Lecture on Revised Corporation Law of 2019

Jul 12, 2024

Lecture on Revised Corporation Law of 2019

Introduction

  • Presenter: Dean Josantos Balagtas Viscara
  • **Background: ** BBA (Accounting, CPA, Magna Cum Laude), MBA (UP Diliman, Magna Cum Laude), Law degree
  • Professional Experience: Financial Analyst, executive positions at Fuji Xerox, Motorola, Delgado Brothers Inc., World Bank projects
  • Teaching Experience: MBA Prof, Bar Reviewer, Law Professor

Dedication

  • Dedicated to Dr. Vergilio Domingo De Los Santos
    • Former Chairman of the Board and President of the University of Manila
    • Legal mentor

Focus of Lecture

  • Comparison: Revised Corporation Law of 2019 vs Batas Pambansa (BP) 68 of 1980
  • Emphasis: New provisions in the Revised Corporation Law of 2019
  • Detailed discussion planned for future uploads

Key Provisions of Revised Corporation Code of 2019

Incorporation and Organization

  • Definition: Corporation is an artificial being created by law, with perpetual existence unless otherwise stated
  • Old Law: Corporations had a 50-year life, renewable for another 50 years

Perpetual Existence

  • Existing corporations get perpetual existence unless they vote to retain a fixed term
  • Changes in corporate life require considering the rights of dissenting stockholders
  • IPC (Independent Professional Corporations) not allowed unless otherwise by special laws

Minimum Capital Stock Requirement

  • New Law: No minimum capital stock required
  • Old Law: 25% must be subscribed and 25% of that must be paid at the time of subscription, with a 5,000 PHP minimum paid-up capital

Corporate Name

  • Must be distinguishable from existing names
  • Clarifications: Adding words like “Incorporated” or punctuation does not make a name distinguishable
  • SEC may order the cessation of use if name conflicts arise

Incorporators

  • New Provision: Any person, partnership, association, or corporation with up to 15 incorporators
  • Juridical persons can now be incorporators
  • No residency requirement in the Philippines

Stockholder Meetings

  • Location: Principal office or same city/municipality
  • Notice: Agenda, proxy submission, and procedures for remote communication and absentee voting

Director Meetings

  • Can be held anywhere unless bylaws state otherwise
  • Notice must be sent at least two days before the meeting
  • Directors cannot vote by proxy

Corporate Officers

  • After election, directors must organize and elect officers: President, Treasurer
  • Compliance officer for corporations with public interest

Election of Directors

  • Voting Methods: Cumulative voting allowed, no delinquent stock voting unless articles/bylaws allow
  • Quorum presence can be physical or via remote communication
  • Election Failure: SEC intervention if no election is held

Removal of Directors

  • Methods: Majority stockholder vote or member vote
  • Notice: Must state purpose of meeting for removal

Vacancies in Board of Directors

  • Filling: Majority of remaining directors if quorum exists; otherwise, by stockholders
  • Term: Replacement directors serve unexpired term of predecessor

Corporate Term and Inactivity

  • Non-Operation: Five years of inactivity will lead to delinquent status, then revocation after two more years

Appraisal Right

  • Definition: Right to dissent and demand fair value payment when major corporate changes occur (e.g., merger, investment shifts)

Mergers and Consolidations

  • Contents of Articles: Plan, necessary corporate details, account methods, pro forma values

Non-Stock Corporations

  • Up to 15 trustees who serve for three-year terms
  • May directly elect officers

Corporations Vested with Public Interest

  • Must have independent directors constituting at least 20% of the board
  • Includes banks, insurance companies, and publicly listed entities

Compliance and Reporting

  • Election Report: Names, shareholdings, and addresses of elected officers to SEC within 30 days
  • Meeting Minutes: Required to be documented for stockholder/directors meetings

Conclusion

  • Important changes aimed at modernizing corporate governance in the Philippines
  • Additional uploads will further explore detailed aspects of the Revised Corporation Code
  • Personal reminiscence of impactful mentor, Dr. Vergilio D. De Los Santos