What the Implementing Rules & Regulations (IRR) require and how to comply

The Revised Corporation Code of the Philippines (RCC) modernized corporate law when it took effect in 2019. The Implementing Rules and Regulations (IRR)—issued through SEC rules, memorandum circulars, and guidelines—operationalize the statute’s policies: digital registration, flexible governance, stronger shareholder/creditor protection, and proportionate enforcement. This article synthesizes what the IRR require in practice, organized by the corporation life cycle and special regimes.

I. Formation & Registration

1) Who may incorporate

Regular stock/non-stock corporations: 2–15 incorporators (natural or juridical persons, domestic or foreign), except where special laws say otherwise.
One Person Corporation (OPC): A single stockholder who is a natural person, a trust, or an estate. Government-owned or -controlled corporations (GOCCs) and banks/insurance companies follow special charters/laws.
Professional corps: Allowed if not barred by the profession’s special laws.

IRR practice points

No minimum authorized capital unless a special law imposes it.
Treasurer-in-Trust (TIT) may be designated at incorporation to attest to paid-in capital; the TIT can be the single stockholder in an OPC.
Digital-first filing: Name reservation, articles, bylaws, and payment are lodged through SEC’s online portals. Electronic signatures and e-stamps are recognized where the IRR so provide.

2) Corporate name & registrations

Name must be distinguishable, not deceptive or contrary to law, and must carry the proper suffix (Inc., Corp., OPC, Foundation, etc.).
Sensitive terms (e.g., “Bank,” “Insurance,” “University”) require prior authority from the concerned regulator.
Business purpose must be specific enough for regulatory screening; “primary” vs “secondary” purposes matter for licensing and related-party rules.

3) Articles & bylaws essentials

Primary purpose, principal office, term (default perpetual, unless a fixed term is chosen), capital structure, and number/qualifications of directors/trustees.
Arbitration clause in the articles or bylaws is enforceable for intra-corporate disputes (except those reserved to regulatory agencies or criminal matters).
Electronic notices and digital stock/transfer books are recognized if properly authorized.

II. Capital Structure, Shares, and Funding

1) Shares & subscriptions

Par or no-par shares allowed (banks/insurance/public-interest entities often restricted by special laws).
Pre-emptive right exists by default for new issuances proportionate to holdings unless denied or limited in the articles or the issuance falls under recognized exceptions (e.g., shares issued for property needed for corporate purposes).
Cumulative voting is mandatory for electing directors in stock corporations.

2) Paid-in capital & watered stock

Directors/officers who consent to or fail to object to issuing shares for less than par/stated value can be solidarily liable for the water (deficiency).
Delinquency arises when subscriptions are unpaid after call; remedies include sale of delinquent shares following notice and publication requirements.

3) Restrictions & transfers

Close corporations may impose transfer restrictions and allow greater shareholder control (e.g., dispensing with a board), but must state it expressly in the articles and stay within shareholder count and public offering limits.
Foreign ownership ceilings (e.g., land, mass media, utilities) still apply; the Foreign Investment Negative List controls.

III. Corporate Governance Under the IRR

1) Directors, trustees, and officers

Board size: As fixed in the articles/bylaws (stock corps: up to 15; OPC has no board, the single stockholder acts as director).
Qualifications/disqualifications: Fit-and-proper standards; disqualification grounds include fraud, convictions for moral turpitude, repeated violations of the RCC/IRR/SEC rules, and administrative offenses indicating unfitness.
Compensation cap: Directors’ compensation limited to 10% of net income before tax in a fiscal year, unless shareholders approve otherwise as permitted by law.
Required officers: President, Treasurer, and Corporate Secretary (must be a Philippine resident; the secretary must be a citizen). Compliance Officer is required for corporations vested with public interest (CVPI).

2) Meetings, remote participation, and emergency board

Remote/virtual meetings of shareholders and boards are expressly allowed if authorized by the bylaws or board resolution with guidelines for quorum, verification of identity, and voting.
Quorum is based on outstanding capital stock/actual trustees in office; remote participants count toward quorum if authentication and participation standards are met.
Emergency board: When vacancies prevent a quorum and an emergency threatens substantial loss, remaining directors may temporarily fill vacancies to address the emergency, subject to reporting limits.

3) Fiduciary duties & conflict transactions

Duty of loyalty and diligence codified; self-dealing contracts are voidable unless fairness and approval safe harbors are met (board approval with vote of at least two-thirds of disinterested directors, full disclosure, and fairness; plus possible ratification by shareholders).
Interlocking directors rules apply; stricter scrutiny for related-party transactions in CVPI (e.g., independent director/committee oversight, enhanced disclosure).

4) Corporations Vested with Public Interest (CVPI)

Include publicly listed companies, public companies (meeting shareholder/asset thresholds), banks, quasi-banks, pre-need, insurance, and other SEC-identified entities.
Enhanced governance: Independent directors, audit and related-party committees, internal audit, whistleblowing mechanisms, and beneficial ownership transparency.
Expanded reportorial duties (timely audited FS/GIS, material fact disclosures, RPT policies).

IV. Special Corporate Forms

1) One Person Corporation (OPC)

Single stockholder acts as sole director; may be a non-resident foreigner if permitted by special law/negative list.
Must designate a nominee and alternate nominee who will temporarily manage upon the single stockholder’s death or incapacity, with duties to notify the SEC and call for settlement or transfer.
No minimum capital unless special laws require; minutes, books, and separate bank account required to avoid alter-ego issues.
Conversion: Ordinary corporation ↔ OPC allowed through SEC procedures.

2) Close corporations

Shareholders may dispense with a board, manage directly, restrict transfers, and require unanimous consent for certain actions.
Shareholder fiduciary duties are heightened; deadlock may be resolved through arbitration or judicial relief per bylaws/IRR.

3) Non-stock corporations & foundations

Must apply donation/endowment thresholds for foundations and pursue lawful, public-benefit purposes.
No distribution of income to members/trustees; compensation must be reasonable; dissolution assets go to similar causes.

V. Meetings, Voting, Records, and Disclosure

1) Notices & voting

Electronic service of notices valid if authorized; corporations must authenticate recipients and retain proof of transmission.
Proxy/remote voting allowed if the bylaws or board resolution authorize and the IRR authentication rules are followed.
Voting trust agreements must comply with form, term, and filing requirements.

2) Corporate records & inspection

Stock and transfer book (STB), minutes, financial statements, and contracts must be maintained at the principal office or in authorized electronic repositories.
Inspection right belongs to shareholders/members in good faith and for a legitimate purpose; corporations may deny vexatious/competitor-driven requests per IRR standards, with reasons in writing.
Beneficial ownership: GIS must disclose natural-person beneficial owners down to the last layer; failure triggers fines and possible suspension/revocation.

3) Financial reporting

Audited FS required above statutory thresholds; smaller entities may submit certified FS per IRR scaling.
Filing deadlines and e-submissions enforced; late filings incur graduated penalties.

VI. Amendments, Reorganizations, and Appraisal Rights

Amendments to articles/bylaws require board approval and stockholder/member vote at statutory thresholds (generally 2/3 of outstanding stock for fundamental changes).
Appraisal right arises for dissenting shareholders in fundamental transactions (e.g., sale of all/substantially all assets, merger, investment of corporate funds in another business not within primary purpose).
Mergers, consolidations, and share exchanges require a plan, board and shareholder approvals, SEC clearance, and post-approval filings.
Reclassification/denial of pre-emptive rights must respect statutory protections and disclosures.

VII. Foreign Corporations & Branches

A foreign corporation “doing business” must obtain an SEC license, appoint a resident agent, and file authenticated constitutional documents.
Intra-group services, e-commerce, and representative activities are analyzed under the IRR’s “doing business” tests; unlicensed doing business leads to void or unenforceable contracts and fines.
Prospective liability for transacting without a license includes bar from suing, administrative sanctions, and regularization requirements.

VIII. Dissolution, Revival, and Liquidation

Voluntary dissolution with or without creditors: requires board + stockholder approvals and notices/publication per IRR; assets liquidated by the corporation or by a receiver if appointed.
Shortening the term effects dissolution on the chosen date without further act.
Involuntary dissolution for cause (e.g., repeated reportorial failures, fraud, unlawful acts).
Revival: Corporations whose terms expired or that were revoked may apply for revival, restoring legal personality (subject to conditions and clearance).

IX. Enforcement, Penalties, and Amnesty

Administrative fines: The IRR adopt a graduated, per-day/per-offense schedule for late filings, non-disclosure of beneficial ownership, non-holding of meetings, and other breaches.
Cease-and-desist, suspension/revocation of registration, and disqualification of directors/officers are available sanctions.
Contumacy (defiance of lawful SEC orders) and fraud invite heavier penalties and possible criminal referral under the RCC and special laws.
From time to time the SEC issues amnesty/streamlining programs—for example, to regularize reportorial backlogs—subject to cut-off dates, fees, and conditions.

X. Practical Compliance Checklists

A) At incorporation

Unique corporate name cleared; sensitive words authorized by sector regulators.
Articles include arbitration/remote-meeting clauses and beneficial ownership readiness.
Bylaws aligned with remote voting, RPT policy, committee charters (for CVPI).
Books (digital or physical) prepared; TIT designated and bank account opened.
If OPC: Nominee/alternate nominee designated in the articles.

B) Ongoing governance

Annual Stockholders’ Meeting held (physical or remote) with proper notice, quorum authentication, and minutes.
GIS filed with beneficial owners; AFS submitted on time.
RPT policy and approvals documented; independent director and audit committee functioning (for CVPI).
Training/certification of corporate secretary and compliance officer current.
Insider list and trading blackout policies (for listed/public companies) implemented.

C) Capital & structural changes

Pre-emptive rights analysis done; appraisal rights assessed and dissenters paid if triggered.
SEC approvals obtained for mergers, reclassifications, or conversions (e.g., to/from OPC/close corp).
Amended articles/bylaws e-filed; regulatory consents from other agencies secured if needed.

D) Exit & revival

Dissolution pathway chosen (with/without creditors); notices published; liquidator/receiver appointed if necessary.
Tax clearances and labor closures integrated into the plan.
For revival, name protection, settlement of deficiencies, and no-derogatory certifications prepared.

XI. High-Risk Areas Auditors and the SEC Scrutinize

Unreported or opaque beneficial owners and ultimate controllers.
Related-party transactions without arm’s-length terms or independent approvals.
Non-holding of annual meetings and missing minutes/resolutions.
Failure to update articles/bylaws after major shifts (e.g., conversion to OPC or close corp).
Unlicensed foreign branches/ROs effectively “doing business.”

XII. Takeaways

The RCC’s IRR make Philippine corporate practice digital, flexible, and disclosure-centric.
Remote meetings, arbitration, OPC, perpetual term, and beneficial ownership disclosures are the signature operational features.
CVPI face heightened governance and RPT oversight; all corporations face graduated penalties for late or false filings.
Thoughtful bylaw drafting (remote participation, arbitration, RPT approvals, committee design) pays long-term compliance dividends.
Keep an annual calendar for meetings and filings, and maintain clean records—nearly all IRR enforcement hinges on documentation.

This article is for general information and does not replace tailored legal advice. Sector-specific entities (banks, insurance, schools, clinics, NGOs, etc.) must layer the RCC/IRR with their special laws and regulator issuances.