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Salient Features of The Amended RCC

The amended RCC makes several changes to corporation law in the Philippines: 1. It allows perpetual corporate existence and removes minimum requirements for incorporators, allowing a single person to form a corporation. 2. It establishes a specific process for incorporation involving submitting corporate documents to the SEC for approval and issuance of a certificate of incorporation. 3. It increases the period after incorporation that a corporation has to commence business from two to five years before its certificate can be revoked for non-use. 4. It allows the SEC to place corporations in delinquent status for two years if they become inoperative, before revoking their certificate, giving them more time to resume operations.

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30 views3 pages

Salient Features of The Amended RCC

The amended RCC makes several changes to corporation law in the Philippines: 1. It allows perpetual corporate existence and removes minimum requirements for incorporators, allowing a single person to form a corporation. 2. It establishes a specific process for incorporation involving submitting corporate documents to the SEC for approval and issuance of a certificate of incorporation. 3. It increases the period after incorporation that a corporation has to commence business from two to five years before its certificate can be revoked for non-use. 4. It allows the SEC to place corporations in delinquent status for two years if they become inoperative, before revoking their certificate, giving them more time to resume operations.

Uploaded by

Pastolero Janine
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Salient Features of the Amended RCC

What are the changes in the classifications of shares?


Designating different types of shares, with varying rights, privileges, and
restrictions, is still allowed. However, the founder shares given the exclusive right
to vote and be voted for are not allowed to exercise that right in violation of the
Anti-Dummy Law and the Foreign Investment Act. As for the redeemable shares,
their redemption shall now be subject to any rules and regulations issued by the
Securities and Exchange Commission (SEC), in addition to terms and restrictions
in the Articles of Incorporation and certificate of stock.

What are the changes in incorporators?


Incorporators are any person, partnership, association, or corporation, singly or
jointly with others, not exceeding 15, may now be incorporators. Incorporators are
those persons who originally form a corporation and are the first stakeholders. No
minimum number is required, and the majority of them need not be Philippine
residents. Previously, a minimum of 5 natural persons is necessary to create a
corporation.

Since there is no longer any minimum number required for incorporators, any
single natural person is now allowed to form a corporation by him/herself, known
under the new Code as a One Person Corporation.

What are the changes in the corporate term?


Perpetual corporate existence is now allowed. Those whose corporate existence
was limited by the 50-year rule in the Old Code will automatically have perpetual
existence unless they notify the SEC of their desire to stick to the limited 50-year
term.

What are the changes in the corporate term?


If a corporation wishes to change its corporate term, it may amend its articles of
incorporation at least three years before the expiration of its term. Previously, such
a change should be made at least five years before the expiration.
If the term has already expired, the corporation may now ask the SEC to revive its
corporate existence, which option was not present in the old Code. If the same is
approved, the SEC will issue a certificate of revival giving it perpetual existence
unless it requests a limited term. However, no revival is allowed for companies
under the supervision of other government agencies, such as banks, insurance and
trust companies, unless the appropriate government agency first approves the
revival.

What are the changes in requirements for incorporation?


Though generally, the same documentary requirements are needed to incorporate,
the new Code provides
that the Articles of Incorporation may be filed with the SEC, and any application
for amendments,
in an electronic document. The old Code did not have any similar provisions
regarding electronic
documents.
In addition to the articles of incorporation, another document previously required
was the treasurer’s affidavit attesting that the minimum amounts of subscribed and
paid-up capital have been met. Since the new Code no longer requires such
minimum amounts, the Treasurer need not issue such an affidavit.
Instead of this, the Articles should indicate that the named Treasurer certifies that
the information in the Articles regarding authorized capital stock, and the
subscription and paid-up amounts have been duly received for an in behalf of the
corporation.

What are the changes in the process of incorporation?


The old Code did not provide for a specific process to be followed when
incorporating a company. At most, it only stated when corporate existence
commences. Under the new Code, a specific process has been laid down. First, the
incorporators shall submit their intended corporate name to the SEC for
verification. Once approved, they shall then submit their articles of incorporation
and by-laws to the SEC.
Once the SEC determines that the documents submitted are duly compliant, then it
shall issue the
certificate of incorporation. Upon issuance of such a certificate, its corporate
existence begins.

What are the changes in the non-use of the corporate charter?


Under the old Code, a new corporation must formally organize and commence
business or construction of its works within two years from incorporation.
Otherwise, it shall be deemed dissolved.
Under the new Code, a new corporation has five years from the date of
incorporation to commence
business operations. If he fails to do so within the said 5-year period, its certificate
of incorporation will be deemed revoked at the end of the five years.

What are the changes in continuous operation?


It may be possible that a corporation, even after it has initially commenced
business operation, may become inoperative. Under the old Code, if it becomes
inoperative continuously for five years, then the SEC may revoke its certificate of
incorporation.
Under the new Code, the corporation may be placed by the SEC under delinquent
status, other after notice and hearing, for two years, to allow it to resume
operations. This will be lifted once the corporation resumes business, but if it does
not resume operations, then the SEC may revoke its certificate of incorporation.

What are the changes in the board of directors (BOD) and trustees?
A corporation exercises its powers through a BOD if it is a stock corporation, or
through a board of trustees if it is a non-stock corporation. Previously, directors
hold office for a term of 1 year, and the majority of whom should be Philippine
residents. Trustees hold office in a way that 1/3 of the first board will hold office
for one year, and then subsequent ones will hold office for three years. Under the
new Code, directors hold office for one year, while trustees hold office for three
years. The majority of the Board is also no longer required to be Philippine
residents.

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