CORPORATIONS may amend their corporate term to be extended, shortened, or deemed to have perpetual existence after a vote from their respective board and stockholders, the Securities and Exchange Commission (SEC) said in its guidelines.
The Revised Corporation Code (RCC) signed into law by President Rodrigo R. Duterte last Feb. 20, 2019 states that firms may now exist forever instead of the previous 50-year limit that can be renewed thereafter.
SEC Memorandum Circular No. 22 released on Sunday said that corporations incorporated when the code was made effective on Feb 23, 2019 will have perpetual existence unless its articles of incorporation provide a specific corporate term.
These corporations, if they have a specific term of existence in their articles of incorporation, may amend their articles of incorporation to extend or shorten their term with the written assent or majority vote of the board of directors or trustees and the stockholders representing two-thirds of outstanding capital stock.
They may do the same to amend their specific corporate term to perpetual existence.
Corporations under the revised code whose articles of incorporation already provide for a perpetual term of existence may amend this for a specific corporate term under the same written assent or vote.
SEC last year said that perpetual existence would create a sense of longevity for corporations to implement long-term projects.
CORPORATIONS BEFORE THE RCC
Corporations that have certificates of incorporation issued before the RCC was made effective will be deemed perpetual without action from the corporation.
To reflect its perpetual corporate term in its articles of incorporation, the board of directors or trustees can vote by majority as well as stockholders representing majority of the outstanding capital stock including non-voting shares. For nonstock corporations, the vote must be cast by a majority of members.
But corporations with certificates of incorporation before the RCC took effect can continue its present corporate term by filing a notice with the SEC, certifying a decision made by vote. — Jenina P. Ibañez