Salient Changes under the Revised Corporation

Code
Republic Act No. 11232, otherwise known as the “Revised Corporation Code of the Philippines” or
“RCC”, was signed into law by President Rodrigo Duterte on 20 February 2019. The RCC took effect
on 23 February 2019, following the completion of its publication in the Manila Bulletin and the
Business Mirror. The new law updates the almost 39-year old Corporation Code of the Philippines with
the aim of improving the ease of doing business in the country. Existing corporations affected by the
new requirements of the RCC are given a period of two (2) years to comply (Sec. 185).
Some of the salient amendments to the Corporation Code include:
1. Organization of Corporations
The RCC removed the absolute requirement of having a minimum of five (5) individuals in the
formation of corporations.
The RCC removed the absolute requirement of having a minimum of 5 individuals in the formation of
corporations (Sec. 10). The law now allows the establishment of a One-Person Corporation (OPC)
composed of a single shareholder, who may be a natural person, a trust or an estate. A shareholder may
acquire all the stocks of an ordinary stock corporation and apply for the conversion thereof into an
OPC. In terms of liability, the single shareholder claiming limited liability has the burden of
affirmatively showing that the corporation was adequately financed (Sec. 115, 116, 130, 131).
Stock corporations are still not required to have a minimum capital stock, unless specifically provided
by special law. Notably, in the revised form of the Articles of Incorporation (AOI), it is no longer
required that the capitalization be in “lawful money of the Philippines” (Sec. 14). Moreover, the RCC
removed the requirement that 25% of the authorized capital stock be subscribed and that 25% of the
subscribed capital stock be paid for purposes of incorporation as previously mandated under Section 13
of the Corporation Code, which was deleted in its entirety (Sec. 12). However, the 25%-25%
requirement was retained for any increase in the authorized capital stock (Sec. 27).
The corporate term limit of 50 years has been removed such that a corporation can now enjoy perpetual
existence unless expressly limited by its AOI. Such perpetual corporate term shall also apply to
corporations incorporated prior to the RCC, unless said corporations elect to retain a specific corporate
term. The new law also states that a corporation whose term has expired can apply with the Securities
and Exchange Commission (SEC) for the revival of its corporate existence, with all the rights and
privileges under its certificate of incorporation and subject to all of its duties, debts and liabilities
existing prior to its revival. Upon the SEC’s approval, the corporation shall be deemed revived and a
certificate of revival of corporate existence shall be issued giving it perpetual existence, unless its
application for revival provides otherwise (Sec. 11). The RCC also extends the allowable period for
non-use of corporate charter from 2 years to 5 years from the date of incorporation. The certificate of
incorporation shall be deemed revoked as of the day following the end of the 5-year period.
Meanwhile, a corporation which has commenced its business but subsequently becomes inoperative for
a period of at least 5 years may be deemed a delinquent corporation and shall have a period of 2 years
to resume operations. Failure to resume operations within the period given by the SEC shall cause the
revocation of its certificate of incorporation (Sec. 21).
2. New Classifications of “Corporations Vested with Public Interest”
In lieu of the expansion of application of the system of Independent Directors under the Securities
Regulation Code (SRC), the RCC has classified the following corporations vested with public interest,
whose board shall have independent directors constituting at least 20% of such board:
a. Publicly-held corporations under the SRC whose securities are registered with the SEC, corporations
listed with an exchange or with assets of at least P50,000,000.00 and having 200 or more holders of
shares, each holding at least 100 shares of a class of its equity shares;
b. Banks and quasi-banks, non-stock savings and loan associations, pawnshops, corporations engaged
in money service business, preneed, trust and insurance companies, and other financial intermediaries;
and
c. Other corporations engaged in businesses vested with public interest similar to the above, as may be
determined by the SEC.

3. Board of Directors/Trustees
With the introduction of the OPC, the minimum number of directors to incorporate is reduced from 5 to
1, while the maximum is retained at 15 directors. For trustees, however, the RCC has removed the
maximum number which can be elected. Some of the changes in the qualification and term of the
board of director or trustees include the removal of the residency requirement for a majority of the
board and the extension of the term of trustees from 1 year to 3 years (Sec. 22).
The new law allows stockholders or members, when authorized by the By-Laws or by a majority of the
board of directors, to vote through remote communication methods or inabsentia. A stockholder or
member who participates through remote communication or inabsentia will still be considered present
for purposes of determining the existence of a quorum (Sec. 23).
The RCC empowers the SEC, unilaterally or upon a verified complaint, and after due notice and
hearing, to remove members of the Board of Directors/Trustees who are determined to be disqualified
to be elected to or to hold such position (Sec. 27).
When there is a vacancy in the Office of the Director/Trustee which prevents the remaining directors
from constituting a quorum and emergency action is required to prevent irreparable loss or damage to
the corporation, the remaining directors are allowed to temporarily fill the vacancy from among the
officers of the corporation, thereby constituting an emergency board, subject to certain requirements
(Sec. 28).
4. Corporate Officers
The RCC mandates a corporation vested with public interest to appoint a Compliance Officer, in
addition to the mandatory positions of President, Treasurer and Corporate Secretary. The law now also
expressly requires that the Treasurer be a resident of the Philippines (Sec. 24).
The election or non-holding of election of the directors, trustees and officers of the corporation is
required to be reported to the SEC, which is empowered under certain conditions to summarily order
that an election be held (Sec. 25).
5. Corporate Powers
Under Section 35 of the RCC, additional powers are expressly granted to corporations, namely: the
power to enter into a partnership, joint venture or any other commercial agreement with a natural
person or another corporation [Sec. 35 (h)]; and, for domestic corporations, the power to donate to a
political party or candidate or for purposes of partisan political activity [Sec. 35 (j)].
6. Shareholder Actions
The RCC now provides that if the date of the regular meeting of the stockholders or members is not
fixed in the By-Laws, the same shall be held on any date after April 15 of every year as determined by
the Board of Directors/Trustees. Written notices of regular meetings may now be sent to stockholders
and members through electronic mail and such other means as may be allowed by the SEC. The right
of stockholders or members to vote may now also be exercised through remote communication or in
absentia, under rules and regulations to be issued by the SEC governing participation and voting
through remote communication or in absentia, taking into account the company’s scale, number of
shareholders or members, structure, and other factors consistent with the protection and promotion of
shareholders’ or members’ meetings (Sec. 49 and 57).
The law also allows an arbitration agreement to be included in the AOI or By-Laws of a corporation
(Sec. 181).
7. Corporate Books and Records
If the corporation denies or does not act on a demand for inspection and/or reproduction of corporate
records, the aggrieved stockholder or member may report such denial or inaction to the SEC, which
shall, within 5 days from receipt of such report, conduct a summary investigation and issue an order
directing the inspection or reproduction of the requested records. This right to inspect is expressly made
subject to confidentiality rules under prevailing laws (Sec. 73).
With regard to the financial statements of a corporation, the RCC provides that if the paid-up capital of
the corporation is less than P600,000.00 or such other amount as may be determined appropriate by the
Department of Finance, the financial statements may be certified under oath by the President and the
Treasurer, and need not be certified by an independent certified public accountant (Sec. 74).
8. Foreign Corporations
The new law provides that within 60 days from issuance by the SEC of a license to transact business to
a branch office of a foreign corporation, said branch must deposit acceptable securities to the SEC with
an actual market value of at least P500,000.00 for the benefit of present and future creditors of the
licensee. In addition, within 6 months after the fiscal year of the licensee, the SEC may require the
licensee to deposit additional securities or financial instruments equivalent in market value to 2% of the
amount by which the licensee’s gross income exceeds P10,000,000.00 (Sec. 143).
A domestic corporation who acts as a resident agent of a foreign corporation must be of sound financial
standing and must show proof that it is in good standing as certified by the SEC (Sec. 144).
9.Investigations, Offenses and Penalties
Under the new law, jurisdiction over party-list organizations is transferred from the SEC to the
Commission on Elections (COMELEC), subject to the implementing rules to be jointly promulgated by
the SEC and the COMELEC (Sec. 182).
The RCC also enumerates the various specific offenses and their corresponding penalties, with special
emphasis on fraud and graft and corrupt practices:
a. Unauthorized Use of Corporate Name (Sec. 159);
b. Violation of Disqualification Provision (Sec. 160);
c. Violation of Duty to Maintain Records, to Allow Inspection or Reproduction (Sec. 161);
d. Willful Certification of Incomplete, Inaccurate, False or Misleading Statements or Reports (Sec.
162);
e. Independent Auditor Collusion (Sec. 163);
f. Obtaining Corporate Registration Through Fraud (Sec. 164);
g. Fraudulent Conduct of Business (Sec. 165);
h. Acting as Intermediaries for Graft and Corrupt Practices (Sec. 166);
i. Engaging Intermediaries for Graft and Corrupt Practices (Sec. 167);
j. Tolerating Graft and Corrupt Practices (Sec. 168);
k. Retaliation Against Whistleblowers (Sec. 169); and
l. Other Violations of the Code (Sec. 170).
10. Technological Updates
Aside from recognizing stockholder or member votes cast in absentia via remote communication
methods, the new law also allows the AOI and applications for amendments thereto to be filed with the
SEC in the form of electronic documents, in accordance with the rules on electronic filing that the SEC
will promulgate (Sec. 13). The SEC is further mandated to implement an electronic filing and
monitoring system to expedite corporate name reservation and registration, incorporation, submission
of reports, notices and documents required by the RCC (Sec. 180).

Coca Cola: "Always" Class A MRP II

A History of Successful Implementations
Besides owning the most well-known brand name in the world, the Coca-Cola
Company can also lay claim to achieving Class A MRP II performance on four
continents, in eight countries and at eight concentrate manufacturing facilities and one
major canning plant. This accomplishment includes an impressive list of Class A MRP II
firsts: first in Puerto Rico, first in Latin America, first in Korea and first in mainland
China. And, if everything goes according to plan, 1997 will see one more continent,
three more countries and three more concentrate manufacturing facilities reaching Class
A!**
Initially implementing MRP II in concentrate plants in the Commonwealth of Puerto
Rico in 1987 and the Republic of Ireland in 1988, the company added a third concentrate
plant in the South of France in 1990 and a company owned canning plant in Northern
France in 1991. In 1995, a strategy to implement MRP II in other concentrate operations
around the world began to bear fruit, with Class A certifications of the concentrate
manufacturing facility located in the heart of the Amazon region of Brazil and also at
concentrate plants in Korea and Thailand. In 1996 the Philippines was certified, as was
China in early 1997.
Significant Payback Achieved for the Corporation
Achieving Class A certification has been a core component of the CPE (Constant Pursuit
of Excellence) program initiated within Coca-Cola to support growth, improve customer
service and increase market responsiveness. Reluctant to quote specific financial results,
the company says it saw the following in each Class A plant:
Inventory levels: down
Each of the facilities saw a significant improvement in inventory turnover, with two of
the facilities seeing the number of weeks of inventory on hand decline anywhere from
50 to 75%
Productivity: up
Productivity gains of 85% to 100% were common.
Customer delivery performance: improved
The time since the last missed shipment is measured in years, not days, weeks or
months, in these facilities. Order fulfillment and delivery are virtually 100% on time
every time in the nine facilities.
Supplier delivery performance: better
Each facility has supplier on-time delivery performance higher than 95% today,
significantly higher than the 50-75% performance pre-MRP II.
Business Processes: improved
Large reductions in cycle times were achieved for processes such as purchasing and
customer order processing.
Data integrity: high
Inventory record accuracy is consistently 99-100%, bill of material accuracy is 100%
Cost of goods: down
Significant improvements have been seen here, with reductions as high as 20% in a
single year in one facility.
Team Spirit: high
Improved communications between marketing, finance, quality assurance and
manufacturing has significantly improved the sense of team within the plants.
Keys to Success
Four Keys to success at Coca-Cola were:
Improvement not Systems Replacement as Implementation Focus
Although nearly every plant replaced an existing system, the first and foremost objective
of the implementation was to improve the operation of the business. The software and all
its functionality (or lack of functionality) was never allowed to impede or divert the
efforts of implementation teams.
One Plant at a Time
Implementations have been undertaken in manageable chunks, generally with two
parallel implementations at once and without succumbing to the temptation of
implementing everything everywhere at once. At some point in the future, the pace of
the implementations may increase, but at least at the start Coke management felt it
important to get the experiences of several successes rather than a lot of failures.
Plant Ownership/Corporate Support
No plant was forced to implement MRP II. This was entirely their decision based on
anticipated benefits. Corporate provided consulting and training support at the level
needed to be successful, but did not overstep the boundaries that define where ultimate
accountability for success or failure lies: at the plant doorstep.
High Expectations and High Standards of Performance
From the beginning, each plant beginning the journey to MRP II was expected to
achieve Class A recognition along the way. Class C or even B performance isn't good
enough at the Coca-Cola Company!
What's Next?
The Coca-Cola Company is commited to implementing MRP II in concentrate facilities
around the world. Expected to join the elite group of Class A facilities are plants in
Mexico, Swaziland and India.**
Where many companies would be content to have a single Class A facility on a single
continent, the Coca-Cola Company may soon have facilities on every continent save
Antarctica. Without a doubt, whether it has to do with the product or with company
operations, whenever it's world class performance, it is "Always Coca-Cola."
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