Posted April 6, 2019

Corporate Structure in the Philippines

Corporate Structure in the Philippines

Corporate structure in the Philippines

Domestic corporation corporate structure in the Philippines
Philippine Corporation must have the following requirements:
  • Must have at least five (5) and maximum fifteen (15) of stockholders. The Corporation may have unlimited number of stockholders after the incorporation.
  • Majority of stockholders must be Philippine residents
  • Each stockholder must have at least 1 share
Liability of stockholders in a domestic corporation

The liability of stockholders is limited only to the extent of their capital contribution within the Corporation. Other properties, holdings or assets of stockholders are not within the reach of corporate creditors.

The kinds of meetings involving the stockholders are as follows:
  • Regular meeting of 3 times in a year (usually every 4 months), that is the equivalent of the annual stockholders’ meeting required to be duly provided under the by-laws
  • Special meeting, which may be called anytime as may be necessary
  • Every meeting should comply with the following requisites to be considered as authorised:
  • A notice of such meeting must be served to the stockholders
  • A quorum (i.e. majority of the outstanding capital stock of the corporation) must be fully established
  • Any and all acts of the stockholders in a meeting will be authorised if approved by a majority of the outstanding capital stock or at least two-thirds (2/3) vote in certain cases specified under the law
Board of Directors
  • Board of directors exercises the corporate powers of a corporation and manages all its business in accordance with the Corporation Code of the Philippines.
  • The Board of Directors is primarily responsible for the governance of the corporation and are usually elected for a period of one (1) year (voted by majority) and/or until their successors are elected and qualified. Corollary to setting the policies for the accomplishment of the corporate objectives, it shall provide an independent check on Management.
Qualifications of Directors
  • Natural person and is of legal age
  • Holder of at least one (1) share or a member in case of non-stock corporations
  • Majority of directors must be Philippine residents. A foreign national can be a director only in companies where the equity of the industry isn’t limited or reserved only for Filipinos.
  • Number of directors must be at least five (5), but not more than fifteen (15)
  • Have not been charged with a criminal offence for more than six (6) years, or violates the Code within five (5) years prior to the election
Board of Directors’ Roles and Responsibilities
  • Act on behalf of the corporation
  • Attend and participate board meetings
  • Effectively monitor Management’s performance to ensure companies compliance with applicable laws and best business practices
  • Elect corporate officers and form quorum
Corporate Officers
  • The Board of Directors in Philippines elects the following officers with the qualifications listed below.
  • Chief Executive Officer (CEO) or President
    • Acts as a signatory of on behalf of companies and reports to the corporation’s board of directors.
    • Must be a natural person and is of legal age
    • Must be a director
    • A foreigner can be a president if the industry is not secured only for Filipinos.
  • Chief Financial Officer (CFO) or Treasurer
    • Responsible for almost all of the corporation’s financial matters (i.e. annual statements, financial reports, moneys, funds, securities, bonds and similar valuable effects belonging to the corporation)
    • Must be a natural person and is of legal age
    • Does not have to be a director but must hold a Filipino residency
    • A foreigner in non-nationalized business activities can be a treasurer but not in a corporation with fully or partly nationalized business activities (provisions of the Anti-Dummy Law
  • Corporate Secretary
    • Handles all the corporation’s administrative and informative work, safekeeping and preserve records, documents and minutes of all meetings.
    • Must be a natural person and is of legal age
    • Must be a Filipino citizen and not just a resident of the Philippines
    • A person cannot be the President and the Corporate Secretary at the same time or the President and Corporate Treasurer at the same time.