CorporateCode.ph FAQ: 100 Common Questions Answered

Question 1

I am starting a business alone. Should I register a sole proprietorship or a One Person Corporation?

Accepted Answer

It depends on how much you need to separate business debts from personal assets. A sole proprietorship is not a separate legal person, so you answer for business debts personally. An OPC is a corporation with a single stockholder and its own juridical personality, but it carries SEC reporting duties, a nominee and alternate nominee, and formal records. Compare liability, continuity and compliance cost before choosing.

Question 2

Who is allowed to form a One Person Corporation?

Accepted Answer

Only a natural person, a trust or an estate may form an OPC under the Revised Corporation Code. Banks and quasi-banks, preneed, trust and insurance companies, public and publicly listed companies, and non-chartered GOCCs cannot incorporate as OPCs. A licensed professional also cannot use an OPC to practise the profession unless a special law allows it. Screen the activity for foreign-ownership limits before filing.

Question 3

Do I need a minimum capital to register a corporation or OPC?

Accepted Answer

No, not as a general rule. The Revised Corporation Code says stock corporations and OPCs are not required to have a minimum capital stock unless a special law requires one. Special laws and sector regulators can still impose capital rules, and foreign-owned companies may face capitalization requirements under the Foreign Investments Act. Check the activity before setting your capital figures.

Question 4

How many incorporators do I need to set up an ordinary stock corporation?

Accepted Answer

You can have one up to fifteen incorporators. Any person, partnership, association or corporation may incorporate, singly or jointly with others, but not more than fifteen. Natural-person incorporators must be of legal age, and each incorporator of a stock corporation must own or subscribe to at least one share. A corporation with a single stockholder is treated as an OPC.

Question 5

What must our Articles of Incorporation contain?

Accepted Answer

The Articles must state, among others, the corporate name, primary and secondary purposes, a principal office in the Philippines, the term if not perpetual, the incorporators and first directors with their nationalities and addresses, and, for stock corporations, the authorized capital, par value and subscriptions. The number of directors cannot exceed fifteen. Use the current SEC form and reconcile every figure before signing.

Question 6

How do we amend our Articles of Incorporation, and who has to approve it?

Accepted Answer

The board approves by majority vote, and stockholders holding at least two-thirds of the outstanding capital stock must vote for or give written assent. Non-voting shares also vote on amendments to the Articles. Dissenting stockholders may have appraisal rights. The amendment takes effect on SEC approval, or six months after filing if the SEC does not act for reasons not attributable to the corporation.

Question 7

Our preferred corporate name is similar to an existing company. Will the SEC accept it?

Accepted Answer

Probably not if the name is not distinguishable. The SEC will not allow a name that is not distinguishable from one already reserved or registered, or that is protected by law. Adding words like Corporation, Inc. or Limited, or changing punctuation, spacing or tense, does not make a name distinguishable. If a registered name is later found non-compliant, the SEC can order the corporation to stop using it.

Question 8

When does our corporation legally come into existence?

Accepted Answer

It begins on the date the SEC issues the certificate of incorporation. Before that, the incorporators submit the proposed name for verification, then file the Articles and bylaws. Anyone who knowingly acts as a corporation without authority can be liable as a general partner for resulting debts. Keep the certificate and accepted documents, then complete BIR, local government and sector registrations.

Question 9

Do we still need to file bylaws, and when do they take effect?

Accepted Answer

Ordinary corporations adopt bylaws either before incorporation, signed by all incorporators and filed with the Articles, or afterwards by stockholders holding a majority of the outstanding capital stock. Either way, the bylaws take effect only when the SEC certifies they conform to the Code. An OPC is not required to file bylaws. Regulated companies need their regulator’s certificate first.

Question 10

How do we amend our bylaws?

Accepted Answer

A majority of the board and stockholders owning at least a majority of the outstanding capital stock may amend or repeal bylaws at a meeting duly called for the purpose. Stockholders holding two-thirds may delegate this power to the board, and a majority of stockholders can revoke that delegation. File the amended bylaws with the SEC; they take effect only on SEC certification.

Question 11

We are two founders. Should we form a partnership or a corporation?

Accepted Answer

Compare liability and governance first. A partnership has its own juridical personality, but partners are liable pro rata with their own property after partnership assets are exhausted. Stockholders of a corporation generally risk only their investment, but the corporation must follow board, stockholder and SEC rules. A partnership with capital of ₱3,000 or more must be in a public instrument recorded with the SEC.

Question 12

What do we need to do right after the SEC issues our certificate?

Accepted Answer

Organize the corporation and complete the registrations that follow SEC. The directors must elect a president, treasurer and corporate secretary, and the election must be reported to the SEC within thirty days. Then register with the BIR, obtain local business permits and sector licenses, open books and bank accounts, and set up a calendar for annual SEC filings.

Question 13

Can we convert our ordinary corporation into an OPC, or our OPC into an ordinary corporation?

Accepted Answer

Yes, both conversions are allowed. When one stockholder acquires all shares of an ordinary corporation, it may apply to convert into an OPC. An OPC may convert into an ordinary stock corporation after notifying the SEC within sixty days of the triggering circumstances and meeting the requirements for stock corporations. In both cases the converted entity remains liable for existing obligations.

Question 14

Can a foreigner own 100% of a Philippine company?

Accepted Answer

Often yes. Under the Foreign Investments Act as amended, a non-Philippine national may invest up to 100% in a domestic enterprise after SEC registration unless the Constitution or a law prohibits or limits foreign participation in that activity. The answer depends on the exact activity, checked against the Constitution, special laws and the current Foreign Investment Negative List.

Question 15

What is the Foreign Investment Negative List, and where do I find the current one?

Accepted Answer

It is the list of activities where foreign ownership is reserved to Filipinos or capped, issued by Executive Order. List A covers limits from the Constitution and specific laws; List B covers limits for reasons such as security, defense, health and protection of small and medium enterprises. Amendments cannot be made more often than every two years. Always check the latest list before structuring.

Question 16

What minimum paid-in capital applies to a foreign-owned company serving the local market?

Accepted Answer

Under the Foreign Investments Act as amended, micro and small domestic market enterprises with paid-in equity below the equivalent of US$200,000 are reserved to Philippine nationals. The threshold drops to US$100,000 if the business involves advanced technology as determined by DOST, is endorsed as a startup or startup enabler, or has a majority of Filipino direct employees, at least fifteen. Special laws may set other figures.

Question 17

Does a 100% foreign-owned exporter need the same minimum capital?

Accepted Answer

Not necessarily. Foreign investment in an export enterprise whose products and services are not in Lists A or B of the Negative List is allowed up to 100%. Export enterprises owned by non-Philippine nationals register with the BOI and must keep meeting their export requirement; if they fail, the SEC or DTI can order domestic sales reduced to not more than 40% of total production.

Question 18

When is a company considered a “Philippine national” for ownership limits?

Accepted Answer

Under the Foreign Investments Act, a corporation organized in the Philippines is a Philippine national when at least 60% of its capital stock outstanding and entitled to vote is owned by Filipino citizens. Layered structures are tested more closely, and the Supreme Court has held that constitutional “capital” in public utilities refers to shares entitled to vote for directors. Map every layer of ownership.

Question 19

Can a foreign-owned corporation own land in the Philippines?

Accepted Answer

Generally no. Apart from hereditary succession, private lands may be transferred only to individuals and corporations qualified to acquire or hold public lands, which in practice means Filipino citizens and corporations at least 60% Filipino-owned. Foreign-owned companies usually lease land or use other lawful arrangements. Do not use nominees to hold land; that can violate the Anti-Dummy Law.

Question 20

Are telecommunications and other public services still limited to 40% foreign ownership?

Accepted Answer

Not all of them. The amended Public Service Act limits the constitutional “public utility” category to listed sectors such as electricity distribution and transmission, petroleum pipeline transmission, water and wastewater pipeline systems, seaports and public utility vehicles. Other public services are no longer public utilities, but critical infrastructure such as telecommunications faces a 50% foreign cap unless reciprocity applies, and national-security reviews.

Question 21

Can foreign investors own an advertising, media or school business?

Accepted Answer

Only within constitutional limits. Mass media must be wholly owned and managed by Filipinos. Advertising companies must be at least 70% Filipino-owned. Educational institutions, other than those established by religious groups and mission boards, must generally be at least 60% Filipino-owned, with control and administration vested in Filipinos. Check whether your activity is classified as one of these.

Question 22

My Filipino partner holds shares for me but I paid for them. Is that legal?

Accepted Answer

No, not if it is used to get around a nationality restriction. The Anti-Dummy Law punishes Filipinos who allow their name or citizenship to be used to evade nationality rules, the foreigners who profit, and those who simulate Filipino ownership. A Filipino holder with no assets equal to the holdings is evidence of a violation. Penalties include imprisonment and forfeiture. Get advice and restructure lawfully.

Question 23

What warning signs suggest our ownership structure has an Anti-Dummy problem?

Accepted Answer

Common red flags are Filipino shareholders who did not fund or control their investment, side agreements giving a foreign investor undisclosed voting or management control, repayment or trust arrangements, and records that do not match across the GIS, stock and transfer book and beneficial-ownership filings. The law looks at substance, funding and control. Pause and get advice before closing.

Question 24

Do we have to report who really owns and controls our company?

Accepted Answer

Yes. Corporations must keep records of their current ownership structure and voting rights, including group structures, intra-group relations and beneficial ownership, and the GIS discloses beneficial owners. Beneficial ownership means the natural persons who ultimately own or control the company, including through nominees, trusts or agreements. Use the current SEC form and definitions, which are set by SEC rules.

Question 25

Should a foreign company open a branch or set up a Philippine subsidiary?

Accepted Answer

It depends on liability, control and the activity. A branch is part of the foreign company, so the head office is directly exposed, and it needs an SEC license and a resident agent. A subsidiary is a separate domestic corporation with its own board, and liabilities are generally contained there. Both are subject to the same foreign-ownership limits on the activity.

Question 26

What happens if a foreign corporation does business here without a license?

Accepted Answer

It cannot sue or intervene in any Philippine court or administrative case, though it can still be sued. The Foreign Investments Act defines doing business broadly, covering soliciting orders, service contracts and opening offices, but mere investment as a shareholder in a domestic corporation does not count. Get the license before operating, and appoint a resident agent.

Question 27

Who actually runs a corporation: the board, the officers or the shareholders?

Accepted Answer

The board. Unless the Code provides otherwise, the board of directors exercises the corporate powers, conducts all business and controls corporate property. Officers manage day-to-day work under the bylaws and board resolutions. Stockholders elect directors and approve major acts reserved to them, such as amending the Articles or selling substantially all assets.

Question 28

How long is a director’s term, and must a director own shares?

Accepted Answer

Directors are elected for a one-year term and hold office until their successors are elected and qualified. They must be holders of shares registered in the corporation’s books, and a director who stops owning at least one share ceases to be a director. Trustees of nonstock corporations serve up to three years. Check the bylaws for added qualifications.

Question 29

How does cumulative voting work in electing directors?

Accepted Answer

Each voting stockholder may multiply their shares by the number of directors to be elected and give all those votes to one candidate or spread them among several. The total cannot exceed shares owned times seats, and delinquent stock cannot vote. Owners of a majority of the outstanding capital stock must be present for the election, and nominees with the most votes win.

Question 30

Which officers must every corporation have, and who can hold them?

Accepted Answer

The board must elect a president, who must be a director; a treasurer, who must be a resident; a corporate secretary, who must be a Philippine citizen and resident; and any other officers the bylaws require. Corporations vested with public interest also need a compliance officer. One person may hold several posts, but not president and secretary, or president and treasurer, at the same time.

Question 31

What is the quorum and vote needed for a valid board decision?

Accepted Answer

Unless the Articles or bylaws require more, a majority of the number of directors stated in the Articles is a quorum, and a majority of the directors present at a meeting with quorum can approve corporate acts. Electing officers needs a majority of all board members. Some transactions need extra stockholder approval or higher thresholds, so check the specific rule first.

Question 32

How much notice do directors need before a board meeting?

Accepted Answer

Notice stating the date, time and place must go to every director at least two days before the meeting, unless the bylaws require longer. A director can waive notice expressly or impliedly. Regular board meetings are held monthly unless the bylaws say otherwise, special meetings may be called by the president or as the bylaws provide, and meetings may be held inside or outside the Philippines.

Question 33

Can a director attend a board meeting by Zoom or vote by proxy?

Accepted Answer

Remote attendance is allowed; proxies are not. Directors who cannot physically attend may participate and vote through videoconferencing, teleconferencing or other modes that give a reasonable chance to participate. Directors cannot attend or vote by proxy. Record who joined remotely, how identity was checked and how each director voted, and follow any applicable SEC rules on remote meetings.

Question 34

How do we remove a director?

Accepted Answer

Stockholders holding at least two-thirds of the outstanding capital stock may remove a director, with or without cause, at a regular meeting or a special meeting called for the purpose, after notice of the intention to remove. Removal without cause cannot be used to defeat minority representation under cumulative voting. The SEC can also order removal of a disqualified director.

Question 35

A director resigned. Who fills the vacancy?

Accepted Answer

If the remaining directors still form a quorum, a majority of them can fill a vacancy that did not arise from removal or term expiry, and the replacement serves only the unexpired term. Otherwise the stockholders fill it at a meeting. Vacancies from removal are filled by stockholders, and seats created by increasing the board need a stockholder election. Report the cessation to the SEC within seven days.

Question 36

Who is disqualified from being a director or officer?

Accepted Answer

Anyone who, within five years before election or appointment, was convicted by final judgment of an offense punishable by more than six years’ imprisonment, of violating the Revised Corporation Code or of violating the Securities Regulation Code; found administratively liable for fraud; or similarly sanctioned abroad. The SEC and other regulators may add qualifications. Screen candidates before the election.

Question 37

Can our directors pay themselves a salary as directors?

Accepted Answer

Only if the bylaws provide for it or stockholders representing at least a majority of the outstanding capital stock approve it. Without that, directors receive only reasonable per diems. Directors cannot take part in deciding their own pay, and total yearly director compensation cannot exceed 10% of the corporation’s net income before income tax for the preceding year. Pay as officers is a separate matter.

Question 38

Can I be held personally liable as a director for company losses?

Accepted Answer

Not automatically. Directors are jointly and severally liable for resulting damages if they willfully and knowingly vote for or assent to patently unlawful acts, act with gross negligence or bad faith, or acquire personal or pecuniary interests in conflict with their duty. Special laws can also impose personal liability. Ask questions, document your reasons, and record any dissent in the minutes.

Question 39

Can our company sign a contract with one of its directors or their relatives?

Accepted Answer

Yes, but the contract is voidable unless all conditions are met: the director was not needed for quorum, their vote was not needed for approval, the contract is fair and reasonable, independent-director approval where required, and prior board authorization for officers. If any of the first three is missing, stockholders holding two-thirds may ratify after full disclosure.

Question 40

A director took a business deal that should have gone to the company. What can the company do?

Accepted Answer

The director must account for and refund to the corporation all profits from a business opportunity acquired by reason of the office, even if the director used personal funds. This applies unless stockholders owning at least two-thirds of the outstanding capital stock ratify the act. Gather board records and communications showing how the opportunity arose before demanding an accounting.

Question 41

Can an officer sign a contract just because of their title?

Accepted Answer

Do not rely on the title alone. Officers manage the corporation and act under the bylaws and board resolutions, and the board exercises corporate powers. A counterparty should check the bylaws, the specific board resolution, and usually a secretary’s certificate showing the signer’s authority. Some transactions also need stockholder approval or regulatory consent before anyone signs.

Question 42

What documents prove that a corporate decision was validly approved?

Accepted Answer

Keep the notice and proof of delivery, the agenda and board materials, the attendance and quorum record, conflict disclosures and recusals, the minutes showing the vote, the signed resolution, a secretary’s certificate for third parties, and evidence of implementation such as the signed contract or filing receipt. Corporations must preserve resolutions and minutes as corporate records.

Question 43

What does the SEC require every corporation to file every year?

Accepted Answer

Every corporation, domestic or foreign, doing business in the Philippines must submit annual financial statements and a General Information Sheet. Corporations vested with public interest also file director compensation and director appraisal reports. The Code leaves filing periods to the SEC, so confirm the current schedule, form and portal in the latest SEC issuance before relying on a date.

Question 44

What is the General Information Sheet, and what goes in it?

Accepted Answer

The GIS is the annual SEC disclosure of the corporation’s current details: registration and principal office, fiscal year and meeting date, directors and officers, capital, stockholders and beneficial owners. Reconcile it with the stock and transfer book and minutes before signing. Filing periods follow current SEC rules, typically tied to the annual meeting, so check the latest announcement.

Question 45

Do our financial statements have to be audited?

Accepted Answer

Usually yes. The Code requires annual financial statements audited by an independent CPA, but if total assets or total liabilities are less than ₱600,000, they may be certified under oath by the treasurer or chief financial officer instead. SEC rules and other regulators may set different thresholds or attachments, so check the current SEC requirements and your BIR obligations separately.

Question 46

What happens if we keep missing our GIS and AFS filings?

Accepted Answer

The SEC may place the corporation under delinquent status if it fails to submit reportorial requirements three times, consecutively or intermittently, within five years. It can also impose administrative sanctions after notice and hearing, including fines and suspension or revocation of registration. Penalty amounts follow current SEC rules, so check the latest SEC issuance and fix gaps early.

Question 47

Our corporation was declared delinquent or its registration revoked. Can we fix it?

Accepted Answer

Often yes, but late filing alone may not restore good standing. Get the SEC order or record showing your exact status, list missing reports, and follow the current SEC procedure for lifting delinquency or petitioning to lift a revocation, including penalties. A delinquent corporation that stopped operating has two years to resume and comply, or its certificate is revoked.

Question 48

We elected new officers. Do we need to tell the SEC?

Accepted Answer

Yes. Within thirty days after the election, the secretary or another officer must submit to the SEC the names, nationalities, shareholdings and residence addresses of the directors and officers elected. If a director, trustee or officer dies, resigns or otherwise ceases to hold office, the SEC must be told in writing within seven days from knowledge. Update the GIS as current SEC rules require.

Question 49

What corporate records must we keep at our principal office?

Accepted Answer

Keep the Articles, bylaws and amendments; current ownership and voting structure including beneficial ownership; names and addresses of directors and executive officers; a record of business transactions; board and stockholder resolutions; copies of the latest SEC reports; and minutes of all meetings. Stock corporations must also keep a stock and transfer book. Records may be in any form.

Question 50

Can we keep confidential information out of our SEC reports?

Accepted Answer

Yes, through a supplemental filing. A person required to file a report may redact confidential information, provided it is filed in a separate supplemental report prominently labelled “confidential”, with a request for confidential treatment and the specific grounds. The SEC decides whether to grant it. Do not simply leave required data out of the GIS or AFS.

Question 51

How do I build a compliance calendar for a new corporation?

Accepted Answer

Start with the company profile: SEC registration number and date, entity type, fiscal year, annual meeting date, capital, ownership and regulated activities. Then make one row per obligation with its legal basis, trigger, owner, approver, deadline, filing route and proof of acceptance. Verify each date against the current SEC rule rather than copying last year’s calendar.

Question 52

How do we prove we actually filed with the SEC?

Accepted Answer

Keep the signed source document, the submitted file, the filing receipt and the acceptance or validation message, plus the name of the person who filed and the date. A filing is not complete in practice until you can show it was accepted. The Code also requires copies of the latest reportorial requirements to be kept with corporate records at the principal office.

Question 53

Can the SEC fine or close our company for violating the Code?

Accepted Answer

Yes. After notice and hearing, the SEC may impose fines, permanent cease and desist orders, suspension or revocation of the certificate of incorporation, and dissolution with forfeiture of assets in cases under the dissolution rules. It weighs participation, nature, effects, frequency and seriousness. Specific penalty schedules for late filings are set by current SEC rules, so check the latest issuance.

Question 54

Where should I start if I am new to CorporateCode.ph and need to fix our compliance?

Accepted Answer

Start with the decision you face, then move to the matching hub. For annual filings, begin with the SEC Compliance hub and the compliance calendar tools; for approvals, use Corporate Governance; for ownership questions, use Shares and Shareholders or Foreign Investment. Each guide points to the controlling law and the records you need. Confirm current SEC forms, fees and deadlines on official channels.

Question 55

I bought shares but the corporation has not recorded the transfer. Am I already a stockholder?

Accepted Answer

Only between you and the seller. Shares transfer by delivery of the endorsed certificate, but no transfer is valid against the corporation and third parties until it is recorded in the corporation’s books, showing the parties, date, certificate numbers and shares transferred. Until recording, the corporation may treat the seller as the stockholder. Ask the corporate secretary to record it.

Question 56

Can the corporation refuse to register my share transfer?

Accepted Answer

It can refuse if the shares have an unpaid claim against them, since such shares are not transferable in the corporation’s books. It can also enforce valid transfer restrictions that appear in the Articles, bylaws and certificate. Otherwise, refusing to record a valid transfer may be challenged as an intra-corporate dispute. Keep the endorsed certificate, deed and tax proof.

Question 57

What documents do we need to complete a share transfer?

Accepted Answer

Typically a signed deed or instrument of transfer, the endorsed certificate surrendered for cancellation, proof of payment and of the tax filings the BIR requires, any corporate consent required by valid restrictions, the new certificate, the stock and transfer book entry, and updated beneficial-ownership records. Check foreign-ownership limits after the transfer, and the current BIR requirements.

Question 58

What is the stock and transfer book, and why does it matter?

Accepted Answer

It is the stock corporation’s register of stockholders, arranged alphabetically, with installments paid and unpaid on subscriptions and every sale or transfer of shares. It is the record that makes a transfer effective against the corporation. Keep it at the principal office, current and consistent with the GIS and beneficial-ownership records.

Question 59

Can we restrict who our shareholders can sell their shares to?

Accepted Answer

Yes, within limits. Transfer restrictions must appear in the Articles, the bylaws and the stock certificate, or they do not bind a purchaser in good faith. In a close corporation, restrictions cannot be more onerous than giving existing stockholders or the corporation an option to buy before a sale to outsiders. Shareholders’ agreements are useful but may not bind outsiders alone.

Question 60

I lost my stock certificate. How do I get a replacement?

Accepted Answer

File with the corporation an affidavit in triplicate explaining how it was lost, stolen or destroyed, with the certificate number and shares. After verification, the corporation publishes notice once a week for three consecutive weeks at your expense. If no contest is filed within one year from the last publication, a new certificate is issued; posting an acceptable bond lets it issue earlier.

Question 61

Can I get a stock certificate even if I have not fully paid my subscription?

Accepted Answer

No. A certificate of stock cannot be issued to a subscriber until the full subscription, plus any interest and expenses for delinquent shares, is paid. Unpaid shares that are not delinquent still carry all stockholder rights, including voting. Once the board calls the balance and it remains unpaid thirty days after the due date, the shares become delinquent unless the board orders otherwise.

Question 62

Can we issue shares in exchange for property or services instead of cash?

Accepted Answer

Yes. Valid consideration includes cash, property actually received, services actually rendered, previously incurred corporate debt, retained earnings capitalized, and shares of another corporation, among others. Shares cannot be issued for promissory notes or future services, or below par or issued value. Non-cash consideration is initially valued by the stockholders or board, subject to SEC approval.

Question 63

Do existing shareholders get first priority to buy new shares?

Accepted Answer

Generally yes. Stockholders have a pre-emptive right to subscribe to all issues of shares in proportion to their holdings, unless the Articles deny it. The right does not apply to shares issued to comply with laws requiring public offerings or ownership, or shares issued in good faith, with two-thirds stockholder approval, for property needed by the corporation or to pay prior debts.

Question 64

How does a corporation increase its authorized capital stock?

Accepted Answer

It needs a majority vote of the board and approval of stockholders holding two-thirds of the outstanding capital stock at a meeting called for the purpose, with written notice. A certificate signed by a majority of directors and countersigned by the meeting chair and secretary, showing compliance and subscriptions, is filed. Prior SEC approval is required, and existing shareholders may have pre-emptive rights.

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