In the Philippines, the enactment of Republic Act No. 11232, otherwise known as the Revised Corporation Code (RCC), significantly modernized the landscape of corporate formation. By removing several archaic requirements from the old 1980 Code, the RCC has made it easier to do business while maintaining specific safeguards regarding who can breathe life into a new juridical entity.
The following is a comprehensive guide to the rules and restrictions governing incorporators under the current Philippine legal framework.
1. Definition and Fundamental Qualifications
An incorporator is a person—natural or juridical—who originally forms the corporation and whose name appears in the Articles of Incorporation (AOI) as a signatory.
Under Section 10 of the RCC, the basic qualifications are:
- Number of Incorporators: Any person, partnership, association, or corporation, singly or jointly with others but not more than fifteen (15) in number, may organize a corporation.
- Capacity to Contract: Natural persons acting as incorporators must be of legal age (18 years or older) and must possess the legal capacity to enter into binding contracts.
- Subscription Requirement: Each incorporator of a stock corporation must own or be a subscriber to at least one (1) share of the capital stock.
2. The Introduction of Juridical Incorporators
One of the most significant shifts in the RCC is the express permission for juridical persons to act as incorporators. Under the old code, only natural persons could be incorporators.
- Corporations as Incorporators: A domestic or foreign corporation can now be an incorporator. If a juridical entity acts as an incorporator, it must submit an affidavit of authority or a Secretary’s Certificate designating a specific individual to sign the AOI on its behalf.
- Partnerships as Incorporators: Partnerships are likewise permitted to be incorporators, provided their partnership agreement does not prohibit such investment.
3. Residency and Citizenship Rules
The RCC has largely liberalized residency requirements, though citizenship restrictions remain sensitive to specific industries.
- Removal of Residency Requirement: Unlike the old code, which required a majority of incorporators to be residents of the Philippines, the RCC no longer requires incorporators to be Philippine residents.
- Citizenship: Generally, there is no citizenship requirement for incorporators. However, if the corporation intends to engage in activities that are "nationalized" (reserved for Filipinos) under the Foreign Investment Negative List (FINL) or the Constitution (e.g., Mass Media, Land Ownership, or Public Utilities), the incorporators must comply with the specific percentage of Filipino ownership required by law.
4. The One Person Corporation (OPC)
A landmark provision of the RCC is the creation of the One Person Corporation.
- The Sole Incorporator: A single natural person, a trust, or an estate may now form a corporation alone.
- Restrictions on OPC Incorporators: Juridical entities (except for trusts or estates) cannot form an OPC. Furthermore, professionals licensed to practice a specific profession (e.g., Law, Medicine) cannot form an OPC for the purpose of practicing that profession; they must generally form a General Professional Partnership.
5. Restrictions and Disqualifications
The Securities and Exchange Commission (SEC) maintains strict oversight regarding who is fit to incorporate. Under Section 16, a person is disqualified from being an incorporator (or a director/officer) if, within five years prior to the attempted incorporation, they were:
- Convicted by final judgment of an offense punishable by imprisonment for a period exceeding six years.
- Found administratively liable for any offense involving fraudulent acts.
- Found liable by a foreign court or equivalent regulatory body for acts similar to those mentioned above.
6. Professional Practices and Special Corporations
There are specific sectors where the general rules of incorporation are restricted by special laws:
- Banks and Financial Institutions: Incorporators of banks, quasi-banks, and insurance companies must obtain prior clearance and "Authority to Register" from the Bangko Sentral ng Pilipinas (BSP) or the Insurance Commission.
- Religious Corporations: The rules for incorporators of a Corporation Sole differ significantly, as the office is held by a single religious leader (e.g., a Bishop or Rabbi) in trust for the religious denomination.
Summary Table: Key Changes at a Glance
| Feature | Old Corporation Code | Revised Corporation Code (RCC) |
|---|---|---|
| Minimum Number | At least 5 | 1 (for OPCs) |
| Maximum Number | 15 | 15 |
| Juridical Persons | Not allowed as incorporators | Allowed (Corporations, Partnerships, etc.) |
| Residency | Majority must be PH residents | No residency requirement |
| Subscription | Must subscribe to 1 share | Must subscribe to 1 share |
Legal Implications of the Signatory Role
It is vital to distinguish between an incorporator and a corporator. While all incorporators are corporators (shareholders/members), not all corporators are incorporators. The status of an "incorporator" is fixed at the moment of registration. They are the individuals who represent the "primary franchise" of the corporation, and their names remain on the AOI permanently as the founders of the legal entity, regardless of whether they later sell their shares.