The Securities and Exchange Commission (“SEC”) issued on 30 July 2019 Memorandum Circular No. 16, Series of 2019 (“MC No. 16-19”), promulgating the Guidelines on the Number and Qualifications of Incorporators under the Revised Corporation Code.
MC No. 16-19 was enacted for the clear and proper implementation of Section 10 of the Revised Corporation Code, which allows any person, partnership, association, or corporation, singly or jointly with others, but not more than fifteen (15) in number, to organize a corporation for any lawful purpose or purposes.
MC No. 16-19 provides guidelines specifically on the following matters:
1. Number of incorporators – Two (2) or more persons, but not more than fifteen (15), may form a corporation. Only a One Person Corporation may have a single stockholder.
2. Definition of incorporators
3. Qualifications of incorporators – In addition to the Revised Corporation Code, MC No. 16-19 expressly provides that foreign corporation/s may be incorporators.
4. Partnerships as incorporators – In the event a partnership is made an incorporator, the application for registration must be accompanied by a Partner’s Affidavit, duly executed by all the partners, to the effect that they have authorized the partnership to invest in the corporation to be formed. An authorized signatory must also be indicated.
5. Domestic corporations or associations as incorporators – In the event a domestic corporation or association is made an incorporator, the application for registration must be accompanied by a Directors’/Trustees’ Certificate or a Secretary’s Certificate indicating the necessary approvals of majority of the board of directors or trustees, and stockholders representing at least two-thirds (2/3) of the outstanding capital stock or by at least two-thirds (2/3) of the members in case of nonstock corporations. An authorized signatory must also be indicated.
6. Foreign corporations as incorporators – In the event a foreign corporation is made an incorporator, the application for registration must be accompanied by a copy of a document duly authenticated by a Philippine Consulate or with an apostille affixed thereto, authorizing the foreign corporation to invest in the corporation being formed. An authorized signatory must also be indicated.
7. Signatories of the Articles of Incorporation – In addition to the Revised Corporation Code, MC No. 16-19 expressly requires the signatory to indicate the capacity upon which he/she is affixing his/her signature thereto, as well as his/her Taxpayer Identification Number (“TIN”). Further, in case of a foreign incorporator, the TIN or passport number must be indicated.
8. Designation of incorporators as directors or trustees
9. Foreign nationals in the Articles of Incorporation – MC No. 16-19 reiterates that the inclusion of foreign nationals in the Articles of Incorporation is subject to restrictions and conditions, with respect to foreign participation in certain investment areas or activities.
10. Additional requirements for certain corporations (i.e., banks, banking and quasi-banking institutions, preneed, insurance and trust companies, non-stock savings and loan associations, pawnshops, and other financial intermediaries)
11. Processing of applications for registration