How to Close and Deregister a Corporation in the Philippines (SEC & BIR Clearance)

This guide walks you end-to-end through dissolving a Philippine domestic corporation, liquidating its assets, and securing clearances from the Securities and Exchange Commission (SEC) and the Bureau of Internal Revenue (BIR). It also covers LGU permits, employee off-boarding, and practical timelines. This is general information—not legal advice. Procedures and forms can change; always confirm with your SEC Company Registration and Monitoring Department (CRMD) office and your BIR Revenue District Office (RDO).

The big picture

Closing a Philippine corporation generally involves four tracks that you’ll run in sequence but with some overlap:

Corporate dissolution and liquidation (company law): Board and stockholder approval → file with SEC → receive Certificate of Dissolution → wind up and distribute assets.
Tax closure and audit (tax law): File final/“short-period” tax returns, settle liabilities, cancel BIR registrations, and obtain BIR tax clearance (a.k.a. “no liability” for closure).
Local permits & regulatory closures: Cancel Mayor’s/Business Permit, Barangay clearance, and any sectoral licenses (e.g., PEZA, BOI, FDA, BSP, DOE, DICT, Insurance Commission, CDA for subsidiaries, etc.).
Employment & operational wind-down: DOLE notices, final pay/separation pay, vendor/lease terminations, bank account closure, records retention.

Key decision: Which type of dissolution applies?

The Revised Corporation Code of the Philippines (RCC) provides several routes. Choose the one that fits your case:

Voluntary dissolution (no creditors affected) You can certify that no creditors are prejudiced. Typical when the corporation has no unpaid third-party debts or has settled all of them.
Voluntary dissolution (with creditors affected) Used if there are outstanding liabilities or creditor interests could be affected. Expect a more formal process (e.g., public notice and opportunity for creditors to object) before SEC grants dissolution.
Dissolution by shortening the corporate term Amend the Articles of Incorporation to set an earlier expiry date. On the new expiry date, the corporation is deemed dissolved and then enters the liquidation period.
Involuntary dissolution / revocation (by SEC) For statutory grounds (e.g., fraud, persistent non-filing). You still need to liquidate and address taxes; revocation is not a “free pass” on liabilities.

Three-year winding-up rule: After dissolution takes effect, the corporation continues as a body corporate for up to three (3) years solely to wind up: collect and pay debts, dispose of property, and distribute remaining assets. It may sue/be sued during this period, but cannot continue business.

Pre-closure planning checklist

Financials current: Audited FS and books updated through your intended cessation date.
Tax compliance current: All periodic returns filed (CIT, VAT/percentage tax, withholding, excise if any), reconciliations done.
Assets & liabilities plan: Which liabilities will be paid; how remaining assets will be sold or distributed; how to handle real property and shares (taxes and documentary requirements).
Employment plan: DOLE and employee notices, final pay and separation pay (if applicable), clearance and COE issuance.
Document inventory: Articles/By-laws and amendments, latest GIS and AFS, board/stockholder minutes, contracts/leases/loans, SEC/BIR/LGU permits, ATP and unused OR/SI, books of accounts.
Banking: Signatory authority for closure period; destination accounts for distributions; plan for bank account closure.
Records retention: Where statutory books and records will be kept (see “Records retention” below).

SEC dissolution – step by step

A. Voluntary dissolution (no creditors affected)

Board approval Board approves a resolution to dissolve and call a stockholders’ meeting.
Stockholders’ approval At least two-thirds (2/3) of outstanding capital stock (or members for non-stock) approve dissolution via stockholders’ meeting or written consent, with proper notice and quorum.
Notice & publication Give written notice to stockholders/members within statutory timelines. Publication requirements apply (generally, notice of the planned dissolution meeting and/or the approved dissolution). Keep proofs (affidavits of publication and posting, if required).
SEC filing Submit to SEC (CRMD) the verified request or application for dissolution with:
- Cover sheet / application form (SEC-prescribed)
- Board and stockholders’ resolutions and secretary’s certificates
- Affidavit stating no creditors will be affected (or that all have been settled)
- Latest AFS and GIS
- Proofs of notice/publication
- Monitoring clearances if your company is under special supervision (e.g., publicly listed, financing/lending, etc.)
- Government ID of signatories and proof of authority Pay SEC filing fees (often minimal for dissolution itself; monitoring fees may apply).
SEC action If complete, SEC issues a Certificate of Dissolution. The corporation enters liquidation (the 3-year winding-up window).

B. Voluntary dissolution (creditors affected)

Steps 1–2 as above, plus a more formal SEC process:

Petition & publication File a verified petition for dissolution. The SEC sets publication/notice and a date for opposition. Creditors may file objections.
Hearing / evaluation The SEC evaluates objections and may require settlement arrangements or a liquidator/trustee.
Order granting dissolution Once satisfied, SEC issues the Order/Certificate of Dissolution and the corporation proceeds to liquidation.

C. Dissolution by shortening corporate term

Amend the Articles to set an earlier expiry date (board + 2/3 stockholders).
File amendment with SEC; upon issuance of the Certificate of Filing of Amended Articles, the corporation’s term ends on the chosen date.
On expiry, the corporation is deemed dissolved and proceeds to liquidation.

Liquidator or trustees: The board may act as liquidator unless stockholders appoint a trustee or the SEC/Court requires one.

Liquidation & distributions (after SEC dissolution)

Collect receivables and realize assets (sell or assign).
Pay creditors in order of priority (secured → preferred → unsecured).
Resolve contingencies (tax assessments, refunds, lawsuits).
Distribute remaining assets to stockholders pro-rata after all liabilities and liquidation expenses are settled.
Issue quitclaims/receipts and stock surrender documentation.

BIR closure & tax clearance – step by step

Goal: Cancel tax registrations (CIT, VAT/percentage tax, withholding, ATP), file final returns, settle liabilities, and obtain a BIR Tax Clearance for closure/cessation.

The BIR process often drives the overall timeline because the RDO may conduct a post-evaluation or audit before issuing clearance.

File registration update / cessation
- Submit BIR Form 1905 (Application for Registration Information Update) to your RDO indicating closure/cessation and cancellation of tax types (e.g., VAT, withholding).
- Attach board/stockholder resolutions, SEC dissolution documents (or at least the filed application/board resolution if processing in parallel), IDs of authorized representative (SPA), and Inventory of unused invoices/receipts.
Surrender Authority to Print (ATP) and unused OR/SI
- Surrender unused official receipts/sales invoices for cancellation, together with Printer’s Certificate of Delivery (PCD) if available.
- Update Books of Accounts (present for stamping of closure/cancellation).
File “short-period” and final tax returns (and pay any tax due)
- Corporate Income Tax (CIT) up to the date of cessation/dissolution.
- VAT or Percentage Tax final/terminal return.
- Withholding Taxes (compensation, expanded, final) through last payroll/payment cycle; include Alphalists.
- Excise or other special taxes, if applicable.
- If disposing of real property: 6% CGT on the higher of zonal/assessed value vs. selling price; plus DST and local transfer taxes.
- If distributing or selling shares (unlisted): 15% capital gains tax on net gain; for listed shares: stock transaction tax.
- If transferring assets to shareholders as liquidating distribution, treat as sale/exchange for income tax purposes (gains may arise).
Compliance substantiation Be ready with:
- Latest AFS and trial balance up to cessation date
- VAT/percentage tax and withholding reconciliations vs. books
- Proofs of remittances (e.g., Form 0619/1601/2550/2551, etc.)
- Inventory lists and asset disposal documents
- Payroll registers and final pay computations (taxed correctly)
BIR post-evaluation/audit The RDO may review returns and books (desk or field). Address findings, deficiency assessments, or letter notices promptly.
Issuance of BIR Tax Clearance Once satisfied that all liabilities are settled and registrations are cancelled, the RDO issues a Tax Clearance for closure (sometimes called a “Letter of No Liability”/“Tax Clearance for Business Cessation”).

Tip on sequencing: You can start BIR closure right after the board/stockholder approvals (using those resolutions), then submit the SEC Certificate of Dissolution when issued. This parallel path often shortens the overall timeline, but follow your RDO’s preference.

Local government & other off-boarding

Mayor’s/Business Permit & Barangay Clearance: Apply for cancellation and secure a retirement/closure clearance from City/Municipality Treasurer (often after settling local business taxes up to cessation).
Sectoral licenses: PEZA/BOI de-registration, FDA license retirement (LTO/CPR), DOE, DICT, BSP, Insurance Commission, etc.—as applicable. Some regulators require tax clearance or SEC proof before approving retirement.
SSS, PhilHealth, Pag-IBIG: De-register as an employer; submit final payroll and settle contributions/penalties, if any.
DOLE: See next section.
Banks & utilities: Close accounts and terminate services after final settlements and cheque clearances.

Employees: DOLE, notices, and separation pay

30-day advance notice to DOLE and to employees for closure/cessation of business (Labor Code, current numbering Art. 298 / old Art. 283).
Separation pay:
- If closure is not due to serious business losses, pay at least one-half (1/2) month pay per year of service or one (1) month pay, whichever is higher (fraction ≥ six months counts as a year).
- If closure is due to serious business losses duly proven, separation pay may not be required.
Final pay: Release within statutory timelines (wages, unused leave if convertible, 13th month differential, tax-corrected).
Provide Certificates of Employment and quitclaims (properly explained and voluntarily executed).

Contracts, leases, and creditors

Landlord & key vendors: Observe termination clauses and notice periods.
Secured creditors: Coordinate lien releases upon payment.
Outstanding liabilities: Aim to fully settle before applying for the “no creditors affected” route; otherwise, use the “creditors affected” petition and/or appoint a liquidator to manage settlements.

Records retention (keep these even after closure)

Books of accounts, OR/SI, and tax returns: Keep for at least 10 years (best practice; retain electronic backups).
Corporate records: Minutes, resolutions, Articles/By-laws, share register, liquidation accounts, proofs of distribution, SEC/BIR/LGU clearances.
Employment records: Payroll, SSS/PhilHealth/Pag-IBIG remittances, DOLE notices.

Taxes on liquidation—practical highlights

Income tax: Gains on sale of assets recognized by the corporation.
Liquidating distributions:
- For shareholders, generally treated as return of capital up to basis; excess over basis is gain (for individuals, capital gains if shares are capital assets).
- Unlisted shares: 15% CGT on net gains; listed: stock transaction tax.
Real property transferred to shareholders: 6% CGT on higher of FMV vs. selling/transfer value; DST and local transfer taxes apply.
Movable assets: Possible VAT on sale (if VAT-registered and asset is part of trade/business); otherwise percentage tax rules apply.
Withholding: Observe final/expanded withholding on final payments to vendors and on certain distributions (e.g., to non-residents per tax treaty/Tax Code).

Typical timeline & sequencing (illustrative only)

Week 0–2: Board & stockholder approvals; initiate DOLE & creditor notices; file SEC dissolution or Articles amendment (shorten term).
Week 1–4: File BIR Form 1905, surrender OR/SI, stamp books; start final returns; start LGU retirement.
Week 4–12+: BIR post-evaluation/audit; settle assessments; SEC issues Certificate of Dissolution (depending on route).
Week 8–16+: Secure BIR Tax Clearance; complete LGU and regulator retirements; finalize distributions; close bank accounts.

Durations vary widely by RDO/SEC workload, completeness of records, and whether assets need sale and taxes on transfers.

Fees, penalties, and money-savers

SEC: Filing fees for dissolution/amendment; publication costs (if applicable).
BIR: No “fee” for closure, but deficiencies (if any), surcharges/interest, and taxes on asset disposals can be material.
LGU: Final business tax up to cessation plus clearance fees.
Savings tip: Time the cessation near quarter/period ends to simplify final returns; reconcile books vs. e-filings early to avoid audit delays.

Common pitfalls (and how to avoid them)

Unfiled returns / open tax types: Ensure every active tax type has a final return and then cancel it in 1905.
Forgotten OR/SI: All unused receipts/invoices must be surrendered for cancellation; keep cancellation proofs.
No DOLE notice: Missing employee/DOLE notices risks labor claims and penalties.
Skipping publication (when required): Can stall SEC action.
Asset transfers after dissolution without tax planning: Map CGT/VAT/DST before distributing assets.
Bank accounts closed too early: Leave one account open for final tax payments and refunds, then close last.

Minimal templates (skeletons)

Board Resolution (extract)

Approves dissolution (or amendment to shorten term).
Calls stockholders’ meeting (or written assent).
Authorizes officers/representatives (with SPA) to file with SEC, BIR, LGU.

Stockholders’ Resolution (extract)

Confirms dissolution by ≥ 2/3 vote (or approves term amendment).
Appoints liquidator / authorizes board to act as liquidator.
Approves plan of liquidation and distribution.

Special cases

One Person Corporation (OPC): The sole stockholder executes the dissolution instruments; creditor/publication rules still apply depending on whether creditors are affected.
Foreign corporation (branch/RO): Apply with SEC to surrender license; liquidate Philippine assets; obtain BIR tax clearance; cancel LGU permits; then close bank accounts.
Merger/Consolidation: The absorbed entity is dissolved without liquidation; ensure transfer taxes and BIR clearance for the transaction.

Practical document checklist

Board & stockholder resolutions with secretary’s certificates
Affidavits (no creditors affected / list of creditors and settlement status)
SEC forms and proof of publication (if applicable)
Latest AFS and GIS, books of accounts
BIR Form 1905, final/short-period returns, Alpha lists
Inventory & surrender receipts for OR/SI and ATP cancellation
DOLE notices, payroll and final pays; separation computations
LGU retirement application and clearances
Liquidation schedule, receipts for creditor payments and asset sales
Distribution documents to stockholders; quitclaims/receipts
Bank closure letters and confirmations

FAQs

Q: Should we finish SEC before BIR, or vice-versa? A: You can start both. Many RDOs accept a dissolution resolution while SEC is processing; they will ask for the SEC Certificate of Dissolution before issuing tax clearance.

Q: Can we dissolve if we still have debts? A: Yes, but use the “creditors affected” route (or settle first). SEC may require notices/opportunity to object and could require a liquidator.

Q: Are stockholders taxed on liquidating distributions? A: Generally yes, to the extent distributions exceed their basis in the shares. Unlisted-share gains are typically subject to 15% CGT; real property transfers may trigger 6% CGT plus DST and local transfer taxes.

Q: After dissolution, can we still sign contracts? A: Only to wind up (collect receivables, sell assets, pay debts, distribute residuals), not to carry on new business.

Final reminders

Keep a master file of all closure documents and official receipts; they are often requested later (banking, shareholder personal taxes, or due diligence).
Confirm current forms and submission channels (some SEC/BIR processes are now hybrid/electronic in certain districts).
If your corporation had special registrations (e.g., VAT refund applications, incentive availments), align closure timing to avoid forfeiting claims.

If you want, tell me your specific company profile (industry, incentives, VAT status, creditors, real properties, listed/unlisted shares), and I’ll tailor a step-by-step filing pack (SEC/BIR/LGU) with a sequenced checklist you can follow.