Corporate Board and Officers

Corporate Board

A corporation has no physical existence the way a natural person exists.  So how does the corporation perform its powers?  Of course, thru the Board of Directors or Trustees.

Under Sec. 22 of the Revised Corporation Code (RCC), the number of the director is what is stated in the articles of incorporation but not to exceed 15.  However, with respect to the trustees (in case of non-stock corporation), the RCC removed the maximum number of trustees to be elected.

As to the term, directors served for 1 year and trustees for 3 years.

Each director and trustee shall hold office until the successor is elected and qualified. A director who ceases to own at least one (1) share of stock or a trustee who ceases to be a member of the corporation shall cease to be such.

The RCC also emphasize the concept of Independent Director in corporations vested with public interest.

In lieu of the expansion of application of the system of Independent Directors under Securities Regulation Code, RCC has classified the following corporations vested with public interest, whose board shall have independent directors constituting at least 20% of such board.

What are these corporations vested with public interest?

-          Publicly-held corporations

-          Financial intermediaries

-          Corporations as determined by SEC.

For the first one, publicly-held corporations under the Securities Regulation Code, these are the corporations by which:

-          Securities are registered with the SEC;

-          Corporations listed with the Philippine Stock Exchange (PSE); and

-          Corporations which assets are at least Php50M and having 200 or more holders of shares, each holding at least 100 shares of class of its equity shares.

For the second one, financial intermediaries, these refer to:

-          Banks and quasi-banks

-          Non-stock savings and loan associations, pawnshops, and corporations engaged in money service business

-          Preneed, trust and insurance companies, and other financial intermediaries.

For the third one, as determined by SEC, this refers to other corporations engaged in business vested with public interest similar to those cited, as maybe determined by the SEC.

Corporate Officers

For the corporate officers, we have:

(a) a president, who must be a director;

(b) a secretary, who must be a citizen and resident of the Philippines;

(c) a treasurer, who must be a resident; (this is one of the amendment of the RCC); and

(d) such other officers as may be provided in the bylaws.

If the corporation is vested with public interest, the board shall also elect a compliance officer.

The same person may hold two (2) or more positions concurrently, except that no one shall act as president and secretary or as president and treasurer at the same time, unless otherwise allowed in the RCC. 

What is this exemption?  In case of OPC.  So that is basically the difference of an ordinary corporation with that of an OPC insofar as corporate officer is concerned.  In ordinary corporation, president-treasurer is not allowed.  But in OPC, this is possible.

OPC

Under Sec. 121 of RCC, as reiterated in Sec. 4 of SEC MC No. 7 - The single stockholder shall be the sole director and president of the OPC.

Under Sec. 122 of RCC and Sec. 9 of SEC MC No. 7 - Within 15 days from the issuance of its certificate of incorporation, the OPC shall appoint a treasurer, corporate secretary, and other officers as it may deem necessary, and notify the SEC thereof within 5 days from appointment.  

The single stockholder may not be appointed as the corporate secretary.  

Under Sec. 122 of RCC and Sec. 10 of SEC MC No. 7 - A single stockholder who is likewise the self-appointed treasurer of the corporation shall give a bond to the SEC in such a sum as may be required.

And according to SEC MC No. 7, Sec. 10 – the bond requirement for the self-appointed treasurer is as follows:

The surety bond is subject to renewal every two (2) years or as maybe required, upon review of the annual submission of the Audited FS or FS certified under oath by the company’s President / Treasurer. (Sec. 122 of RCC and Sec. 10 MC No. 7, S2019).

Note also that the bond is a continuing requirement for so long as the single stockholder is the self-appointed Treasurer of the OPC. The bond maybe cancelled upon proof of appointment of another person as the Treasurer and Filing of Amended Form for Appointment of Officers. (Sec. 10 MC No. 7, S2019).

For partnership and single proprietorship, the law has no specific requirements as to the qualification of the officers.  They appoint or elect officers as may deemed necessary.

I hope this gives you a working knowledge as to what kind of professionals may incorporate in the Philippines.

The above post does not create a lawyer-client relationship between you and me. While I am a lawyer, I am not your lawyer. It is still best for you to engage the services of your lawyer to address your specific legal concerns, if there is any.

Finally, the write ups stated above was written in accordance with the law, rules, and jurisprudence prevailing at the time of writing and posting, and do not include any future legal developments on the subject matter under discussion.

Thank you for dropping by. I hope we can spend time together here in my website during your coffee break.