Senate ratifies bicam report on Corporation Code amendments

The Senate today ratified the bicameral conference committee report on the bill amending the Corporation Code to help improve the country's business climate and make it more friendly to foreign and local investors and entrepreneurs alike.

The bicameral report on the reconciled version of Senate Bill No. 1280 and House Bill No. 8374 was unanimously adopted by the Senate, two days after the bicameral committee had approved their report on the bill last November 26, 2018.

"The enactment of this landmark legislation is not only timely but is also necessary considering the fact that we are lagging behind our neighbors in terms of ease of doing business. This measure will vastly improve the regulatory environment for setting up a business in our country," said Senate Minority Leader Franklin Drilon, the principal sponsor and author of the bill.

With the help of the bill, he added, "the country will be able to catch up with its neighboring countries."

According to Drilon, the bill will introduce reforms to the decades-old Corporation Code to "remove the barriers hindering the entry of both small and large enterprises into the market."

He said that the old law poses difficulties to attracting businesses, due to "numerous and stringent incorporation and regulatory requirements that discourage investors and Filipino entrepreneurs to enter the local market."

Drilon said the bill pushes for amendments that will help improve the ease of doing business in the country through strengthened and simplified corporate governance standards, which includes allowing one-person corporations, removing the minimum capital requirement and providing for perpetual existence of corporations. He explained that allowing one-person corporations would end the practice by local business owners and investors of naming their household members as incorporators "simply to comply with the stringent requirement of the law."

The bill will also allow a one-person corporation to better avail of loans and grants, to help address the current business environment "where it is hard for corporations and individual businesses to avail loans."

He said that the bill also removed the requirement for minimum capitalization, "in keeping with the trend worldwide and to further remove barriers to business entry."

The bill will mandate that existing and future corporations are deemed to have perpetual lives, he added.

Drilon said the bill likewise calls for the protection of minority stockholders by requiring, among others, corporations vested with public interest to have independent directors.

"In delegating this function to the SEC, the bicameral committee provides a standard to guide the agency in determining which corporations are vested with public interest," Drilon said.

Among other reforms in the reconciled version of the bill are provisions that seek to permit the electronic filing of reportorial requirements and attendance in meetings via remote communication or in absentia, among others - "practices that were not recognized in the old law."