With the enactment of this new code of law on corporations, several reforms and innovations have been introduced and integrated with the aim of enhancing the ease of doing business in the Philippines. I will be discussing only some of these notable innovations and reforms and leave it to the experts to elaborate more.
Under the new system of law, a single person can now form a one-person corporation (Sections 115-132) thereby logically and expressly lifting the minimum number of incorporators from five to one person (Section 10). Likewise, companies are allowed to exist in perpetuity (Section 11). The fear before was that corporations may become so powerful that they may even rival the State; hence, the restrictions under the previous set-up. This is not the norm anymore.
Proceeding further, as a rule, there is no more minimum capital stock for stock corporations (Section 12) either.
The corporate name verification system with the “confusingly similar” standard has shifted to the “distinguishability test” (Section 17). Moreover, companies engaged in business impressed with public interest like those covered by the Securities Regulations Code, banks and quasi-banks, etc. shall now be required to have independent directors constituting at least 20% of the composition of their board (Section 22). In still other instances, compliance officers are appointed in companies.
Shareholder voting in absentia or conducted through remote communication is now statutorily permissible (Section 23). Early on, even prior to the passage of the new legal code on corporations, the Securities and Exchange Commission had long issued guidelines on teleconferencing and video conferencing which the Honorable Supreme Court took judicial notice of in a 2005 case.
On another point, the new system of law has also expanded the grounds for disqualification of directors (Section 26). Moving on, close (family) corporations are required to have a maximum number of 20 shareholders. Permit me to end the discussion for now.