By Arra B. Francia, March 22 2019; Business World
https://www.bworldonline.com/sec-drafts-rules-on-perpetual-corporate-existence/
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THE Securities and Exchange Commission (SEC) is seeking comments from the investing public for its proposed guidelines on the perpetual existence of corporations.
The country’s corporate regulator on Friday posted the draft guidelines on a firm’s corporate term, as amended in Section 11 of the Revised Corporation Code of the Philippines.
The Revised Corporation Code, which was signed into law by President Rodrigo R. Duterte last Feb. 20, states that firms may now exist forever, as opposed to the previous 50-year limit which can be renewed thereafter.
“Perpetual existence does not only mean less paperwork. It also preserves legitimate and productive corporations that support our economy’s growth and fosters a sense of longevity that encourages corporations to implement long-term and sustainable projects and investments,” Mr. Aquino said in a statement.
However, firms that choose to retain its specific corporate term as stated in its articles of incorporation may do so.
The draft guidelines state that a company must secure approval during its stockholders’ annual or special meeting on whether they want to retain their specific corporate term.
The company must then send a notice to the SEC of its decision, signed by at least a majority of the members of the board of directors or trustees, and attested by the corporate secretary.
“Such decision must receive affirmative votes from stockholders representing a majority of the corporation’s outstanding capital stock or a majority of the members, in case of a non-stock corporation,” the company said.
The notice must be sent to the SEC Company Registration and Monitoring Department within two years from Feb. 23.
Companies that wish to have perpetual existence no longer have to send such notices to the commission.
The SEC is inviting the investing public to submit comments until April 5.
The Revised Corporation Code now allows one-person corporations (OPC), the use of remote communication in stockholder and board meetings, and the implementation of an electronic filing and monitoring system to improve the ease of doing business in the country, among others.
The previous corporation code under Batas Pambansa Blg. 68 required at least five stockholders to form a company. The SEC is also in the process of soliciting comments for its draft guidelines on OPCs. The proposed draft states that an OPC may only be formed by a natural person of legal age, a trust, or an estate.
For the electronic filing and monitoring system, the SEC is already operating a fully automated and online company registration system for pre-processing of corporations and partnerships and amendments of the articles of incorporation.