2018News

Senate OKs bill amending Corporation Code on third and final reading

By Hannah Torregoza, August 7 2018; Manila Bulletin

https://news.mb.com.ph/2018/08/07/senate-oks-bill-amending-corporation-code-on-third-and-final-reading/

Image Credit to Manila Bulletin

Voting 20-0, the Senate on Tuesday approved on third and final reading the measure that seeks to improve the country’s business climate and make it attractive to large and small businesses by amending the 38-year-old Corporation Code.

Senator Frank Drilon speaks during the Committees of public order and dangerous drugs and justice and human rights at Senate in Pasay city, July 26,2017. (Czar Dancel / MANILA BULLETIN)
Senator Frank Drilon
(Czar Dancel / MANILA BULLETIN)

Senate Bill No. 1280 or an Act Amending Batas Pambansa Bilang 68 or the Corporation Code of the Philippines, is authored and sponsored by Senate Minority leader Franklin Drilon and co-sponsored by Senate Majority Leader Juan Miguel Zubiri. There was no zero negative vote and no abstention during the voting.

Drilon commended members of the Senate for crossing party lines when it comes to the passage of the much-needed bill.

“Once more, this chamber showed its bipartisanship when it comes to needed legislation,” Drilon said in his speech after the approval of the measure.

Drilon pointed out the measure complements the National Economic and Development Authority (NEDA)’s belief on key policy reform in accelerating the improvement of government process dealing with business.

“This is precisely what this bill that we just approved today is. This is a tool to improve the government’s process insofar as corporations and incorporating business are concerned today,” Drilon said.

“It is our hope that once this becomes law, the Commission will exert effort in order to make successful a key reform agenda to improve our investment climate,” the Senate minority chief said.

Apart from Drilon and Zubiri, the bill was also co-authored by Senate President Vicente Sotto III and Senators Nancy Binay, Joseph Victor “JV” Ejercito, Sherwin Gatchalian, Richard Gordon, Gregorio Honasan II, Risa Hontiveros, Panfilo Lacson, Manny Pacquiao, Francis Pangilinan, Aquilino Pimentel III, Grace Poe and Antonio Trillanes IV.

The measure seeks to amend the Corporation Code—enacted in 1980—to establish a more business and investor-friendly environment in the country.

Drilon said the proposed amendments, which are in line with global best practices, will allow the country “to compete with other countries as a viable investment destination and business-friendly jurisdiction.”

“If we are to keep up with the rest of the financial world, we need to codify best international corporate practices and address the archaic bottlenecks in the areas of starting a business and protecting minority investors,” Drilon said.

Drilon said reforms in the corporate sector will certainly make the country more investment-attractive and, therefore, investments can generate jobs that can help the Philippines and the Filipino people.

“We must provide an environment conducive not just to big businesses, but make the corporate vehicle an appealing prospect for startups and entrepreneurs,” he added.

Drilon said the various amendments under the bill were categorized under four reform clusters: policies that would enhance ease of doing business; rules that would prioritize corporate and stockholder protection; provisions that would instill corporate and civic responsibility; and amendments that would strengthen the country’s policy and regulatory corporate framework.

“In general, the proposed amendments promote efficiency and encourage transparency in corporate dealings from formation to daily operations,” he said.

Among the key reforms to streamline the process of incorporation, Drilon said, was the introduction of the “one-person corporation” concept, which would permit a single person to form a corporation.

This move, he said, would help address problems regarding the current requirement of at least five stockholders for a corporation – a “common stumbling block” which led investors to name even their household members and hired help as incorporators just to comply with the rule.

To help investors avoid the risk of having their corporations dissolved simply by forgetting to renew their corporate term, the bill will grant a perpetual term as the default option for companies.

The measure will also require the adoption of an electronic filing system for reportorial requirements, and will simplify the current “confusing” name verification system to allow seamless automation of name registration for corporations.

Likewise, the bill will also allow the use of alternative modes of communication in corporate meetings, so that stockholders and directors can attend and participate through remote communication, and in some cases, “votes may be cast in absentia.”

According to Drilon, doing business in the country “still presents many complexities,” as observed by the World Bank in its 2017 “Ease of Doing Business survey” where the Philippines dropped seven spots from 164th to 171th in the ‘Starting a Business’ aspect.

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