Carl Angelo Ramos Business Law 2

3rd BSBA Wednesday 4:00 to 7:00pm

Difference in Batas Pambansang bilang 68 and Republic Act no. 11232

FUNDAMENTAL CHANGES
Many of the provisions in the Revised Code introduce dramatic changes that alter the
rules for establishing and maintaining corporations.
One-person corporations. The Revised Code removes the minimum number of
incorporators required to establish a corporation; the old Code had prescribed a minimum
of five incorporators. The Revised Code goes as far as to permit an individual to form a
one-person corporation. The allowance of one-person corporations make it easier for
small to medium-sized business owners to incorporate, thus providing a viable alternative
for sole proprietors. (Sec. 10)
Arbitration agreements embedded in articles of incorporation or bylaws. The Revised
Code allows for an arbitration agreement to be provided in the articles of incorporation
(AOI) or bylaws of a corporation. With such an agreement in place, disputes between the
corporation, its stockholders or members that arise from the implementation of AOI or
bylaws or from intra corporate relations shall now be referred to arbitration. Disputes
involving criminal offenses or the interests of third parties remain non-arbitrable. (Sec.
181)
Corporations vested with public interest. The Revised Code refers to corporations vested
with public interest, which are subject to additional regulatory conditions that do not apply
to other corporations. Corporations vested with public interest are required to elect a
compliance officer upon organization. (Sec. 24) They are required to submit additional
annual reports to the Securities and Exchange Commission (SEC), particularly a
director/trustee compensation report and a director/trustee appraisal or performance
report. (Sec. 177) Stockholders in such corporations have the unequivocal right to vote
to elect directors or trustees during stock holder meetings through remote
communications or in absentia. (Sec. 23)
Section 22 of Revised Code identifies as corporations vested with public interest those
whose securities are registered with the SEC, those listed with an exchange, those with
assets of at least 50 Million Pesos and having 200 or more holders of shares (with each
holding at least 100 shares of a class of its equity shares), banks and quasi-banks, non-
stock savings and loan associations, pawnshops, corporations engaged in money service
business, preneed, trust and insurance companies, and financial intermediaries. The
provision requires that at least 20% composition of the boards of these corporations be
independent directors. The SEC is also authorized to determine other corporations
engaged in businesses vested with public interest, after taking into account relevant
factors which are germane to the objective and purpose of requiring the election of an
independent director.
Removal of minimum capital stock requirement. The Revised Code does away with the
minimum capital stock requirement for stock corporations, except as otherwise
specifically provided by special law. The change again works to the benefit of small to
medium-sized enterprises by making it easier for them to incorporate. (Sec. 12)
Indefinite corporate lifespan. The old Code had prescribed a maximum corporate term of
50 years and required corporations to amend their articles of incorporation (AOI) to extend
the corporate life for another fifty-year period. The new Code now provides that a
corporation shall have perpetual existence unless its articles of incorporation provides
otherwise. Existing corporations are even presumed now to have perpetual existence
unless the stockholders vote to retain the original term provided in the AOI, (upon a vote
of the stockholders representing a majority of its outstanding capital stock) or a new
specific period (upon a vote to amend the articles of incorporation by stockholders
representing at least 2/3 of the outstanding capital stock. (Sec. 11)
Revival of corporations whose term had already expired. The new Code expressly allows
a corporation whose term has expired to apply with the SEC for a revival of its corporate
existence, together with all the rights and privileges under its certificate of incorporation.
Upon approval by the SEC, the corporation is deemed revived. The corporation is also
granted perpetual existence unless its application for revival specifies otherwise. (Sec.
11)
Extended period to commence corporate operations. Corporations are now allowed five
years from incorporation to commence operations; the old Code had only allowed two
years. (Sec. 21)
Delinquent corporations. A corporation that had commenced its business may now be
placed by the SEC under delinquent status if it had become inoperative for a period of at
least five years; previously such inactivity was already cause for the revocation of the
certificate of incorporation. A delinquent corporation has two years to resume operations;
failure to do so is cause for the SEC to revoke the certificate of incorporation. (Sec. 21)
Lifting the ban on corporate donations for political parties or candidates. The Revised
Code amends Section 36(9) of the Old Code, which stated that no corporation, domestic
or foreign, shall give donations in aid of any political party or candidate or for purposes of
partisan political activity. The Revised Code now expressly bans only foreign corporations
from giving such donations
TECHNOLOGY-ENABLED CHANGES
The revision of the Corporation Code also integrates technological advances over the last
four decades into the rules governing corporations. The old Code was enacted before the
online age, or even the widespread use of the personal computer in the 1980s.
Electronic Notices. The Revised Code allows written notices of regular stock holders
meetings to be sent to all stockholders or members of record through email or such other
manner as the SEC shall allow under guidelines it would prescribe. (Sec. 49) A
corporation is also allowed to specify in its bylaws the means of communications through
which meetings would be sent; these include regular or special stockholders meetings
(Sec. 50), meetings to increase or decrease capital stock (Sec. 37), to sell or dispose
assets (Sec. 39), or to invest corporate funds (Sec. 50)
Remote Participation. The Revised Code now allows members of the board of directors
or trustees of every corporation to participate in meetings through remote communication
such as videoconferencing, teleconferencing or other alternative modes of
communication that allow them reasonable opportunities to participate. (Sec. 52)
Stockholders or members may also be allowed to vote during stock holders meetings
through remote communication or in absentia, but only if the corporate bylaws authorize
voting through such means. (Sec. 49) The exception, as earlier mentioned, is in the case
of corporations vested with public interest, where stockholders and members are entitled
to vote to elect directors or trustees through remote communication or in absentia even
without a provision in the bylaws that authorizes voting through those means.
Section 49 of the Revised Code requires the SEC to issue the rules and regulations
governing participation and voting through remote communication or in absentia.
Electronic filing and monitoring system. The Revised Code mandates the SEC to develop
and implement an electronic filing and monitoring system. (Sec. 180) It should be noted
that the SEC already has an existing electronic Company Registration System (CRS) that
allows for the online pre-processing of corporations and partnerships, licensing of foreign
corporations, amendments of the articles of incorporation and other corporate
applications requiring SEC approval.