Senate amends outdated corporate code to improve business climate

MANILA - Local business owners and investors will soon need not resort to naming their entire household as incorporators to comply with the stringent requirement of the law, Senate Minority Leader Franklin Drilon said.

This is after the Senate on Tuesday passed on second reading Senate Bill 1280 which seeks to amend the decades-old Corporation Code and introduces, among others, the concept of a one-man corporation.

Drilon, who authored and sponsored the bill, described the legislation as a "milestone" necessary to improve the business climate in the Philippines.

"These are long overdue reforms that the business sector is fully supportive of and, in fact, has been clamoring for its immediate passage," Drilon said. "I'm glad that the Senate is able to respond to such call of the business sector in order that we can establish a more business- and investor-friendly environment."

Drilon is confident that once the bill is enacted into law, it will change the atmosphere of conducting business in the country, particularly in light of the country's dismal ranking in terms of the ease of doing business in 2017.

In a study by the World Bank regarding the ease of doing business across 190 countries in 2017, the Philippines was ranked 113th, Drilon noted. It also lagged behind its neighbors in the Southeast Asia, far from Thailand and Vietnam, which were ranked 26th; Brunei, 56th; Vietnam, 68th; and Indonesia, 72nd. Singapore was ranked 2nd.

Drilon said 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. The bill is expected to hurdle third and final reading next week.

He said the proposed revised corporation code would introduce the concept of the one-person corporation, simplify the name verification process, and grant a perpetual life as the default option for corporations.

Drilon said a provision requiring corporations to have least five incorporators is "a common stumbling block" for many investors.

He noted that naming household members - from cook to driver - is a usual practice in the country.

The measure also allows electronic filing of reportorial requirements and attendance in meetings via remote communication or in absentia.

Drilon said there are four reform clusters that the bill seeks to address, including improving the ease of business in the country, prioritizing corporate and stockholder protection, instilling corporate and civic responsibility, and strengthening the country's policy and regulatory corporate framework.

"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. (Senate PR)

Source: Philippine News Agency