Good news to all micro, small and medium enterprises!
President Rodrigo Duterte signed into law the Revised Corporation Code which is more MSME-friendly.
With this, the archaic 38-year old Corporation Code gets the much needed amendment and updates, many believe that this would pave way for having more entrepreneurs and start-up businesses to bankroll on their own business idea.
Amendments are as follows:
1. INCORPORATORS: Removal of the minimum number of incorporators.
2. MINIMUM CAPITAL STOCK: Imposition of a Php 1,000,000.00 minimum capital stock on stock corporations. This effectively increases the minimum paid-up capital to Php 62,500.00.
3. CORPORATE TERM: Removal of the 50-year corporate term. This means that unless there is a provision in the Articles of Incorporation with regard to the term of corporate existence, the corporation will exist perpetually unless sooner dissolved.
4. ONE PERSON CORPORATION: Allowance for a single person – whether natural or juridical – to organize and put up a corporation. However, this is subject to the requirement of a minimum capital stock of Php 1,000,000.00 to be paid up in a lump sum at the time of incorporation.
5. CORPORATE OFFICERS: Chief Executive Officer is made the alternative title to President and Chief Financial Officer is made the alternative title to Treasurer. Also, the inclusion of Compliance Officer as a mandatory corporate officer on top of the president/CEO, treasurer/CFO, and corporate secretary.
6. BOARD MEETINGS: Allowance of remote communication methods in attending board meetings subject to provisions of the corporate by-laws.
7. NATIONALITY OF A CORPORATION: Formalization of the test in determining the nationality of a corporation, i.e. the control test.
8. REMOVAL OF A MEMBER OF THE BOARD OF DIRECTORS OR TRUSTEES: Empowering the SEC to remove disqualified members of the Board of Directors or Trustees.
Given this new development, many more entrepreneurs would be encouraged to setup their business with ease and this is very much welcomed by various business groups.