Undeniably, the effects of the COVID-19 outbreak have spread globally. In the Philippines, Luzon has been placed under Enhanced Community Quarantine, along with other areas across the nation. People were advised to stay home, most businesses are closed except for those serving the public, and social distancing is imperative where possible.
In the first part of this article on the revised Corporation Code of the Philippines, I mentioned that directors may now be elected by stockholders through remote communication and in absentia if allowed in the by-laws or approved by majority of the board of directors. The Securities and Exchange Commission (SEC) will issue rules and regulations to govern the manner of participation through these means. In consonance with this, the by-laws should now mention the allowable modes by which stockholders and directors may attend meetings. In addition, the by-laws should also provide guidelines for setting a director’s compensation, the maximum number of independent directors (which should not exceed the limit under the Code), and the arbitration agreement, if any.
On Feb. 20, Republic Act 11232 was signed into law, amending the more than 38-year old Corporation Code of the Philippines. This comes at an opportune time, in the midst of an active government campaign towards the promotion of the ease of doing business in the Philippines. In 2018, the Ease of Doing Business Act was passed and a more liberal Foreign Investments Negative List was issued. Hopefully, the changes brought about by the amendments in the Code can complement these laws in pursuing the ultimate goal -- to improve the Philippines’ competitiveness as an investment destination.
To ease restrictions against foreign equity, the Eleventh Foreign Investment Negative List (FINL) was issued by the President on Oct. 29, 2018 and takes effect 15 days from its publication in a newspaper of general circulation.