MANILA, Philippines — Corporations in the Philippines may still retain their specific corporate terms instead of having perpetual existence as now allowed by the Revised Corporation Code of the Philippines, according to the Securities and Exchange Commission.
According to the SEC’s draft guidelines on corporate terms, a decision to retain the specific corporate term of a corporation just needs to be approved during the stockholders’ annual or special meeting duly held for the purpose at the corporation’s principal office.
Such decision must receive affirmative votes from stockholders representing a majority of the corporation’s outstanding capital stock or a majority of the members, in case of a non-stock corporation.
“Corporations with certificates of incorporation issued prior to the effectivity of this code, and which continue to exist shall have perpetual existence, unless the corporation, upon a vote of its stockholders representing a majority of its outstanding capital, notifies the commission that it elects to retain its specific corporate term pursuant to its articles of incorporation,” the SEC said.
As part of the requirements, a corporation must submit a notice to the SEC company registration and monitoring department or any SEC satellite office or SEC extension office, within a period of two years from Feb. 23.
The notice must be signed by at least a majority of the members of the board of directors or trustees, and attested by the corporate secretary.
On the other hand, the SEC said corporations that intend to enjoy perpetual term of existence need not send a notice to the commission. This is stated in the provision of the Revised Corporation Code.
Prior to the enactment of the Revised Corporation Code, corporate terms were capped at 50 years. A corporation, however, could extend its existence for periods not exceeding 50 years by amending its articles of incorporation.
SEC chairperson Emilio Aquino said the grant of perpetual corporate terms to corporations should make the Philippines more conducive for business.
“Perpetual existence does not only mean less paperwork. It also preserves legitimate and productive corporations that support our economy’s growth and fosters a sense of longevity that encourages corporations to implement long-term and sustainable projects and investments,” Aquino said.
In a notice on March 22, the SEC released for public comment the draft guidelines on corporate term, which sets forth the requirements for retaining a corporation’s present corporate term, as specified in its articles of incorporation.