Senate Approved One-Person Corporation Bill
Authored and sponsored by Senate Minority Leader Franklin M. Drilon, the bill aims to provide a more appealing and investor-friendly business environment in the country, not just for big businesses but also for startups and entrepreneurs. This bill will improve the 38-year-old code governing the formation and operation of companies in the Philippines.
A key provision of the bill allows the formation of a “one-person corporation,” making it possible for a single person, whether natural or juridical, to form a corporation. Under the existing code, at least five stockholders are required in order to form a corporation with the Securities and Exchange Commission (SEC). This will eliminate the need of many entrepreneurs and investors resort having a filler name on incorporation papers just to comply with the current law. With the amendment, the incorporation process will be streamlined and enhanced to ease doing business in the country.
In the current law, business owners wishing to put up a business organization with no partners has no other option but to set it up as a single proprietorship. While that allows him or her to run the business on his own, it also exposes the owner to unlimited financial risks because he or she would be personally liable for the debts and liabilities of the business.
On the other hand a corporation is a separate juridical entity from the owner, shielding the shareholder from boundless risk as his or her liability is limited to the amount of his or her investment. By allowing “one-person corporations” business owners can have access to these advantages without the necessity of a partner.
The bill also prioritizes corporate and stockholder protection, helping corporations avoid the risk of getting dissolved just because of non-renewal of their corporate terms. Additionally, SB No. 1280 will push the use of technology for seamless registration processes and for enhanced participation in corporate meetings through remote communication.
Co-sponsoring the bill are senators Juan Miguel F. Zubiri, Francis “Chiz” G. Escudero, Paolo Benigno “Bam” Aquino IV, and Juan Edgardo “Sonny” M. Angara. Twenty senators voted in favor of the passage of the bill, no oppositions, and zero abstentions.