MANILA, Philippines - The Securities and Exchange Commission (SEC) is pushing for key amendments to the two-decade-old corporation code in an effort to encourage the creation of more businesses in the country.
Reforms will make the country’s corporation code aligned with global benchmarks, the agency’s chief said last week.
“We think we will have a progressive corporation code after these amendments,†SEC chairperson Teresita Herbosa said.
“We’ve given (the proposed amendments) to the Secretary of Finance on Friday. We are hoping it will be included in the Legislative Agenda,†Herbosa said.
The corporation code, which governs firms’ registration and the monitoring of companies’ compliance with reportorial requirements, was last amended in 1980.
Highlights of the amended corporation code include the perpetual term for companies, the provision for a one-person firm, SEC’s power to call a stockholders meeting and a review on de facto mergers.
“We’re gunning for a perpetual term, no longer a maximum of 50 years of corporate life,†Herbosa said.
Herbosa said that in other countries, companies are mandated to participate in periodic renewals to show the business is still operating.
SEC is also looking at allowing the creation of one-person stock corporation, but these firms will still be required to submit reports like financial statements and general information sheets.
To avoid erring boards from perpetuating themselves to power for an unlimited term, the SEC is also creating a provision for a mandatory stockholders meeting.
“The SEC can call a meeting, declare a quorum present and elect the new directors,†Herbosa said.
This will prevent current officials from always deferring stockholders meetings and elections and extending their terms, Herbosa said.
The amended corporation code will also expand the power of SEC in reviewing mergers.
“There will be a provision of de facto merger. If (the transaction) will result in a merger-like setting, they will have to go through SEC,†Herbosa said.
On top of the amendments to the corporation code, SEC is implementing several measures in terms of monitoring companies and protecting shareholders.
SEC earlier released the Guidelines on the Conduct of Valuation and Issuance of Fairness Opinion during mandatory tender offers and the Revised Guidelines on Property Valuations that aim to enhance reliability and quality of reports on valuation of properties.