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This article was originally published on May 4, 2018 and has been updated to reflect recent legal developments.
The following post does not create a lawyer-client relationship between Alburo Alburo and Associates Law Offices (or any of its lawyers) and the reader. It is still best for you to engage the services of a lawyer or you may directly contact and consult Alburo Alburo and Associates Law Offices to address your specific legal concerns, if there is any.
Also, the matters contained in the following were written in accordance with the law, rules, and jurisprudence prevailing at the time of writing and posting, and do not include any future developments on the subject matter under discussion.
AT A GLANCE:
Every starting entrepreneur has to consider the business organization that will carry out the business he is about to establish. Considering that there are several ways by which a business may be organized, one has to at least be familiar, if not equipped with full working knowledge, as to the nature and characteristics of each of his options, and how it will affect the way he does business. Among the options that an entrepreneur may choose is to form a corporation, which is defined by law. Among the options that an entrepreneur may choose is to form a corporation, which is defined by law as an artificial being created by operation of law, having the right of succession and the powers, attributes, and properties expressly authorized by law or incidental to its existence (Sec. 2 of the Revised Corporation Code).
Creation of Corporation
Section 10 of the Revised Corporation Code provides, any person, partnership, association or corporation, singly or jointly with others but not more than fifteen (15) in number, may organize a corporation for any lawful purpose or purposes: Provided, That natural persons who are licensed to practice a profession, and partnerships or associations organized for the purpose of practicing a profession, shall not be allowed to organize as a corporation unless otherwise provided under special laws. Incorporators who are natural persons must be of legal age.
Each incorporator of a stock corporation must own or be a subscriber to at least one (1) share of the capital stock.
Basic steps and requirements in registration
One may register a corporation online through the SEC’s Electronic Simplified Processing of Application for Registration of Company (eSPARC) by logging in at esparc.sec.gov.ph
The registrant shall first create an account with eSECURE (iampub.sec.gov.ph), which will be used in registering the corporation. After the creation of an account, you may now proceed with the registration of the corporation.
The registrant will be required to accomplish online forms by filling up the blank spaces that will be provided, and by choosing from among the various options available through pull-down menus. The process is pretty much straightforward, and all the registrant has to do is to proceed as instructed.
Submission of documents and payment of fees
After accomplishing the necessary online forms, you will be required to pay the filing fees online. After payment, the following document wills be generated by the system:
- Cover Sheet
- Articles of Incorporation
- By-laws
- Application Summary Form
- Certificate of Authentication
- Proof of Payment
Once generated, print them and submit them to the nearest SEC Satellite Office.
The documents submitted will be evaluated, and confirmation will be sent through email.
Once the corporation is successfully registered and a Certificate of Incorporation is issued, the corporation is deemed to have been born, and it starts to possess a personality separate and distinct from its incorporators, stockholders, directors, officers, and all other persons composing it.
Corporate business operations
After incorporation, there is a need for the corporation to commence its business operations as a condition of continued corporate existence. If a corporation does not formally organize and commence its business within five (5) years from the date of its incorporation, its certificate of incorporation shall be deemed revoked as of the day following the end of the five (5)-year period.
However, if a corporation has commenced its business but subsequently becomes inoperative for a period of at least five (5) consecutive years, the Commission may, after due notice and hearing, place the corporation under delinquent status.
A delinquent corporation shall have a period of two (2) years to resume operations and comply with all requirements that the Commission shall prescribe. Upon compliance by the corporation, the Commission shall issue an order lifting the delinquent status. Failure to comply with the requirements and resume operations within the period given by the Commission shall cause the revocation of the corporation’s certificate of incorporation. (Sec. 21)
With this, it is imperative for every entrepreneur to actually engage in business and to remain in business for the corporation to continue existing. That’s precisely the point in creating a corporation, anyway. At any rate, such registration with the SEC would be the start. Entrepreneurs, therefore, are better off not only knowing how to run their corporate businesses, but also as to how they would begin doing corporate business in the first place, through registration.
Related Articles:
- CERTIFICATE OF AUTHENTICATION IN LIEU OF NOTARIZATION OF ARTICLES OF INCORPORATION
- Bylaws and the Corresponding Voting Requirements under the Revised Corporation Code
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Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries regarding legal services, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/ 09175772207/ 09778050020.
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