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MANILA, Philippines – Why give Philippine corporations a maximum “life” of 50 years when some incorporators live for less?
This was the experience of the Securities and Exchange Commission (SEC) with around 300,000 registered companies that have yet to renew their license or comply with other paper work related with extending or renewing the shelf life of their corporations.
The regulator plans to propose amendments to the Corporation Code of the Philippines that will reduce the life of companies from the maximum 50 years, SEC chairperson Teresita Herbosa told reporters at the sidelines of the Philippine Business Registry launch on Monday, March 12.
“We’re thinking of another way, instead of just 50 years, either we make it shorter or we make it perpetual but with certain periodic renewals [every one or 5 years],” said Herbosa.
“We can make it 25 so hindi namamatay lahat ng incorporators before the end of the corporate life,” she added.
Herbosa noted that some companies are not conscious of the expiration of their corporate term. The SEC had already published a warning on its website.
The draft amendments to the Corporation Code will be finished within the year, Herbosa said.
The Corporation Code states that “a corporation shall exist for a period not exceeding 50 years from the date of incorporation unless sooner dissolved or unless said period is extended.”
However, the corporate life may be extended for periods not exceeding 50 years but no extension may be made five years prior to the original expiry date.
Herbosa said the SEC regulates about 700,000 registered entities, but only 400,000 of which are actively operating and complying with regulatory requirements.
Last year, the SEC almost doubled its revenues to a record P1.4 billion in 2011, overshooting its P800 million target.
Collected fees contribute 85% of total revenues, while penalties account for 15%.
“Hopefully, if we keep the same amount even without the fines and penalty it’s fine with me. I prefer revenues from regulation fees and not from enforcement because that means you’re not doing your job,” she said.
Company registrations have steadily picked up in the last 3 years since the time of the 2008 financial crisis and business activity is seen to improve further this year, resulting in higher revenues for the government agency.
“We took into consideration the fact that there may be more initial public offerings this year. Basically, from people wanting to incorporate,” said Herbosa. – Rappler.com