Date of Eff ectivity/Repeal of Old Corporation
Code
The Revised Corporation Code of the
Philippines, Act No. 11232 (the “Revised Corp.
Code” or the “Law”) became eff ective on February
23, 2019 following its publication in 2 newspapers
of general circulation, as declared by the Securities
and Exchange Commission (SEC) on February 28,
2019. President Rodrigo Duterte signed the Law on
February 20, 2019 after it was passed by the
Senate and the House of Representatives on
November 28, 2018. It was also earlier published in
the Offi cial Gazette on February 21, 2019 but the
SEC did not consider this as the eff ectivity date.
In its Repealing Clause, the Revised Corp. Code
expressly repealed the 1980 Corporation Code (the
“Old Corp. Code”) which had no amendments for
almost 39 years. The Old Corp. Code had over the
years been deemed not attuned to the changing
business environment and requirements, thus, the
need for a change was recognized.
The enactment of the Revised Corporation Code is
a welcome development in light of the
requirements of modern technology and business.
The facilitation and easing up of procedural
requirements for incorporating corporations and
extension of corporate existence to maintain
business continuity and stability provides a
signifi cant assistance to investors and the public.
The requirement for more consciousness about and
compliance with a good corporate governance
framework for corporations bodes well for an ever
growing Philippine economy. The challenge is for
the SEC and the business community to work
towards achieving the goals of this new law through
an effi cient implementation and faithful adherence.
Unchanged Corporate Principles and Concepts
While the Revised Corp. Code now contains 188
sections compared to the 149 sections of the Old
Corp. Code, it maintains the defi nition of a
corporation, the classes of corporations,
classifi cation of shares, the management structure
of corporations, corporate powers and capacity,
dissolution process, mergers and consolidations,
and licensing of foreign corporations. The main
principle of having a corporation with a separate
and distinct legal personality from those of its
stockholders/member, directors/trustee, offi cers
and employees remains albeit a recognition of the
need for corporate governance and minority
protection is now a recurring theme in this new
Law.
Signifi cant Changes and Introductions
But there are signifi cant changes on corporation
law and principles introduced by the Revised Corp.
Code. The substantive changes in the Revised Corp.
Code may be classifi ed into the following main
categories:
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 Ease in doing business;
 Process improvements in corporate activities;
 Corporate continuity and stability;
 Corporate Governance; Directors’ and offi cers’
accountability;
 SEC jurisdiction and authority expansion.
 
Contributions to Ease in Doing Business
 Incorporation facilitated:
 Partnerships, associations or corporations,
singly or jointly with others but not more than
15 may now be incorporators – 10; but if singly
or to be a One Person Corporation (“OPC”),
incorporator must be a natural person, trust or
an estate – Sec. 116;
 No more residency requirement for
incorporators and directors – 10 and 22
 Professionals or partnerships or associations
organized for the practice of a profession are
not allowed to organize as a corporation –  10
 Changes in the contents of the Articles of
Incorporation (AOI) – 13 and 14 and related
sections
 Corporate Name – must be distinguishable
from a name that is already reserved or
registered for the use of another corporation, or
is not protected by law; or is not contrary to
existing law, rules and regulations. –   17
 Requires online verifi cation –  18
 If a One Person Corporation (“OPC”), the
letters “OPC” must be indicated either below or
at the end of its corporate name –  120
 Principal Offi ce Address – now allows
general reference to city or municipality and not
a specifi c offi ce address;
Corporate Term – now with a perpetual
existence unless its AOI provides otherwise –  11
 For existing corporations – automatically now
have perpetual existence, unless by a majority
vote of its stockholders, notifi es the SEC that it
elects to retain its specifi c corporate term under
its present AOI –  11, 2   par.
nd
 Eff ect of non-use of corporate charter, failure
to organize or commence business is now for a
period of fi ve (5) years (no longer for 2 years)
from its date of incorporation –  deemed
revoked  certifi cate of registration –  21
 Incorporators – May be partnerships,
associations or corporations; may be only one
(1) incorporator but still not more than 15; and
no more residency requirement –  10
 Directors/Trustees – No more minimum
number of fi ve (5) and no more residency
requirement –  22
 If a corporation vested with public interest – at
least 20% of the Board must be independent
directors, i.e. independent of management and
free from any business or relationship that could
aff ect exercise of independent judgment –   22 –
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 No required minimum capital stock except
if required by special law – 12; – see, e.g. FIA
on minimum paid up capital of foreign
corporations in the domestic market.
 No more required 25% minimum
subscription and paid up capital stock at
incorporation – previous Sec. 13 deleted –
but in an increase of authorized capital stock
the 25% subscription and 25% paid up
requirements are still imposed – 37
 Arbitration Agreement – to govern dispute
resolution between the corporation, its
stockholders or members arising out of the
implementation of the AOI or by-laws, or from
intra-corporate relations; criminal off enses and
interests of third parties are not arbitrable;
binding on the corporation, its directors,
trustees, offi cers, executives and managers;
should indicate number of arbitrators and
procedure for appointment; power to appoint
granted to a designated independent third
party; or failing which, the SEC; other usual
arbitration provisions – 181
 Treasurer’s Certifi cation in Article Ninth of
the AOI, the Treasurer is named and he is a
signatory to the AOI thereby certifying the
information in the seventh and eighth clauses of
the AOI –  14. – seems to imply no need for
Treasurer’s Affi davit.
 Treasurer must be a resident – Sec. 40
 Tenth Article – contains undertaking to
change the name of the corporation
 Electronic fi ling – in accordance with SEC
rules Sec. 13
 The requirement for “favorable
recommendation of appropriate government
agency to the eff ect such articles or amendment
is in accordance with law” for incorporation or
amendment for public utilities, educational
institution and other corporations governed by
special law was deleted
 Adoption of By-laws – no longer required to be
done within one (1) month from the
incorporation, may still be adopted and fi led
prior to incorporation (along with the AOI)-  45
 By-laws may provide for the modes by which a
stockholder, member, director, or trustee may
attend meetings and cast their votes – in
person; by proxy; by remote communication
or in absentia –  46
 May provide for arbitration agreement – 46
Introduction of OPC as a type of corporation  
Secs. 115 to 132 – corporation with a single
stockholder; stock corporation; cannot be a non-
stock corporation;
 Who may form – only natural persons, trust,
or an estate may form an OPC; banks; quasi-
banks, preneed, trust, insurance, public and
publicly-listed companies, and non-chartered
GOCCs may NOT incorporate an OPC;
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 professionals wanting to exercise their
profession cannot form an OPC; foreigners and
non-residents may form an OPC.
 How much capital – no minimum authorized
capital stock except as otherwise required by
special law; open to foreigners but need to
comply with FIA requirement of US$200,000 for
domestic market enterprise.
 What should be fi led – AOI; no need for By-
laws; name should indicate “OPC” either below
or at the end of the corporate name.
 Who constitute the OPC –
 the single stockholder shall be the sole
director and president of the OPC;
 within 15 days from issuance of certifi cate of
incorporation, the OPC shall appoint a treasurer,
corporate secretary, and other offi cers as
necessary, and SEC is notifi ed of appointments
within 5 days;
 single stockholder cannot be corporate
secretary;
 but can be treasurer, provided, he posts a
bond to the SEC in a sum required by SEC, with
a written undertaking to faithfully administer
the OPC’s funds, and to invest and disburse the
same according to the AOI; bond is renewed
every 2 years or as often required by SEC;
 nominee and alternate nominee stockholders
are required to be designated who shall take the
place of the single stockholder as director and
manage the corporation’s aff airs in the event of
death of the single stockholder. Written consent
of the nominee or alternate nominee is attached
to the application for incorporation; consent
may be withdrawn in writing before death or
incapacity of the single stockholder; may be
changed at any time.
 Corporate secretary has special functions to
maintain minutes and notify in case of death of
single stockholder.
 Reports to be fi led by OPC – AFS; disclosure
of self-dealings and related party transactions;
others required; failure to fi le for 3 consecutive
times or intermittently within a period of 5 years
will result in delinquent status.
 Liability of OPC – Sole shareholder has
burden of proving that the OPC was adequately
fi nanced; and that the property of the OPC is
independent of the stockholder’s personal
property – otherwise, the sole shareholder shall
be jointly and severally liable for the debts and
other liabilities of the OPC. Principle of piercing
the veil of corporate fi ction applies.
 Conversion from an Ordinary Corporation
to an OPC – when a single stockholder acquires
all the stocks of an ordinary stock corporation,
he may apply for conversion into an OPC; thus,
a certifi cate of fi ling of amended articles of
incorporation is issued by the SEC to refl ect the
conversion. OPC becomes legally responsible for
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 the latter’s outstanding liabilities as of the date
of conversion.
 Conversion from an OPC to an Ordinary
Stock Corporation – may also be applied for
and granted through an amendment of the AOI.
 Eff ect of death of single shareholder – the
nominee or alternate nominee transfers the
shares to the duly designated legal heir or
estate within 7 days from receipt of either an
Affi davit of heirship or self-adjudication
executed by the sole heir; then the heirs shall
notify the SEC of the decision to either wind up
and dissolve the OPC or to convert into an
ordinary stock corporation.  right of a stockholder to vote by remote
Process improvements in corporate activities
 Stockholders/Members Meetings – Written
notice of  regular meetings  may be sent
through the means of communications provided
by bylaws, by electronic mail or other SEC
allowed manner  – 49 – at least 21 days
(instead of 2 weeks)
 Notice of meeting is now required to be
accompanied by:
1. Agenda;
2. Proxy form to be submitted to corporate
secretary prior to meeting;
3. When attendance, participation, and voting
are allowed by remote communication or in
absentia, the requirements and procedures to be
followed when a stockholder or member elects
either option; and
4. When the meeting is for the election of
directors or trustees, the requirements and
procedure for nomination and election.
 Voting of
Stockholders/Members – stockholders or
members are allowed to vote through remote
communication or in absentia in election of
directors, and in shareholders
meetings Shareholders who participate through
remote communication or  in absentia  are
deemed present for purposes of quorum. The
communications or in absentia is recognized in
corporations vested with public interest, even if
provision is absent in its by-laws. – 23.–  SEC to
issue rules and regulations re 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.
 Notice of Special Meetings – may be sent
electronically when allowed by the bylaws or
done with the consent of the stockholders, and
in accordance with the rules and regulations of
the SEC – following purposes to: extend or
shorten corporate term – 36, increase or
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 decrease its capital stock, or incur, create or
increase any bonded indebtedness – Sec. 37,
approve the sale of all or substantially assets of
the corporation – Sec. 39, or invest the
corporate funds in another corporation or
business – Sec. 41.
 Directors/Trustees Meetings – Notice of
meetings must be sent at least two (2)days prior
to the scheduled meeting – no longer one (1)
day
 Directors or trustees who cannot physically
attend or vote at board meetings can participate
and vote through  remote communication
such as videoconferencing,
teleconferencing, or other alternative
modes of communication.  Directors or
trustees cannot attend or vote by proxy at
board meetings. – Sec. 52
 Electronic Filing of AOI and applications
for amendments – 13 The SEC is required to
develop and implement an electronic fi ling and
monitoring system. It shall promulgate rules to
facilitate and expedite corporate name
reservation and registration, incorporation,
submission of reports, notices, and documents
required under the Revised Corp. Code, and
sharing of pertinent information with other
government agencies – Sec. 180
Corporate continuity and stability  directors due to resignation, death or
 Perpetual Existence – Corporations now
have a perpetual existence or corporate term,
unless the AOI provides otherwise, or in the
case of existing corporations, unless majority of
the stockholders elect to retain the specifi c
corporate term provided in its AOI and advised
the SEC – 11
 Revival of Corporate Term – A corporation
whose term has expired may apply for a revival
of its corporate existence, together with all the
rights and privileges under its certifi cate of
incorporation and subject to all of its duties,
debts and liabilities existing prior to its revival.
Upon approval by the SEC, the corporation shall
be deemed revived and a certifi cate of revival
of existence shall be issued – 11
 Election of Replacement
Directors/Trustees – when vacancy due to
term expiration, the election should be held no
later than the day of such expiration; when
vacancy is due to a removal, the election may
be held on the same day as the removal; but in
both cases, no later than 45 days from the
vacancy; term of replacement director or
trustee is only for the unexpired term –  28
 Election of an emergency
director/emergency board – is now allowed
when there is no quorum in the board of
disqualifi cation and emergency action is
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 required to prevent grave, substantial, and
irreparable loss or damage to the corporation,
the vacancy may be temporarily fi lled from
among the offi cers of the corporation by
unanimous vote of the remaining directors. The
emergency director serves only to address the
emergency and ceases when a replacement
director is elected. The SEC must be notifi ed
– 28
 Corporations are empowered to enter into
partnerships, joint venture or any commercial
agreements – 35(h) – expands rule in
jurisprudence that corporations can only enter
into joint ventures and not partnerships.
Corporate Governance
– introduced as a new concept and recurring
theme; also strengthens minority protection;
Directors’ and offi cers’ accountability;
While the term “corporate governance” is not
defi ned in the Revised Corp. Code, it is used
signifi cantly and new provisions were added so that
corporation can practice good governance and in
the process, protect minority stockholders. Directed
at corporations vested with public interest such as
listed companies, banks, quasi-banks, pawnshops,
money service business, preneed, trust and
insurance companies, and other fi nancial
intermediaries.
SEC Memorandum Circular No. 9, s. 2014 – defi ned
corporate governance as: “the framework of rules,
systems and processes in the corporation that
governs the performance of the Board of Directors
and management of their respective duties and
responsibilities to stockholders and other
stakeholders which include, among others,
customers, employees, suppliers, fi nanciers,
government and community in which it operates.”
1. SEC Mandate – The SEC is granted the
authority to promote corporate governance and
the protection of minority investors through,
among others, the issuance of rules and
regulations consistent with international best
practices – 179
2. Independent Directors – required for
corporations vested with public interest  – 22
3. Duties of Directors – The directors or
trustees elected shall perform their duties as
prescribed by law, rules of good corporate
governance, and by-laws of the corporation – 23
4. Voting by shareholders through remote
communication or in absentia  –  is now
allowed – 23 and Sec. 49.
5. Compliance offi cer – required for
corporations vested with public interest  – 24
6. Adds grounds for disqualifi cation of
Directors/Trustees/Offi cers – (a) for violating
Republic Act No. 8799, otherwise known as “The
Securities Regulation Code”; (b) found
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 administratively liable for any off ense involving
fraud acts; and (c) by a foreign court or
equivalent foreign regulatory authority for
similar acts, violations or misconduct resulting
in conviction by fi nal judgment. 26
7. Total compensation of each director – of
corporations vested with public interest are
required to be disclosed –  29.
8. Compensation of Directors – Directors are
prohibited from participating in the
determination of their own per diems or
compensation –  29.
9. The rule on self-dealing Directors –
is  expanded  to cover contracts of the
corporation with spouses and relatives within
the fourth civil degree of consanguinity or
affi nity of a director of offi cer –  31; A director
who has potential interest in any related party
transaction must recuse from voting on the
approval of the related party transaction – Sec.
52
10. Higher voting threshold – including the vote
of a majority of the independent directors, is
required for certain contracts of directors or
offi cers in a corporation vested with public
interest –  31 (d)
11. Foreign corporations are not allowed to give
donations in aid of any political party or
candidate or for purposes of partisan political
activity –  35 (i)
12. Reference is made to the required approval
of the Philippine Competition
Commission for sale or disposition of corporate
assets – 39; increase or decrease in capital or
incurring or increasing any bonded indebtedness
– Sec. 37; or merger or consolidation, of
corporations – Sec. 78 – threshold of P5.2B
for Party Size and P2.2B for Transaction
Size.
13. The bylaws may provide matters – necessary
for the promotion of good governance and anti-
graft and corruption measures –  46 (k).
14. Expanded Information to be provided by
directors/trustees to stockholders at their
regular meetings – minutes of stockholders
meeting should now include additional
information; items in the interest of good
corporate governance and the protection of
minority stockholders; list of
stockholders/members with voting rights;
assessment of corporation’s performance;
fi nancial report; dividend policy;
directors/trustees profi les; directors/trustees
attendance report; appraisal and performance
reports for the board; compensation report; self-
dealing directors and transactions – 49
15. The notice of stockholders’ meeting – is
required to be accompanied by: (i) the agenda
for the meeting; (ii) a proxy form; (iii) the
requirement and procedures to be followed by a
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 stockholder who elects to participate by remote
communication or in absentia, if such is allowed;
(iv) the requirements and procedure for
nomination and election, if the meeting is for
election of directors – 50
16. Chairman as Presiding Offi cer, unless the
bylaws provide otherwise – 53 – previously, it
was the President that was recognized by the
old Corp. Code.
17. Right of Inspection Expanded – 73 – (a)
AOI, By-laws and amendments; (b) Current
ownership structure and voting rights of the
corporation, including lists of stockholders or
members, group structures, intra-group
relations, ownership data, and benefi cial
ownership; (c) Names and Addresses of the
board of directors or trustees and the executive
offi cers; (d) A record of all business
transactions; (e) A record of the board and
stockholders resolutions; (f) Copies of the latest
reportorial requirements submitted to the SEC;
and (g) The minutes of all meetings of
stockholders or members, or of the board of
directors or trustees – with more details
required.  The inspecting or reproducing party
shall remain bound by confi dentiality rules for
trade secrets or processes under R.A. No. 8293 –
the “Intellectual Property Code of the
Philippines”, as amended, R.A. No. 10173 – the
“Data Privacy Act of 2012”, R.A. No. 8799,
otherwise known as “The Securities Regulation
Code”, and the Rules of Court.  Right of
Inspection is NOT open to  a non-stockholder or
non-member, or a competitor, director, offi cer,
controlling stockholder or otherwise represents
the interests of a competitor.
18. Identifi es and penalizes new off enses
o Unauthorized use of corporate name
– 159
o Violation of disqualifi cation provision
– 160
o Violation of duty to maintain records
– 161
o Willful certifi cation of incomplete,
inaccurate, false or misleading statements or
reports – 161
o Collusion of an independent auditor – 163
o Obtaining corporate registration through
fraud – Sec. 164
o Fraudulent conduct of business – Sec.
165
o Acting as intermediaries for graft and
corrupt practices – Sec. 166
o Engaging intermediaries for graft and
corrupt practices – 167
o Tolerating graft and corrupt
practices- 168
2. Retaliation against whistleblowers – 169 –
persons who provide truthful information
relating to the commission or possible
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 commission of any off ense or violation of the
Revised Corp. Code – a person who retaliates
against a whistleblower by interfering with his
livelihood, etc. may be penalized with fi ne from
P100,000 to P1,000,000 –  Sec. 169
3. The deposit for issuance of license to a
foreign corporation is increased to P 500,000
and in subsequent fi scal years, 2% of the
amount by which the licensee’s gross income for
that fi scal year exceeds P 10 Million – 143 –
from P100,000 and P5 Million
4. Increased fi ne as a penalty for violation of
other provisions of the Revised Corp. to a
minimum of P 10,000 to a maximum of P
1,000,000. It was a minimum of P 1,000 and a
maximum of P 10,000 under the old Code –  170
and Sec. 144
5. Imprisonment as a penalty was removed .
The corporation may be dissolved in a
proceedings before the SEC, as part of the
penalty.
6. Corporation as Off ender – penalty may be
imposed upon such corporation and/or upon its
directors, stockholders, offi cers or employees
responsible for the violation or indispensable to
its commission, at the discretion of the court
– 171
7. Anyone who shall aid, abet, counsel,
command, induce, or cause any violation of the
Revised Corp. Code, or any rule, regulation, or
order of the SEC shall be punished with a fi ne
not exceeding that imposed on the principal
off enders, at the discretion of the court, after
taking into account their participation in the
off ense – 172
8. A judgment fi nding that the corporation: (i)
was created for committing, concealing or aiding
the commission of, or (ii) with the knowledge of
its stockholders had committed or aided in the
commission of: securities violation, smuggling,
tax evasion, money laundering, or graft and
corrupt practices; or (iii) repeatedly and
knowingly tolerated the commission of graft and
corrupt practices or other fraudulent or illegal
acts of its directors, offi cers, or employees,
are grounds for dissolution of the
corporation. In such case its assets shall be
forfeited in favor of the national government
– 138
9. Reportorial Requirements – Annual
Submission – now specifi cally stated – Sec.
177
o  Audited Financial Statements
o General Information Sheet – new form use
is suspended until June 30, 2019
 if corporation is vested with public
interest – need for
 a director compensation report; and
 a director appraisal or performance
report
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  delinquent status – if reports are not
submitted 3 times consecutively or
intermittently within a period of 5 years.
 Confi dential information may be
redacted
SEC jurisdiction and authority expansion
1. Visitorial powers over all corporations  –
examine and inspect records, regulate and
supervise activities; enforce compliance; and
impose sanctions; may revoke certifi cates of
incorporation if a corporation refuses or
obstructs the SEC, without justifi able cause.
2. Authority over certain intra-corporate
disputes
o Summary order to hold an election of
directors if the election is not held
unjustifi ably. The SEC may issue orders
directing the issuance of a notice stating the
time and place of the election, designated
presiding offi cer, and record date or dates for
determination of stockholders entitled to
vote – 25
o After notice and hearing, removal of a
director elected despite a disqualifi cation
– 27
o Disputes pertaining to a denial of the
right of inspection or reproduction of
corporate records – 73
o Motu proprio or upon verifi ed complaint,
dissolution of a corporation on grounds
provided in Section 138 of the Revised Corp.
Code.
o Alleged violation of the Revised
Corporation Code, or of its rule, regulation or
order – 154 – subpoena powers – Sec.
155; and contempt powers – Sec.
157 issuance of a permanent cease and
desist order, suspension or revocation of the
certifi cate of incorporation; and dissolution of
the corporation and forfeiture of its assets –
for violations of Revised Corp. Code, rules or
regulations, or any of SEC’s orders – Sec.
159
2. Transmittal of evidence to the
Department of Justice for preliminary
investigation or criminal prosecution and/or
initiate criminal prosecution for any violation of
the Revised Corp. Code, rule, or regulation
– 156
3. SEC Fiscal Autonomy under the Revised
Corp. Code. Collected fees, fi nes and other
charges shall form part of its modernization, and
will augment its operational expenses –  175.
4. No court below the Court of Appeals shall
have jurisdiction to issue a restraining
order, preliminary injunction, preliminary
mandatory injunction in any case, dispute, or
controversy what directly interferes with the
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exercise of the powers, duties and
responsibilities of the SEC that falls exclusively
within its jurisdiction – 179.

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