The Revised Corporation Code of the Philippines (the “RCC”), which took effect on 23 February 2019, introduced several changes in corporate law, one of which is in relation to establishing a corporation. The RCC now allows any person, partnership or corporation, whether singly or jointly with others, to form a corporation. In addition, the old requirement of having at least 5 incorporators have been removed paving the way for the introduction of a One Person Corporation (OPC).
The Securities and Exchange Commission (SEC) currently allows establishment of a corporation with less than 5 incorporators through manual registration. A few years ago, the SEC launched the Company Registration System (CRS) which provides an online pre-processing of registrations and other corporate applications. However, the changes introduced by the RCC has not yet been integrated into the CRS so for those who intend to establish a corporation with less than 5 incorporators, the application must be filed physically at the SEC.
Below are the steps for establishing a corporation with less than 5 incorporators (other than a OPC):
1. Prepare 5 sets of the Articles of Incorporation and By-Laws (the “Incorporation Documents”) signed by the incorporators and the treasurer-in-trust, and acknowledged or authenticated in such form and manner as allowed by the SEC. Each incorporator must own or subscribe to at least 1 share of the capital stock or in case of a non-stock corporation, each must be a member thereof. In case of incorporators who are natural persons, each must be of legal age. In case of an incorporator which is a juridical entity, it must be in good standing and the investment must be approved by majority of the board of directors or trustees and ratified by shareholders owning at least 2/3 of the outstanding capital stock or by at least 2/3 of the members in case of a non-stock corporation or by all partners in case of a partnership. In case of foreign corporations, the document evidencing board approval must be authenticated or with an apostille affixed thereto. In any case, the written approval must also contain the name of the designated signatory for the juridical entity. These written approvals must be submitted together with the Incorporation Documents.
2. Reserve the proposed corporate name through the manual name reservation procedure with the Corporate and Partnership Registration Division (CPRD) of the SEC for a fee of Php100.00. This process takes 1 to 3 business days. Confirmed name reservations are valid for 30 days.
3. Submit the duly accomplished Incorporation Documents to the CPRD for checking. SEC review takes 1 to 2 business days.
4. Upon securing clearance, the SEC will issue a Payment Assessment Form (PAF) for the registration fees. Upon issuance of the PAF, proceed to the Cashier’s Office to pay the registration fees. This will take 1 business day.
5. After payment of the registration fees, submit Incorporation Documents for processing and issuance of the Certificate of Incorporation. This process takes 2 to 5 business days.
A downside of the manual registration is that the SEC will not be able to generate the Taxpayer Identification Number (“TIN”), or Employer Registration Numbers (“ERNs”) of the corporation with Pag-IBIG, Philhealth, and SSS. As such, corporations that underwent the manual process of registration must therefore separately apply for the TIN with the BIR and the ERNs with the proper government agencies.