Significant Changes and Introductions
2 n d   par.
But there are significant changes on corporation law
and principles introduced by the Revised Corp.
Code. The substantive changes in the Revised Corp.
Code may be classified into the following main
categories:
 Ease in doing business;
 Process improvements in corporate activities;
 Corporate continuity and stability;
 Corporate Governance; Directors’ and
officers’ 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 verification –   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 Office Address  – now allows
general reference to city or municipality and
not a specific office 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, notifies the
SEC that it elects to retain its specific
corporate term under its present AOI –   11,
 Effect of non-use of corporate charter,
failure to organize or commence business is
now for a period of five (5) years (no longer for
2 years) from its date of incorporation
–  deemed revoked  certificate 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 five (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 affect exercise of independent judgment
–  22 –
 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 offenses and
interests of third parties are not arbitrable;
binding on the corporation, its directors,
trustees, officers, 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 Certification  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 Affidavit.
 Treasurer must be a resident – Sec. 40
 Tenth Article – contains undertaking to
change the name of the corporation
 Electronic filing – in accordance with SEC
rules Sec. 13
 The requirement for “favorable
recommendation of appropriate government
agency to the effect 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 filed
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;
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 filed – 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 certificate of
incorporation, the OPC shall appoint a
treasurer, corporate secretary, and other
officers as necessary, and SEC is notified 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 affairs 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 filed by OPC –  AFS;
disclosure of self-dealings and related party
transactions; others required; failure to file 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
financed; 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 fiction 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 certificate of filing of amended
articles of incorporation is issued by the SEC to
reflect the conversion. OPC becomes legally
responsible for 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.
 Effect 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
Affidavit 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. 
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
right of a stockholder to vote by remote
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
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 filing 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  
 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 specific
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 certificate 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 certificate 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
directors due to resignation, death or
disqualification and emergency action is
required to prevent grave, substantial, and
irreparable loss or damage to the corporation,
the vacancy may be temporarily filled from
among the officers 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 notified
– 28
 Corporations are empowered to enter into
partnerships, joint venture or any commercial
 agreements – 35(h) – expands rule in 7. Total compensation of each director  – of
jurisprudence that corporations can only enter corporations vested with public interest are
into joint ventures and not partnerships. required to be disclosed –  29.
8. Compensation of Directors  – Directors are
prohibited from participating in the
Corporate Governance determination of their own per diems or
– introduced as a new concept and recurring compensation –  29.
theme; also strengthens minority protection; 9. The rule on self-dealing Directors  –
Directors’ and officers’ accountability; is  expanded  to cover contracts of the
While the term “corporate governance” is not corporation with spouses and relatives within
defined in the Revised Corp. Code, it is used the fourth civil degree of consanguinity or
significantly and new provisions were added so that affinity of a director of officer –   31; A director
corporation can practice good governance and in the who has potential interest in any related party
process, protect minority stockholders. Directed at transaction must recuse from voting on the
corporations vested with public interest such as approval of the related party transaction –  Sec.
listed companies, banks, quasi-banks, pawnshops, 52
money service business, preneed, trust and insurance 10. Higher voting threshold  – including the
companies, and other financial intermediaries. vote of a majority of the independent directors,
SEC Memorandum Circular No. 9, s. 2014 – defined is required for certain contracts of directors or
corporate governance as: “the framework of rules, officers in a corporation vested with public
systems and processes in the corporation that interest –  31 (d)
governs the performance of the Board of Directors 11. Foreign corporations are not allowed to give
and management of their respective duties and donations in aid of any political party or
responsibilities to stockholders and other candidate or for purposes of partisan political
stakeholders which include, among others, activity –  35 (i)
customers, employees, suppliers, financiers,
government and community in which it operates.” 12. Reference is made to the required  approval
of the Philippine Competition Commission  for
1. SEC Mandate – The SEC is granted the sale or disposition of corporate assets –  39;
authority to promote corporate governance and increase or decrease in capital or incurring or
the protection of minority investors through, increasing any bonded indebtedness –  Sec. 37;
among others, the issuance of rules and or merger or consolidation, of corporations
regulations consistent with international best – Sec. 78 – threshold of P5.2B for Party Size
practices – 179 and P2.2B for Transaction Size.
2. Independent Directors  – required for 13. The bylaws may provide matters –  necessary
corporations vested with public interest  – 22 for the promotion of good governance and anti-
3. Duties of Directors  – The directors or graft and corruption measures –   46 (k).
trustees elected shall perform their duties as 14. Expanded Information  to be provided by
prescribed by law, rules of good corporate directors/trustees to stockholders at their
governance, and by-laws of the regular meetings – minutes of stockholders
corporation – 23 meeting should now include additional
4. Voting by shareholders through remote information; items in the interest of good
communication or in absentia  –  is now corporate governance and the protection of
allowed – 23 and Sec. 49. minority stockholders; list of
stockholders/members with voting rights;
5. Compliance officer  – required for assessment of corporation’s performance;
corporations vested with public interest  – 24 financial report; dividend policy;
directors/trustees profiles; directors/trustees
6. Adds grounds for disqualification of attendance report; appraisal and performance
Directors/Trustees/Officers  – (a) for violating reports for the board; compensation report;
Republic Act No. 8799, otherwise known as self-dealing directors and transactions  – 49
“The Securities Regulation Code”; (b) found
administratively liable for any offense involving 15. The notice of stockholders’ meeting –  is
fraud acts; and (c) by a foreign court or required to be accompanied by: (i) the agenda
equivalent foreign regulatory authority for for the meeting; (ii) a proxy form; (iii) the
similar acts, violations or misconduct resulting requirement and procedures to be followed by a
in conviction by final judgment . 26 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 Officer , 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 beneficial
ownership; (c) Names and Addresses of the
board of directors or trustees and the executive
officers; (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 confidentiality 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, officer,
controlling stockholder or otherwise represents
the interests of a competitor.
18. Identifies and penalizes new offenses
o Unauthorized use of corporate name
– 159
o Violation of disqualification
provision – 160
o Violation of duty to maintain records
– 161
o Willful certification 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
commission of any offense or violation of the
Revised Corp. Code –  a person who retaliates
against a whistleblower by interfering with his
livelihood, etc. may be penalized with fine 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 fiscal years, 2% of the
amount by which the licensee’s gross income
for that fiscal year exceeds P 10 Million –  143 –
from P100,000 and P5 Million
4. Increased fine 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 Offender – penalty may be
imposed upon such corporation and/or upon its
directors, stockholders, officers 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 fine
not exceeding that imposed on the principal
offenders, at the discretion of the court, after
taking into account their participation in the
offense – 172
8. A judgment finding 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, officers, 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 the certificate of incorporation; and
Submission – now specifically stated – Sec. dissolution of the corporation and
177 forfeiture of its assets – for violations of
Revised Corp. Code, rules or regulations,
o  Audited Financial Statements or any of SEC’s orders –  Sec. 159
o General Information Sheet – new 2. Transmittal of evidence to the Department
form use is suspended until June 30, 2019 of Justice for preliminary investigation or
criminal prosecution and/or initiate criminal
 if corporation is vested with
prosecution for any violation of the Revised
public interest – need for
Corp. Code, rule, or regulation –  156
 a director compensation
3. SEC Fiscal Autonomy under the Revised
report; and
Corp. Code. Collected fees, fines and other
 a director appraisal or charges shall form part of its modernization,
performance report and will augment its operational expenses
– 175.
 delinquent status – if reports
are not submitted 3 times 4. No court below the Court of Appeals shall
consecutively or intermittently within have jurisdiction to issue a restraining order,
a period of 5 years. preliminary injunction, preliminary mandatory
injunction in any case, dispute, or controversy
 Confidential information may what directly interferes with the exercise of the
be redacted powers, duties and responsibilities of the SEC
that falls exclusively within its jurisdiction
SEC jurisdiction and authority expansion – 179.
1. Visitorial powers over all corporations  –
examine and inspect records, regulate and
supervise activities; enforce compliance; and
impose sanctions; may revoke certificates of
incorporation if a corporation refuses or
obstructs the SEC, without justifiable cause.
2. Authority over certain intra-corporate
disputes
o Summary order to hold an election of
directors if the election is not held
unjustifiably. The SEC may issue orders
directing the issuance of a notice stating
the time and place of the election,
designated presiding officer, 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 disqualification
– 27
o Disputes pertaining to a denial of the
right of inspection or reproduction of
corporate records – 73
o Motu proprio or upon verified
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