Teresita J.

Herbosa
Picture from Rappler
The Securities and Exchange Commission
(SEC) submitted on September 13,2013 its
190+ proposed Corporate Code
amendments to the Department of Finance
(DOF).

It took the SEC two years to revise the

Corporation Code, which was last
amended in 1980.
Among others, the amendments
would cover:
 Perpetual Corporate Term
 Distinguishable Corporate Name
 One Person Corporation
 Intra-corporate Disputes
 Director Disqualifications
 The Emergency Board
 Better Corporate Governance;
 Dissolution
 Investigations
 Offenses and Penalties
 Arbitration.
Special Corporations for One
Person Corporations
 The current corporation code requires no less
than five but no more than 15 persons to
incorporate and organize a private
corporation.
 Proposal: registration of one-person
corporations, or corporations with a single
stockholder.
 The difference from the single-proprietorship
corporation that one person corporation’s
liability is limited to the capital put in it.
Perpetual Corporate Term
 At present, the corporation life is pegged at 50 years
 Proposal: perpetual term
 Herbosa said this perpetual term was now a
common worldwide practice, adding this would give
corporations more flexibility in fund-raising. The
corporations, however, will still be subject to
reportorial requirements and periodically prove to
the SEC that they still exist.
 The SEC recognizes that some corporations, even
those in good standing, forget to renew their term at
the end of 50 years, especially when the original
incorporations have passed away. “It’s a big mess.
It’s not worth the trouble,” Herbosa said
Better Corporate Governance
 includes
the SEC’s power to ask a
corporation to:
 hold a board meeting if they have not
done so
 declare a quorum
 elect directors to replace the incumbent
board.
 Offenses and Penalties
 boosting the SEC’s capability to issue cease and desist
orders
 Stiffer penalties will be introduced, for instance, against
willful certification of incomplete, inaccurate, false or
misleading statements or reports
 independent auditor collusion;
 organizing a corporation through fraud;
 fraudulent or unlawful conduct of business;
 theft of identity;
 acting as or engaging intermediaries for graft and
corrupt practices;
 tolerating graft and corrupt practices and retaliation
against whistleblowers.
Director Dis/qualifications
 more stringent rules for the qualification of
directors
 putting a cap on board representations
 adding more grounds for their
disqualification
 giving the regulator the power to remove
disqualified directors.
others
 the amendments will also give the SEC
visitorial powers over firms,
 the right to arbitrate intra-corporate disputes,
 jurisdiction over corporations of special
character like party-lists, neighborhood
associations and transport groups.
 electronic filing of some of the pertinent
documents such as by-laws and full online
registration of an entity even online payment
others
 provision
for de facto mergers. The
commission has the power to approve or
deny mergers.

"With this provision on de facto merger, we

would cover those kinds of situations
[merger-like settings]. It's not that we will
prevent [it] because mergers are good for
business” (Herbosa)
sources
 http://www.rappler.com/business/211-governance/38950-
sec-seeks-corporation-code-amendments
 http://business.inquirer.net/143041/corporation-code-
overhaul-pushed
 http://businessmirror.com.ph/index.php/en/news/top-
news/19454-sec-to-push-corporation-code-revisions
 http://www.interaksyon.com/business/70763/sec-wants-
tighter-rules-on-board-directors-mergers-under-revised-
corporation-code
 http://map.org.ph/programs/advocacies/good-
governance/annual-corporate-governance-workshop/30-
2013-events/237-sec-presents-to-map-the-proposed-
amendments-to-corporation-code
 http://www.abs-cbnnews.com/business/09/16/13/sec-
push-corporation-code-revisions