SEC’s guidelines on revival of expired corporations
Credit to Author: KELVIN LESTER LEE | Date: Tue, 07 Jan 2020 16:19:24 +0000
One of the game-changing provisions introduced by Republic Act 11232, otherwise known as the “Revised Corporation Code of the Philippines (RCC),” pertains to Section 11 or the perpetuity of corporate terms of corporations existing prior to and which continues to exist upon the effectivity of the RCC, without any further action on the part of the corporation.
Paragraph 2, Section 11 of the RCC provides: “Corporations with certificates of incorporation issued prior to the effectivity of this Code, and which continue to exist, shall have perpetual existence.”
However, Section 11 also provides that “a corporation whose term has expired may apply for a revival of its corporate existence, together with all the rights and privileges under its certificate of incorporation and subject to all its duties, debts and liabilities existing prior to its revival.”
But how can an expired corporation revive its corporate existence pursuant to Section 11 of the RCC?
On Dec. 6, 2019, the Securities and Exchange Commission (SEC) published in two newspapers of general circulation SEC Memorandum Circular 23, Series of 2019 (SEC MC No. 23, s. of 2019), which provides for the “Guidelines on the Revival of Expired Corporations under the Revised Corporation Code.”
The following salient features are provided for under SEC MC No. 23, s. of 2019:
1. The guidelines shall cover the following corporations: a) a corporation whose term has expired; b) an expired corporation whose certificate of registration has been revoked for non-filing of reports; c) an expired corporation whose certificate of registration has been suspended; and d) an expired corporation whose corporate name has already been validly re-used, and is currently being used, by another existing corporation duly registered with the commission (Section 1, SEC MC No. 23, s. of 2019).
2. The following are excluded from the coverage of the guidelines: a) an expired corporation which has completed the liquidation of its asset; b) a corporation whose certificate of registration has been revoked for reasons other than non-filing of reports; c) a corporation dissolved by virtue of Sections 6 (c) and 6 (d) of Presidential Decree (PD) 902-A, as amended by PD 1799; or d) an expired corporation, which already availed of re-registration (Section 2, SEC MC No. 23, s. of 2019).
3. The required number of votes for the revival of an expired stock corporation is at least a majority vote of the board of directors, and the vote of at least majority of the outstanding capital stock; while for a non-stock corporation, at least a majority vote of the board of trustees, and the vote of at least majority of the members (Section 3, SEC MC No. 23, s. of 2019).
4. The procedure of revival, as well the documentary requirements, are explained under Sections 6 and 7 of SEC MC No. 23, s. of 2019.
5. The SEC will require a favorable recommendation from the appropriate government agency in case banks, banking and quasi-banking institutions, preneed, insurance and trust companies, non-stock savings and loan associations (NSSLAS), pawnshops, corporations engaged in money service business and other financial intermediaries will be incorporated (Section 8, SEC MC No. 23, s. of 2019).
6. A revived corporation shall be given a period of two years from the issuance of its certificate of revival to comply with the RCC provisions (Section 9, SEC MC No. 23, s. of 2019).
7. Such revival is without prejudice to the appraisal right of dissenting stockholders in accordance with the RCC provisions (Section 10, SEC MC No. 23, s. of 2019).
8. Exemption from the guidelines may be given by the commission under exceptional cases and in the broader interest of justice (Section 11, SEC MC No. 23, s. of 2019).
The petition may be filed with the SEC’s Company Registration and Monitoring Department, any SEC Satellite Office, or any SEC Extension Office. I advise you to check the SEC website (www.sec.gov.ph) for the full details and updates on the implementation of SEC MC No. 23, s. of 2019.
Kelvin Lester K. Lee is a commissioner of the Securities and Exchange Commission (SEC). He is the co-chairman of the SEC Committee on Memorandum Circular/s to Operationalize Revised Corporation Code Provisions. The views and opinions stated here in are his own. You may email your comments and questions to oclee@sec.gov.ph.