A corporation is formed upon the issuance of a Certificate of Registration by the Philippine Securities and Exchange Commission (“SEC”) together with the approval of the applicant’s Articles of Incorporation and By-Laws.
The Philippine Corporation Code requires a minimum of five and a maximum of fifteen incorporators, all of whom must be natural persons, of legal age, and a majority of whom must be Philippine residents. Each incorporator must subscribe to at least one share of stock of the corporation. In addition, the SEC requires that all incorporators must posses a tax identification number and indicate the same when signing the Articles of Incorporation
A corporation must have not less than five nor more than fifteen directors. A majority of the directors must likewise be Philippine residents. Every director must own or hold at least one share of stock of the corporation in his/her name. The incorporators may be the directors first appointed in the Articles of Incorporation. Foreigners may be elected to the Board of Directors to the extent of the allowable foreign equity in the business.
The Articles of Incorporation must be signed and acknowledged by all incorporators and must contain substantially the following matters:
1. the name of the corporation;
2. the specific purpose or purposes for which the corporation is being incorporated;
3. the address where the principal office of the corporation is to be located, which must be within the Philippines;
4. the term for which the corporation is to exist (which shall be originally a maximum of 50 years from the date of incorporation);
5. the names, nationalities and residences of the incorporators;
6. the number of directors;
7. the names, nationalities and residences of persons who shall act as the first appointed directors; and
8. the amount of its authorized capital stock in lawful money of the Philippines, the number of shares into which it is divided, and in case the share are par value shares, the par value of each, the names, nationalities and residences of the original subscribers, and the amount subscribed and paid by each on his subscription, and if some or all of the shares are without par value, such fact must be stated.
The Articles of Incorporation must also identify the first appointed Treasurer, who must execute an affidavit attesting that at least 25% percent of the authorized capital stock of the corporation has been subscribed, and at least 25% of the total subscription has been fully paid to him/her in actual cash and/or in property the fair valuation of which is equal to at least 25% percent of the said subscription, such paid-up capital being not less than Php5,000.00.
It is common for applicants to submit to the SEC for approval the By-Laws together with the Articles of Incorporation. In such case, the By-Laws must be approved and signed by all the incorporators. The By-Laws may provide for:
1. the time, place and manner of calling and conducting regular or special meetings of the directors or trustees;
2. the time and manner of calling and conducting regular or special meetings of the stockholders or members;
3. the required quorum in meetings of stockholders or members and the manner of voting therein;
4. the form for proxies of stockholders and members and the manner of voting them;
5. the qualifications, duties and compensation of directors or trustees, officers and employees;
6. the time for holding the annual election of directors of trustees and the mode or manner of giving notice thereof;
7. the manner of election or appointment and the term of office of all officers other than directors or trustees;
8. the penalties for violation of the by-laws;
9. the manner of issuing stock certificates; and
10. such other matters as may be necessary for the proper or convenient transaction of its corporate business and affairs.
The annual stockholders’ meeting is generally scheduled on a date that audited financial statements can be made available to the stockholders for approval. A company that follows the calendar year for reporting income should be able to submit audited financial statements to revenue authorities on or before April 15. Thus, its annual stockholders’ meeting can be held in May. If the company follows a fiscal year, the annual stockholders’ meeting should be scheduled at least two weeks following the last day for submission of its audited financial statements.
The Philippine Corporation Code requires a corporation to have at least the following officers: President, Treasurer and Corporate Secretary. The By-Laws may provide for other officers. The Philippine Corporation Code imposes the following qualifications on the officers:
1. the President must be a director;
2. the Treasurer need not be a director; and
3. the Corporate Secretary must be a Philippine citizen and resident but need not be a director
Any two or more positions may be held concurrently by the same person, except that no one shall act as President and Treasurer or as President and Corporate Secretary at the same time.
As a matter of policy, the SEC requires that the Treasurer must be a Philippine resident.