The Revised Corporation Code:
Stronger Framework and Governance Towards
Better Protection of Minority Rights and
Improved Ease of Doing Business
By Marian Joanne K. Co-Pua*
I. THE REVISED CORPORATION CODE
Republic Act No. 11232, otherwise known as the “Revised Corporation Code of the Philippines” (RCC), is a consolidation of Senate Bill No. 1280 and House Bill No. 8374 aimed at increasing competitiveness and improving ease of doing business, especially considering that the Philippines slipped to rank 124th from rank 113th out of one hundred ninety (190) economies surveyed in the Doing Business 2019 report of the World Bank. By documenting changes in regulation in twelve (12) areas of business activity in the said economies, Doing Business analyzes regulation that encourages efficiency and supports freedom to do business; as it measures how easy or difficult it is for an entrepreneur to open, manage and operate his business, and how such business may readily comply with regulations.
In the sponsorship speech of Senate Bill No. 1280, four (4) main reform clusters were mentioned, to wit:
First, policies that would enhance the ease of doing business in the Philippines;
Second, rules that prioritize corporate and stockholder protection;
Third, provisions that instill corporate and civic responsibility; and
Fourth, amendments that will strengthen the country’s policy and regulatory corporate framework.
The adoption of the RCC in February 2019 readily resulted to a 29-notch jump for the Philippines, now ranked 95th in the Doing Business 2020 report. Based on the report, the Philippines improved in three areas: starting a business, dealing with construction permits, and protecting minority investors. The report stated that starting a business was made easier by abolishing the minimum capital requirement for domestic companies; dealing with construction permits was made easier by improving coordination and streamlining the process for obtaining an occupancy certificate; and protecting minority investors was strengthened by requiring greater disclosure of transactions with interested parties and enhancing director liability for transactions with interested parties.
The Securities and Exchange Commission (SEC) as the overseer of the corporate sector considers the adoption of the RCC as one giant leap forward as it fills the gaps in the four-decade-old Batas Pambansa Blg. 68, otherwise known as “The Corporation Code of the Philippines” (CCP) and supersedes provisions that have become obsolete and even hindersome in a fast-paced and highly competitive environment.[1] According to the SEC, “overall, the Revised Corporation Code fosters inclusive entrepreneurship, improves the ease of doing business in the country and subsequently the economy’s competitiveness, promotes good corporate governance, and increases protection afforded to corporations, investors and other stakeholders through progressive provisions.”[2]
This article intends to discuss the changes introduced by the RCC championing the four (4) main reform clusters, provide insights on such changes and recent circulars issued by the SEC, and discuss additional measures that may be further adopted to better achieve the laudable objectives of the RCC.
* Doctor of Civil Law: University of Santo Tomas; Lecturer: University of Santo Tomas Faculty of Civil Law and Bulacan State University College of Law; Editorial Board: UST Law Journal (First Edition – 2019); Editor-in-Chief: UST Law Review – Vol. 50 (2005-2006).
[1] Foreword, SEC Briefer on Revised Corporation Code. Available at: https://www.sec.gov.ph/wp-content/uploads/2019/11/2019RCC_BrieferonRevisedCorporationCode.pdf
[2] Ibid.
