Term of license to do business of a foreign corporation
Credit to Author: KELVIN LESTER LEE | Date: Tue, 03 Dec 2019 16:18:28 +0000
If the Securities and Exchange Commission (SEC) grants to a foreign corporation a license to do business in the Philippines, is such license considered co-terminus with the life of a foreign corporation? In a recent SEC OGC Opinion, the commission opined in the affirmative.
As a general rule, Paragraph 2, Section 11 of Republic Act 11232, known as the “Revised Corporation Code” (RCC), provides: “Corporations with certificates of incorporation issued prior to the effectivity of this Code, and which continue to exist, shall have perpetual existence.” However, the exception is when the corporation, upon a vote of its stockholders representing a majority of its outstanding capital stock, notifies the commission that it elects to retain its specific corporate term pursuant to its articles of incorporation.
Where the corporate term of a foreign corporation does not provide for a definite corporate term, its corporate term is deemed indefinite or perpetual. However, it is deemed best to verify first the existing laws of the country where the foreign corporation is incorporated.
On the other hand, Section 143 of the RCC is the applicable provision when it comes to licenses to transact business in the Philippines issued to foreign corporations. It provides: “Upon issuance of the license, such foreign corporation may commence to transact business in the Philippines and continue to do so for as long as it retains its authority to act as a corporation under the laws of the country or State of its incorporation, unless such license is sooner surrendered, revoked, suspended, or annulled in accordance with this Code or other special laws.”
It is clear from the above provision that the license to do business in the Philippines of a foreign corporation is dependent on the existence and legality of the foreign corporation in its place of incorporation. The license remains valid, unless sooner surrendered, revoked, suspended, or annulled in accordance with the RCC provisions or other special laws.
In such a case, any foreign corporation that intends to apply for a license to transact business in the Philippines can now proceed to the SEC’s Company Registration and Monitoring Department and comply with all the documentary requirements, provided on the commission’s website at www.sec.gov.ph.
Hence, the license to do business in the Philippines granted to a foreign corporation is co-terminus with the life of a foreign corporation, unless such license is sooner surrendered, revoked, suspended or annulled in accordance with the RCC or other special laws.
Kelvin Lester K. Lee is a commissioner of the Securities and Exchange Commission (SEC). He is the co-chairman of the SEC Committee on Memorandum Circulars To Operationalize Revised Corporation Code Provisions. The views and opinions stated herein are his own. You may email your comments and questions to oclee@sec.gov.ph.