THE bicameral conference committee approved Tuesday the reconciled House and Senate versions of the bill seeking to strengthen and simplify corporate governance standards for a more business-friendly environment amid the drop in the country’s rank in the latest Ease of Doing Business Report of the World Bank.
“We are proud to lead the chamber in passing this landmark legislation that will remove the barriers hindering the entry of both small and large enterprises into the market,” Senate Minority Leader Franklin Drilon, the principal sponsor and author of Senate Bill No. 1280 which amends the decades-old Corporation Code of the Philippines.
In the latest Ease of Doing Business Report of the World Bank released earlier this month, the Philippines fell to 124th out of 190 economies from 113th previously, he noted.
“One of our difficulties today is our laws have not been updated. As a result, in terms of our ranking in the ease of doing business we are lagging behind, especially in the areas of starting a business where the country was ranked 166th,” Drilon said.
He said that it was too difficult to open a business in the country under the old law due to numerous and stringent incorporation and regulatory requirements, which discouraged investors and Filipino entrepreneurs to enter the local market.
“Suffice it to say, then, that the enactment of this measure and its immediate signing into law by the President is in order, so that we can change the atmosphere of conducting business in the country and make our economy more competitive,” he stressed.
Drilon said the new corporation code would improve ease of doing business in the country by allowing a one-person corporation, removing the minimum capital requirement and providing for perpetual existence of corporation.
With the new code allowing a one-person corporation, Drilon said local business owners and investors could already stop the practice of naming their entire household as incorporators simply to comply with the stringent requirement of the law.
Noting that the current business environment makes it hard for corporations and individual business owners to avail loans, as indicated in the country scoring only 5 (184th place) on the “getting credit” indicator of the World Bank the Philippines, Drilon said the new code allowed a one-person corporation to avail itself of loans and grants.
Once enacted, all existing and future corporations are deemed to have perpetual lives, he added.
The new code alsointroduces provisions that seek to remove the minimum number of incorporators, permit the electronic filing of reportorial requirements and attendance in meetings via remote communication or in absentia, among others—practices that were not recognized in the old law.
The amended Corporation Code will strengthen corporate governance standards and provide protection to minority stockholders by requiring, among others, corporations vested with public interest to have independent directors.
With the enactment of this landmark legislation, Drilon is confident that country would be able to catch up with its neighboring countries.