People who dare to do business in the country know: registering one’s company with the government sucks. The lines at government offices are long, red tape is rampant, and really, there are just too many forms to fill out. According to the World Bank, it takes at least a month to start a business in the country.
But in February, President Rodrigo Duterte signed Republic Act 11232 or the revised corporation code with provisions that may lighten the process of doing business in the country. The newly passed measure updates the Corporation Code that has been untouched for almost 40 years.
Below, we break down some of the updated corporation code’s provisions that may significantly affect an entrepreneur’s business registration process.
One of the biggest amendments made to the corporation code, RA11232 finally allows individuals to register a corporation even without any partners or incorporators. Previously, the law required corporations to have at least five and at most 15 incorporators before they could be fully registered with the Securities and Exchange Commission (SEC). This particular requirement has forced some to register anyone they know, from relatives to casual friends, to become incorporators of their company even when they don’t play active roles in the firm, so this one is a big win for the business community.
True, individuals who want to run businesses on their own may also register for sole proprietorship, but the law will identify the assets and liabilities of the individual and the business as one, thus making it a risky move for any individual.
The new code also now allows corporations to become perpetually registered with the SEC unless otherwise requested by the company. Under the previous code, a corporation is only identified as one for fifty years, after which, it would have to register again with the SEC. The provision also automatically applies to existing companies.
More time to prove existence for inoperative companies
The law also contains friendlier provisions even for those that may be having a hard time to get their businesses running. Under the new code, a corporation that has been inoperative for five years will be given a two-year grace period to get their businesses running. If the company still fails to open shop during that period, then the company’s article of incorporation will be revoked. The SEC was previously stricter with this one as it revokes inoperative companies' incorporation right after the five-year window.
Capital stock requirement lifted
Business owners have one less fee to worry about, too, which is a welcome development. Companies are now no longer required to subscribe and pay at least 25 percent of their authorized capital stock under the new law.
Senate Minority Leader Franklin Drilon, the principal author and sponsor of the law, said the new measure will make the Philippines a more attractive environment for investors and more importantly, make doing business in the country a lot easier.
"The passage into law of this measure is critical in our bid to improve the country's business climate and make our economy more competitive with the rest of the world," he said in a statement.
This story originally appeared on Esquiremag.ph.
* Minor edits have been made by the Entrepreneur.com.ph editors.