MTF Counsel | Tax Lawyer Philippines | Best Law Firms in the Philippines

taxation in the philippines

tax lawyer philippines

law firms in makati

lawyers in the philippines

best lawyers in the philippines

special power of attorney philippines
taxation law
customs lawyer Philippines
corporate lawyer philippines
commercial lawyer philippines
tax law expert philippines
customs law expert philippines
commercial law expert philippines
corporate law expert philippines










By: Euney Marie J. Mata-Perez on March 28, 2019

Republic Act No. 11232 or the Revised Corporation Code (RCC) has expanded the role and increased the powers of the Securities and Exchange Commission (SEC).

Senator Franklin Drilon, the main author of the law, said during the very well-attended joint forum of the RCC, spearheaded by the Institute of Corporate Directors (ICD), held on March 26, 2019, the RCC has four reform clusters: 1) set policies that will enhance the ease of doing business in the Philippines, 2) strengthened stockholder protection and institutionalized good governance, 3) institutionalized provisions that will instill corporate social responsibility and 4) strengthened the country’s policy and regulatory corporate framework.

The reforms resulted in granting the SEC expanded powers. In his speech, however, Senator Drilon reminded the SEC not to ‘stifle’ business in the exercise of its expanded powers. SEC Chairman Emilio B. Aquino, who was also a speaker at the forum, assured the audience they will do what is right and bear in mind the lawmaker’s reminder.

Chairman Aquino has confirmed that no consolidated rules will be issued; instead the SEC will issue rules on specific topics, such as rules on the one-person corporation (OPC), the use of electronic data message, as well as participation and voting through remote communication or in absentia of stockholders.
So, what do the expanded powers of the SEC under the RCC include?

Power to interpret the RCC – The RCC has given the SEC room to interpret several major provisions of the RCC. For instance, while the RCC has defined what constitutes corporations vested with ‘public interest’, it provides that the SEC has the power to determine what ‘other corporations’ may be deemed to be engaged in businesses vested with public interest similar to those identified in the RCC, after taking into account relevant factors which are germane to the objective and purpose of requiring the election of an independent director, such as the extent of minority ownership, type of financial products or securities issued or offered to investors, public interest involved in the nature of business operations and other analogous factors.

Also, the SEC can set the parameters when OPCs, for instance, are required to be ‘adequately financed’, or what is ‘irreparable injury’ for purposes of issuing cease and desist orders against fraudulent acts or violations of the RCC.

Removal of directors – The RCC provides that the SEC shall, motu proprio (on its own) or upon verified complaint, and after due notice and hearing, order the removal of a director or trustee elected despite the disqualification, or whose disqualification arose or is discovered subsequent to an election. The SEC may also impose sanctions on the board of directors or trustees who, with knowledge of the disqualifications, failed to remove such director or trustee.

Qualifications/disqualifications of directors – The SEC may also impose additional qualifications or other disqualifications of directors in its promotion of good corporate governance or as a sanction in its administrative proceedings.

Election of directors and trustees – The SEC has the power to call an election of directors and trustees in case no stockholders meeting is held for election of new directors and trustees, and no new date has been designated, or if the rescheduled election is likewise not held. In such cases, the SEC may, upon the application of a stockholder, member, director or trustee, and after verification of the unjustified non-holding of the election, summarily order that an election be held.

Power to prescribe forms – The SEC is empowered to prescribe the form and substance of the financial reporting required by the commission, reports on compensation, and other reports, including contents of minutes of meeting.

Expansive investigative powers and powers to impose sanctions– The RCC has added an entire new section on offenses and penalties, and in relation thereto, the SEC is empowered to investigate an alleged violation of the RCC, rule, or regulation, issue subpoena and subpoena duces tecum, take testimony in any inquiry or investigation, perform other acts necessary to the proceedings or to the investigation, and of course, impose sanctions permitted under the RCC. These sanctions include the imposition of huge penalties, suspension or revocation of certificate of incorporation, imposition of permanent disqualification for directors and officers, and citing in contempt any person who unjustifiably fails or refuses to comply with any subpoena issued or lawful order.

Power to issue cease and desist orders; contempt – Whenever the SEC has reasonable basis to believe that a person has violated, or is about to violate the RCC, a rule or regulation, it may issue cease and desist orders .It may also issue a cease and desist order ex parte to enjoin an act or practice which is fraudulent or can be reasonably expected to cause significant, imminent and irreparable danger or injury to public safety or welfare. Aside from proceeding administratively against the guilty person, the SEC can also transmit evidence to the Department of Justice for preliminary investigation or criminal prosecution for any violation of the RCC, rule or regulation.

The above enumeration is not exhaustive, but the bottom line is that the SEC has been granted more powers to regulate and impose sanctions on corporations, their stockholders, directors and officers. All of these powers are aimed at protecting not just minority shareholders, but also creditors and the public in general. However, as mentioned by Senator Drilon, such powers should be exercised with caution so as not to stifle business. Indeed, the SEC will be playing a very critical role in our country’s future business environment.

From the The Manila Time website on March 28, 2019

Contact Information

Our office address:

15/f Unit A. ACT Tower, H.V. Dela Costa St.
Salcedo Village, Makati City 1227 Philippines

Telefax: +632 831-1297

Telephone: +632 808-5375 • +632 815-0069



Euney Marie J. Mata-Perez

Mark Anthony P. Tamayo

Gerardo Maximo V. Francisco