispute, or controversy that
directly or indirectly interferes with the exercise of the powers,
duties and responsibilities of the SEC.
Penalties
 Administrative sanctions
 SEC may impose any or all of the following sanctions, after due notice and
hearing, for violation of the Revised Code, rules, regulations or orders:

1. Fine ranging from PhP 5,000 to PhP 2,000,000, and not more than
PhP 1,000 for each day of continuing violation but in no case to
exceed PhP 2,000,000;

2. Permanent cease and desist order;

3. Suspension or revocation of the certificate of incorporation; and

4. Dissolution of the corporation and forfeiture of its assets.

Specific violations and penalties
Unauthorized use of a
 fine ranging from PhP10,000 to
corporate name
PhP200,000

A director, trustee or officer who  fine ranging from PhP10,000 to PhP20,000;

willfully holds office, or willfully  be permanently disqualified from being a
conceals a ground for director, trustee or officer of any
disqualification corporation;
 if injurious or detrimental to the public, fine
ranging from PhP20,000 to PhP400,000.
Specific violations and penalties
Unjustified failure or refusal by
the corporation, or by those
responsible for keeping and  fine ranging from PhP10,000 to
maintaining corporate records, to PhP200,000;
comply with rules on inspection  if injurious or detrimental to the public, fine
and reproduction of records ranging from PhP20,000 to PhP400,000.

Willfully certifying a report with

incomplete, inaccurate, false, or  fine ranging from PhP20,000 to
PhP200,000;
misleading information or
statements  if injurious or detrimental to the public, fine
ranging from PhP40,000 to PhP400,000.
Specific violations and penalties
An independent auditor who, in
collusion with the corporation's
directors or representatives,
certifies the corporation's
financial statements despite its  fine ranging from PhP80,000 to
PhP500,000;
incompleteness or inaccuracy, its
failure to give a fair and accurate  if fraudulent or injurious to the general
public, fine ranging from PhP100,000 to
presentation of the corporation's PhP600,000.
condition, or despite containing
false or misleading statement
Specific violations and penalties
Those responsible for the
formation of a corporation  fine ranging from PhP200,000 to
through fraud, or who assisted PhP2,000,000;
directly or indirectly therein  if injurious or detrimental to the public, fine
ranging from PhP400,000 to PhP5,000,000.

 fine ranging from PhP200,000 to

Fraudulent conduct of business PhP2,000,000;
 if injurious or detrimental to the public, fine
ranging from PhP400,000 to PhP5,000,000.
Specific violations and penalties
 fine ranging from PhP100,000 to
PhP5,000,000;
 when there is a finding that any of its
Use of the corporation for fraud, directors, officers, employees, agents, or
or for committing or concealing representatives are engaged in graft and
graft and corrupt practices corrupt practices, the corporation's failure
to install: (a) safeguards for the transparent
and lawful delivery of services; and (b)
policies, code of ethics, and procedures
against graft and corruption shall be prima
facie evidence of corporate liability under
this section.
Specific violations and penalties
Appointing an intermediary who engages
in graft and corrupt practices for the  fine ranging from PhP100,000 to
corporation's benefit or interest PhP1,000,000

A director, trustee, or officer who knowingly

fails to sanction, report, or file the
appropriate action with proper agencies,
allows or tolerates the graft and corrupt
practices or fraudulent acts committed by a  fine ranging from PhP500,000 to
PhP1,000,000.
corporation's directors, trustees, officers,
or employees
Specific violations and penalties
Any person who, knowingly and with  fine ranging from PhP100,000 to
intent to retaliate, commits acts PhP1,000,000;
detrimental to a whistleblower such as  A whistleblower refers to any person who
interfering with the lawful employment or provides truthful information relating to
livelihood of the whistleblower the commission or possible commission
of any offense or violation under the
Revised Code.

For other violations of the Code, the Revised Code increased the
minimum penalty from PhP1,000 to PhP10,000 and the maximum
penalty from PhP10,000 to PhP1,000,000.
 Liability of directors, trustees
and employees

 If the offender is a corporation, the penalty may, at the discretion of

the court, be imposed upon such corporation and/or upon its
directors, trustees, stockholders, members, officers, or employees
responsible for the violation or indispensable to its commission.
 Liability of aiders and abettors

 Anyone who shall aid, abet, counsel, command, induce, or cause any
violation of the Revised Code, or any rule, regulation, or order

- fine not exceeding that imposed on the principal offenders, at the

discretion of the court, after taking into account their participation in
the offense.
Other changes
 Electronic filing

 The SEC shall develop and implement an electronic filing and

monitoring system.
 Data privacy
 SEC findings, opinions, advisories, or information concerning
any violation of the Revised Code, rule, regulation or order, must
comply with the provisions of the Data Privacy Act.
 Reportorial requirements
 Annual financial statements audited by an independent certified
public accountant,
- If the total assets or total liabilities of the corporation are less than
P600,000, the financial statements shall be certified under oath by
the corporation's treasurer or chief financial officer; and
 A general information sheet.
 CPIs shall submit the following:

- A director or trustee compensation report;

- A director or trustee appraisal or performance report and the

standards or criteria used to assess each director or trustee.
 SEC may place the corporation under delinquent status in case of failure
to submit the reportorial requirements 3 times, consecutively or
intermittently, within a period of 5 years.

 Confidential information

- may be redacted from reports to be filed with the SEC

- submitted in a supplemental report prominently labelled "confidential",

together with a request for confidential treatment of the report and the
specific grounds.
Conclusion
 Consider actions to take to conform to requirements of the
1 Revised Code.

Incorporate new arrangements to ease doing business and

2 improve corporate governance.

3 CPIs to comply with additional requirements.

Set up systems and processes in place to operate under the

4 Revised Code.
Questions

Christina Macasaet-Acaban
Partner
Christina.Macasaet-Acaban@quisumbingtorres.com
© 2019 Quisumbing Torres