2019News

SEC drafts guidelines on revival of expired corporations

By Iris Gonzales, April 10 2019; Philippine Star

https://www.philstar.com/business/2019/04/10/1908645/sec-drafts-guidelines-revival-expired-corporations

Image Credit to Rappler

MANILA, Philippines — The Securities and Exchange Commission (SEC) has drafted its guidelines on the revival of expired corporations.

These corporations are those whose terms have expired prior to the enactment of Republic Act 11232, or the Revised Corporation Code of the Philippines. The law now allows perpetual existence of corporations.

SEC chairperson Emilio Aquino said the revival of expired corporations would be beneficial to the country.

“This will translate to more market players competing, introducing innovations and more choices, and creating employment opportunities, among others,” he said.

Prior to the enactment of the Revised Corporation Code, corporate terms were capped at 50 years. A corporation, however, could extend its existence for a period not exceeding 50 years by amending its articles of incorporation.

As part of the shift to a perpetual corporate term, the Revised Corporation Code allows an expired company to apply for the revival of its 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.

Under the SEC’s draft guidelines, an expired corporation seeking to revive its existence shall file with the Commission a verified petition for revival, in accordance with the SEC Rules of Procedure, and signed by a majority of the board of directors or trustees, the corporate secretary, and corporate treasurer.

The guidelines also state that the petition must state, among others, that the revival of the corporation was approved by a vote of at least two-thirds of the outstanding capital stock, or members for non-stock corporation and that there is no intra-corporate controversy.

The corporation shall also submit supporting documents such as certificate of incorporation and articles of incorporation; general information sheet; audited financial statements; balance sheet; monitoring clearance from CRMD; tax clearance certificate; and copy of official receipts for the payment of the petition fee and filing fee.

“The SEC shall also require a favorable recommendation from the appropriate government agency in the case of banks, banking and quasi-banking institutions, preneed, insurance and trust companies, non-stock savings and loan associations, pawnshops, corporations engaged in money service business, and other financial intermediaries,” the commission said.

The corporation shall then pay a petition fee amounting to P3,030 plus a filing fee for the extension of term of existence.

The SEC en banc shall approve the petition and issue a certificate of revival of corporate existence. The certificate shall provide for perpetual corporate existence unless the corporation states a specific corporate term in its verified petition.

However, the SEC said a corporation whose certificate of registration has been revoked and whose corporate term has expired, for reasons other than the non-filing of reports, shall not be allowed to revive its corporate existence.

Meanwhile, a corporation whose certificate of registration has been suspended and whose term of existence has expired may apply for revival, provided it files the proper petition to lift its suspension, which may be incorporated in its petition for revival, and settles the corresponding penalties thereof.

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