Congress amends Corporation Code

Louella Desiderio, Paolo Romero | The Philippine Star – November 28, 2018 

Lawmakers approve changes to ease doing business

MANILA, Philippines — The bicameral conference committee in Congress approved yesterday the reconciled version of a bill amending the Corporation Code of the Philippines to make it easier for investors to set up businesses.

The bicameral committee’s approval comes amid a drop in the country’s rank in the latest Ease of Doing Business Report of the World Bank.

Senate Minority Leader Franklin Drilon, the principal sponsor and author of the measure, said the old law, which set numerous and stringent incorporation requirements, discouraged individuals from setting up a business.

 “One of our difficulties today is our laws have not been updated. As a result, in terms of our ranking in the ease of doing business, we are lagging behind, especially in the areas of starting a business where the country was ranked 166th,” he said.

The Philippines’ ranking in the Ease of Doing Business Report of the World Bank released earlier this month fell to 124th out of 190 economies, from 113th previously.

Apart from the starting a business, the Philippines ranked close to the bottom in other indicators of the report such as getting credit (184th) and enforcing contracts (151st).

Drilon said the amended Corporation Code is expected to improve ease of doing business in the country as it would allow a one-person corporation.

As the current business environment makes it hard for corporations and individual business owners to get loans, Drilon said the new code would allow a one-person corporation to secure financing.

The new code also removes the minimum capital requirement and minimum number of incorporators, provides for perpetual existence of corporation, and allows electronic filing of reportorial requirements, as well as attendance in meetings via remote communication.

Minority stockholders are likewise provided protection under the new code as it requires corporations vested with public interest to have independent directors.

Drilon is confident the country would be able to catch up with its neighbors with the enactment of the law.

“Suffice it to say, then, that the enactment of this measure and its immediate signing into law by the President is in order, so that we can change the atmosphere of conducting business in the country and make our economy more competitive,” he  said.

The Department of Trade and Industry (DTI) and Department of Finance have earlier called on World Bank to review the Philippines’ ranking amid concerns

on the data and methodology used in arriving at the results of the survey.

As the World Bank only collected data from the BAP Credit Bureau Inc. which has the smallest database of 1.7 million borrower-entrepreneurs, the two agencies said the agency did not capture the correct information for the Philippines’ ranking in the getting credit indicator of the report.

Still, the DTI is hopeful of an improvement in the country’s overall ranking in the next Doing Business report as it engages with the Bureau of Customs to work on reforms on trading across borders, and pushes for the inclusion of data from the country’s other credit bureaus in the survey.

Source: https://www.philstar.com/business/2018/11/28/1872217/congress-amends-corporation-code