The Revised Corporation Code of the Philippines now allows the formation of a One Person Corporation

Incorporators are the stockholders or members named in the articles of incorporation. They are the signatories to the incorporation who originally formed and composed the corporation. Each incorporator of a stock corporation must own or subscribe to at least 1 share of the capital stock.

The Revised Corporation Code has made important changes to who can be the incorporators of a Philippine corporation.

There used to be a minimum of 5 and a maximum of 15 incorporators who must all be natural persons of legal age. Juridical persons such as other corporations could be transferees of the shares of stock only after incorporation. Now, a partnership, association, or corporation can also be an incorporator.

The minimum number has also been changed. The RCC now allows the formation of even a One Person Corporation, a corporation with only a single stockholder.

The Board of Directors is the governing body elected by the stockholders. It exercises the corporate powers of a corporation, conducts all its business, and controls its properties.

Directors are elected for a 1 year term from among the registered stockholders. Each director holds office until his or her successor is elected and qualified.

The RCC provides that the board of corporations classified as being vested with public interest shall have independent directors constituting at least 20% of the board.

An independent director must, apart from shareholdings and fees received from the corporation, be independent of management and free from any business or other relationship which could, or could reasonably be perceived to materially interfere with the exercise of independent judgment in carrying out the responsibilities as a director.

The board acts on behalf of the corporation’s shareholders to make corporate policy decisions.

The Board has the power and the responsibility to decide whether the corporation should enter into a contract that will bind it, subject to the Articles of Incorporation, By-laws, or relevant provisions of law.

Directors must act as a body in a board meeting called in accordance with the corporation’s by-laws. Otherwise, any action taken by them may be questioned by any objecting director or shareholder. These meetings may be regular specially called for the purpose

However, the Board can delegate some of its functions and powers to officers, committees, or agents. These individuals’ authority to bind the corporation is derived from law, corporate by-laws or authorization from the Board.[i]

[i] Cebu Mactan Members Center, Inc. vs. Masahiro Tsukahara, G.R. No. 159624, July 17, 2009.

The RCC now also allows inabsentia voting of a director

The chairman or, in his absence, the president shall preside at all meetings of the directors unless the bylaws provide otherwise.

The traditional, in-person meetings are not the only way the Board can meet.

The RCC also provides for videoconference meetings of the Board. The advent of the pandemic prompted the SEC to issue guidelines on the conduct of such meetings, directing companies to develop internal procedures for board meetings through remote communication or other alternative modes.[i]

Directors who cannot physically attend or vote at board meetings can participate and vote through videoconferencing, teleconferencing, or other alternative modes of communication that allow them reasonable opportunities to participate. However, directors cannot attend or vote by proxy at board meetings.

Corporate secretaries must ensure compliance with regulatory requirements and implement decisions made by the board.

The corporate secretary may send notice of meetings to directors through email, messaging services or such other manner allowed by the corporation’s bylaws or by board resolution

The notice shall include all pertinent materials for discussion which shall be numbered and marked so that the director or trustee can easily follow and participate in the meeting.

Directors who intend to participate in a meeting through remote communication shall notify in advance the presiding officer and corporate secretary.

During the roll call, they shall state their location, specify the device they are using and confirm that they can clearly hear and/or see the other attendees, among others.

In deciding any item or matter in the agenda, the directors may cast their votes through email, message services or such other manner allowed in the internal procedures.

The corporate secretary shall ensure, among others, that the directors or trustees can communicate with and understand each other during the meeting, that the visual and audio recordings of the meeting are secured, and that attendees will sign the minutes of the meeting, whenever practicable, within a reasonable time after the meeting.

[i] SEC Memorandum Circular No. 6, Series of 2020, March 12, 2020.

Corporate officers may be executives hired by the business’s owner or board of directos

The corporate officers are:

• The President, who must be a member of the Board of Directors;
• The Treasurer, who must be a resident of the Philippines; and
• The Corporate Secretary, who must be a resident and citizen of the Philippines;
• Other officers, as may be provided in the bylaws.

If the corporation is vested with public interest, the Board shall also elect Compliance Officer.

The same person may hold 2 or more positions, but no one can act as president and secretary or as president and treasurer at the same time unless allowed by law as in the case of a One Person Corporation.

The single stockholder of a One Person Corporation is also its sole director and president. However, the single stockholder cannot be the corporate secretary.

The single stockholder may be the self-appointed treasurer provided he gives a bond to the SEC and undertakes in writing to faithfully administer the One Person Corporation’s funds to be received as treasurer, and to disburse and invest the same according to the articles of incorporation as approved by the Commission.

It is not unusual for a lawyer or law office to fulfill the role of a corporate secretary considering his duties. The corporate secretary organizes and attends the meetings with the Board and the corporate officers, takes minutes of meetings, keeps the corporate records such as the Articles of Incorporation and By-laws, prepares and executes the certification of board resolutions, and sees to the corporate compliances with SEC.

Atty. Francesco Britanico