Bill amending Corporation Code gets Senate nod

Minority Leader Franklin Drilon, the author and sponsor of SB 1280, lauded his colleagues for passing the “milestone” legislation. (Photo: Senato of the Philippines/ Facebook)

MANILA — The Senate on Tuesday approved on third and final reading a bill seeking to amend the Corporation Code to improve the country’s business climate and make it attractive to large and small businesses.

Senate Bill 1280 was approved with 20 positive votes, zero negative votes and zero abstention.

The bill amends the 38-year-old Corporation Code of the Philippines and introduces provisions that seek to remove the minimum number of incorporators, permit the establishment of a one-man corporation, allow the electronic filing of reportorial requirements and attendance in meetings via remote communication or in absentia, among others.

Minority Leader Franklin Drilon, the author and sponsor of SB 1280, lauded his colleagues for passing the “milestone” legislation.

He noted that during the briefing for the proposed 2019 national budget earlier in the day, Secretary Ernesto Pernia of the National Economic and Development Authority (NEDA) cited the improvement of government processes dealing with business as a key policy reform agenda in sustaining and accelerating economic growth.

“This is precisely what this Senate bill that we just approved today is. This is a tool to improve government processes insofar as corporations and incorporating businesses are concerned today,” Drilon said.

He said the proposed amendments are divided into four reform clusters consisting of policies that seek to improve the ease of business in the country; prioritize corporate and stockholder protection; instill corporate and civic responsibility; and strengthen the country’s policy and regulatory corporate framework.

To enhance the ease of doing business, the bill seeks to remove a common stumbling block for many investors, which is the requirement for a corporation to have at least five incorporators.

Drilon noted that such policy has made local business owners and investors resort to naming their entire household – from cook cum driver — as incorporators to comply with the stringent requirement of the law.

SB 1280 also calls for the creation of emergency boards, which can operate for a limited period and purpose, allowing the corporation to continue operating daily despite vacancies in the board.

It also revised the rules on the right to inspect corporate books, modified the quorum requirements, and expanded the grounds for disqualification of directors.

The bill also aims to prevent the use of the corporation as a vehicle for committing crimes by providing for the imposition of corporate criminal liability and penalties for graft and corruption.

Drilon is confident that once the bill is enacted into law, the revised corporate code will change the atmosphere of conducting business in the country.

“The proposed changes would streamline the process of incorporation to make the present corporate code attuned with the changing business landscape, thereby making the Philippines an attractive investment destination,” he said.

“In general, the proposed amendments promote efficiency and encourage transparency in corporate dealings – from formation to daily operations. Having them in place will allow the Philippines to compete with other countries as a viable investment destination and small-business-friendly jurisdiction,” Drilon said.