At the recent forum held by the UP Women Lawyers’ Circle headed by Sylvette Tankiang, one of the most anticipated talks was that of former Securities and Exchange Commission (SEC) chief Tess Herbosa on what she calls the reenacted Corporation Code of the Philippines with major and minor changes.
Herbosa is said to have championed the cause for the passage of the New Corporation Code during her seven-year stint as SEC chairperson, working with Sen. Franklin Drilon who is the principal author in the Senate in putting in the much-needed changes that would align our law with international best practices, allow the use of technology for ease of doing business, strengthen minority stockholders’ rights, manage and reduce corporate risks, and include specific and more effective enforcement provisions to enhance compliance and avoid regulatory capture.
One of the most controversial inclusions in Republic Act 11232 is the creation of the one-person corporation (OPC).
Sec. 10 provides that any person, partnership, association or corporation, singly or jointly with other but not more than 15 in number, may organize a corporation. It still, however, disallows the creation of corporations for the purpose of practicing a profession, like law or accountancy.
Under Batas Pambansa 68 approved in 1980, only natural persons not less than five but not more than 15, majority of who are residents of the Philippines, may form a private corporation.
What this basically means is that one can now have a corporation of one, two, three or four incorporators (odd number of course works best) who can be natural or juridical persons.
One lawyer raised the possibility of general professional partnerships engaged in the practice of law becoming incorporators. The new law does not seem to distinguish. It says “any partnership.”
This, however, has to be related to the provisions on OPCs, which disallows juridical persons (partnerships, corporations, associations) from becoming incorporators/stockholders.
The new Code, in particular Chapter III, deals with the OPC, which is a corporation with a single stockholder, but only natural persons, trusts, and estates are allowed to form it. Again, a natural person who is licensed to exercise a profession cannot organize an OPC, except as provided under special laws.
In her talk, Herbosa revealed that the idea to remove the minimum authorized capital stock requirement under the old Code actually started with the proposal that OPCs should not have such requirement.
The old Code does not provide for a minimum authorized capital stock for corporations created under it but provides for a minimum paid up capital of P5,000. Assuming that the entire authorized capital stock is paid-up, then the minimum authorized capital stock should also be P5,000.
The single stockholder of an OPC shall be the sole director and president. That person can also be the treasurer, provided that he or she gives a bond to the SEC in such sum as may be required. The single stockholder however must appoint another person as corporate secretary.
The OPC, however, is separate and distinct from the stockholder, thus the limited liability of the single stockholder. Unlike in the case of sole proprietorships where the assets and liabilities of the sole proprietorship are also that of the person who constitutes it, creditors of the OPC cannot reach out to the assets of the single stockholder.
To avoid the possibility of the OPC business entity being abused, the new law provides that the sole shareholder claiming limited liability has the burden of showing that the corporation was adequately financed. So if the single stockholder cannot prove that the property of the OPC is independent of the stockholder’s personal property, the stockholder shall be jointly and severally liable for the debts and other liabilities of the OPC.
Thus, the doctrine of piercing the veil of corporate fiction also applies to OPCs. If the corporate legal entity is used as a cloak for fraud or illegality, then the law will regard the OPC and single stockholder as one and the same.
While limited liability of course is one advantage that OPCs will be entitled to, one disadvantage is that it will be subject to the corporate tax rate, unlike persons engaged in business who are subject to a graduated income tax.
According to Herbosa, one reason for the creation of the OPC is the growing number of micro, small and medium enterprises (MSMEs). These MSMEs, who make up bulk of sole proprietorships in the country, find themselves facing extreme hardships when their businesses suffer because their creditors can reach their personal assets. With the OPC, these MSMEs will be treated separately from the person owning it.
Not so hidden agenda
Leading ASEAN agencies of the Public Relations Organization International (PROI) Worldwide have teamed up to deliver quality communications solutions that can be carried seamlessly across the region.
Doy Roque, head of PROI Worldwide’s partner agency in the Philippines, said the challenge for global companies in the ASEAN region is that each country speaks with its own unique flavor, and reaching each market needs a nuanced approach. This partnership, he said, gives global companies access to the collective expertise of the top agencies across all markets to communicate on a regional scale, delivering real business value.
PROI ASEAN is taking an integrated approach to connect the region by leveraging each member agency’s unique skill set and on-the-ground local knowledge. The approach will enable clients to build brand awareness, enhance credibility, and drive business growth anywhere in Southeast Asia.
Leading agencies within PROI ASEAN include Echo Myanmar Communications (Myanmar), Huntington Communications (Singapore), Imogen Indonesia, M2.0 Communications (Philippines), Midas Communication (Thailand and Vietnam), and Priority Communications (Malaysia).
The PROI ASEAN network comes at an opportune time for us to take our service offerings to the next level, working on the strengths of our partners, says Lena Soh, vice-chair of PROI Asia Pacific.
PROI ASEAN’s services includes crisis and issues management, reputation management, stakeholder management, social media management, corporate communications, community relations, consumer campaigns, event management, and experiential marketing. With a total of 250 communications experts, the partnership’s clients include PayPal, Shopee, Takeda, Tetra Pak and Tourism Tasmania.
PROI Worldwide, the world’s largest partnership of integrated independent communications agencies founded in Europe in 1970 has offices in more than 110 cities in over 50 countries, with 75 leading independent integrated communications partner companies and more than 5,000 staff servicing over 6,300 clients worldwide.
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