Corporate Law at Philippines
Sure! Here’s a summary of Corporate Law in the Philippines:
Corporate Law in the Philippines
Corporate law in the Philippines is primarily governed by the Revised Corporation Code of the Philippines (Republic Act No. 11232), which took effect in 2019 and replaced the older Corporation Code of 1980. This law governs the formation, organization, regulation, and dissolution of corporations.
Key Features of Corporate Law in the Philippines
1. Types of Business Entities
Stock Corporation: Capital divided into shares of stock.
Non-Stock Corporation: No capital stock; usually for non-profit organizations.
One-Person Corporation (OPC): A corporation with a single stockholder, allowed under the Revised Code.
Partnerships and Sole Proprietorships are regulated under separate laws.
2. Incorporation and Registration
Must be registered with the Securities and Exchange Commission (SEC).
Incorporation requirements:
Minimum of 1 (for OPC) or 5 incorporators (for regular stock corporations).
Articles of Incorporation and By-laws must be submitted.
Capital stock with a prescribed minimum (PHP 5,000 for stock corporations).
Name of the corporation must be unique and approved by SEC.
3. Corporate Governance
Board of Directors: At least 5 members for regular stock corporations.
Officers: At least a President, Treasurer, and Corporate Secretary.
For OPCs, the sole stockholder appoints the officers.
Annual stockholder meetings and board meetings are required.
4. Foreign Ownership and Investment
Foreigners can own corporations but certain industries have foreign ownership restrictions (e.g., land ownership is prohibited).
Foreign Investment Act governs the registration of foreign investments and grants equal treatment to foreign investors except in restricted sectors.
Some businesses require special licenses from government agencies.
5. Capitalization and Shares
No minimum paid-up capital for stock corporations under the Revised Code, but SEC may require minimum amounts depending on the nature of business.
Shares can be classified as common or preferred.
Transfer of shares is generally allowed unless restricted in the bylaws.
6. Corporate Taxation
Corporate income tax rate is 25% (for net taxable income over PHP 5 million).
Dividends paid to residents are subject to a 10% final withholding tax.
VAT is generally 12%.
7. Reporting and Compliance
Annual financial statements must be filed with the SEC.
General Information Sheet (GIS) must be submitted yearly.
Compliance with labor, tax, and environmental regulations is mandatory.
8. Dissolution and Liquidation
Can be voluntary or involuntary.
Process includes settling liabilities, notifying creditors, and filing proper documents with the SEC.
Additional Notes:
The Revised Corporation Code introduced modern provisions such as the One-Person Corporation and removed the previous minimum capital requirements.
The SEC is the main regulator overseeing corporate activities.
There are sector-specific laws affecting corporations (e.g., banking, insurance, telecommunications).
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