Under Section 10 of RA No. 11232 An Act Providing for the Revised Corporation Code of the Philippines, states that it allows any person, partnership, corporation or association, singly or jointly with others but not more than fifteen (15) to form a corporation. However, SEC finds it necessary to issue a guideline that will clearly and properly implement the above provision of law. Thus, the SEC Memorandum Circular No. 16-2019 was issued last July 30, 2019. This states the guidelines on the number and qualifications of incorporators under the revised Corporation Code.
How many can form a corporation?
SEC Memorandum Circular No. 16 under Section 1 states that:
“For the purpose of forming a new domestic corporation under the Revised Corporation Code, two (2) or more persons, but not more than fifteen (15), may organize themselves and form a corporation.
Only a One Person Corporation (OPC) may have a single stockholder, as well as a sole director. Accordingly, its registration must comply with the corresponding separate guidelines on the establishment of an OPC.”
What are Incorporators?
SEC Memorandum Circular No. 16 under Section 2 defines incorporators as follows:
“Incorporators are those stockholders or members mentioned in the Articles of Incorporation as originally forming and composing the corporation, and who are signatories thereof.”
What are the qualifications to be an Incorporator?
The qualifications to become an incorporator were laid out in SEC Memorandum Circular No. 16 under Section 3 as follows:
“Each incorporator of a stock corporation must own, or be a subscriber to, at least one (1) share of the capital stock. Each incorporator of a nonstock corporation must be a member of the corporation.
The incorporators may be composed of any combination of natural person/s, SEC-registered partnership/s, SEC-registered domestic corporation/s or association/s, as well as foreign corporation/s.
Incorporators who are natural persons must be of legal age, and must sign the Articles of Incorporation/Bylaws.”
How can a Partnership become an Incorporator?
As stated in Section 3 of SEC MC No. 16-2019, incorporators may be composed of SEC-registered partnership. Below are the pre-requisites to qualify a partnership to be an incorporator:
“In an event that an SEC-recorded partnership is made an incorporator, the application for registration must be accompanied by a Partner’s Affidavit, duly executed by all the partners, to the effect that they have authorized the partnership to invest in the corporation about to be formed and that they have designated one of the partners to become a signatory to the incorporation documents.
Partnerships under “dissolved” or “expired” status with the SEC shall not be authorized to become an incorporator.”
How can a Domestic Corporations or Associations become an Incorporator?
As stated in Section 3 of SEC MC No. 16-2019, incorporators may be composed of SEC registered domestic corporation or association. To qualify a SEC-registered domestic corporation or association to become an incorporator, it should comply with the rules stated in SEC MC No. 16-2019 under Section 5 as follows:
“In the event that an SEC-registered domestic corporation or association is made an incorporator, its investment in the new corporation must be approved by a majority of the board of directors or trustees and ratified by the stockholders representing at least two-thirds (2/3) of the outstanding capital stock, or by at least two thirds (2/3) of the members in the case of nonstock corporations, at a meeting duly called for the purpose.
A Director’s /Trustees’ Certificate or a Secretary’s Certificate, indicating the necessary approvals, as well as the authorized signatory to the incorporation documents, shall be executed under oath and submitted by the applicant.
Domestic corporations under “delinquent”, “suspended”, “revoked” or “expired” status with the SEC shall not be authorized to become an incorporator.”
How can a Foreign Corporations become an Incorporator?
As stated in Section 3 of SEC MC No. 16-2019, incorporators may be composed of foreign corporation. The requirements for the qualification of a Foreign Corporation are stated under Section 6 as follows:
“In the event that a foreign corporation is made an incorporator, the application for registration must be accompanied by a copy of a document (i.e. Board Resolution, Director’s Certificate, or its equivalent), duly authenticated by a Philippine Consulate or with an apostille affixed thereto, authorizing the foreign corporation to invest in the corporation being formed and specifically naming the designated signatory on behalf of the foreign corporation.”
What are the restrictions for Foreign Nationals as part of the Articles of Incorporation?
As stated in SEC MC No. 16-2019 under Section 9. Foreign Nationals in the Articles of Incorporation. Foreign Nationals inclusion in the Articles of Incorporation are still subject to the applicable constitutional, statutory, and regulatory restrictions. They are also subject to the conditions regarding foreign participation in certain investment areas or activities.
What are the additional requirements for certain corporations?
SEC MC No. 16-2019 under Section 10 states the requirement as follows:
“No Articles of Incorporation of banks, banking and quasi-banking institutions, preneed, insurance and trust companies, NSSLAS, pawnshops, and other financial intermediaries shall be approved unless accompanied by a favorable recommendation of the appropriate government agency to the effect that the Articles of Incorporation are in accordance with law.”