Home Top Stories SEC issues more rules for smaller corporations
SEC issues more rules for smaller corporations
THE SECURITIES and Exchange Commission (SEC) will now allow at least two people to form a corporation, in line with amendments in Republic Act No. 11232, otherwise known as the Revised Corporation Code.
According to Memorandum Circular No. 16 posted on the commission’s Web site, two or more persons, but not more than 15, may organize themselves as a corporation. This is opposed to the old corporation code, or Batas Pambansa Blg. 68, which allowed a group of not less than five but not more than 15 to form a company.
Incorporators are defined as “those stockholders or members mentioned in the Articles of Incorporation as originally forming and composing the corporation, and who are signatories thereof.”
The SEC noted that only one-person corporations (OPC) may have a single stockholder and a sole director. Such entities must comply with separate guidelines for OPCs.
“The guidelines were released for uniformity of interpretation of the Revised Corporation Code,” Armando A. Pan, SEC officer-in-charge for the Office of the Commission Secretary said in a text message when asked for an explanation.
Section 3 of the circular outlines the qualifications of incorporators, stating that each incorporator of a stock corporation “must own, or be a subscriber to, at least one share of the capital stock.”
Meanwhile, each incorporator of a nonstock corporation must be a member of the corporation.
Incorporators must also be natural persons of legal age, and must be a signatory to the articles of incorporation or bylaws.
Partnerships that would like to register as incorporators are required to submit a partners’ affidavit signed by all partners. This should indicate that they have authorized the partnership to invest in the corporation about to be formed.
Domestic corporations or associations are allowed to become incorporators, as long as they have been approved by a majority of the board of directors or trustees, and ratified by stockholders representing at least two-thirds of the outstanding capital stock.
For foreign corporations, a copy of a document such as a board resolution, director’s certificate, secretary’s certificate, or its equivalent, must be authenticated by a Philippine Consulate. This will give the foreign entity authority to invest in the corporation being formed.
Section 7 covers requirements for signatories of a corporation’s articles of incorporation.
The corporation must also specify the taxpayer identification number (TIN) of its principal.
“No application for incorporation shall be accepted unless the registration documents reflect the TIN or passport number of all its foreign investors other than foreign corporations which have not yet been issued a TIN,” according to the rules.
All foreign investors must secure a TIN upon incorporation, which should be included in all documents filed with the SEC thereafter. Documents with no TIN from foreign investors will not be accepted.
In addition, banks, banking and quasi-banking institutions, preneed, insurance and trust companies, non-stock savings and loan associations, pawnshops, and other financial intermediaries must obtain a favorable recommendation from the appropriate government agency for their articles of incorporation to be approved. — ABF