Philippines firms may have perpetual corporate terms

MANILA, Philippines — Philippine corporations may soon have perpetual corporate terms in line with the global trend. 

The House of Representatives has approved on third reading The Revised Corporation Code of the Philippines, which includes provisions on perpetual corporate term instead of the current 50-year term, good governance and sustainability.

Securities and Exchange Commission (SEC) chairperson Emilio Aquino welcomed the move, saying it would help improve the business environment in the country. 

“We at the SEC are enthused with the Congress’ approval of the bill amending the Corporation Code, which contains provisions for perpetual corporate term, ease of doing business, sustainable development and good corporate governance. With these amendments, we look forward to contributing better to the country’s business and economic goals,” Aquino said.

Aquino said “a forever” term of corporate existence would mean that a corporation is a stable enterprise and investors are assured of a safer investment option.

As an ease of doing business factor, there will be no need to amend the articles of incorporation to extend corporate life beyond the 50-year term in the present Corporation Code, he said.

“Many corporations continue to extend their corporate terms showing determination to pursue business beyond the 50-year initial term. Providing for a perpetual corporate term, will not only help remove possibility of expiration of the registration of legitimate and productive businesses but will also foster a sense of longevity in corporations which will translate to sustainable, well-thought out projects,” Aquino said.

In connection with the shift to perpetual corporate term, Aquino said that all corporations whose corporate existence have lapsed due to failure to extend their terms would be given an opportunity to revive their corporations.

Another amendment is the new chapter on the One Person Corporation or OPC. 

This provides for the formation of a OPC, a corporation with a single stockholder as it is not uncommon that the capital of a corporation emanates from a single investor. 

At present, the Corporation Code only provides for a corporation sole, which is a corporation associated with the clergy and may be formed by one person only.

“Forming a OPC allows more flexibility, wherein the lone stockholder may pursue his/her business decisions without need for a board consensus,” Aquino said.

The proposed OPC hybrid gives rise to a new entity separate and distinct from the person of the stockholder and hence, limits the liability of the OPC to the corporate entity.

“These are exciting times for the corporate sector, with these innovations as approved by the Senate and now the House of Representatives, more people will be encouraged and see the advantages of incorporating their businesses,” Aquino said.

He expressed hopes President Duterte would also support the measure to amend the Corporation Code and sign it into law.