27 March, 2020
Much has been said about the feature of the Revised Corporation Code (RCC) allowing corporations to have perpetual existence under Section 11 of the RCC. Yet, there is also a nifty feature tucked in under the same section allowing the revival of those corporations whose corporate terms have expired. Pursuant to this provision, the Securities and Exchange Commission (SEC) issued SEC Memorandum Circular No. 23, Series of 2019 or the Guidelines on the Revival of Expired Corporations. The Guidelines became effective on Dec. 6 last year and the SEC has started accepting applications for the revival of expired corporations until then.
The Guidelines explicitly allow the revival of
(i) corporations whose terms have expired;
(ii) expired corporations whose Certificate of Registration with the SEC has been revoked for non-filing of reportorial requirements (i.e. the General Information Sheet or Audited Financial Statements);
(iii) expired corporations whose Certificate of Registration has been suspended; and,
(iv) expired corporations whose corporate name has been validly re-used and is currently being used by another existing corporation duly registered with the SEC.
Corporations under items (ii) and (iii) in the above list require the filing of the proper Petition to Lift Revoked Status and Petition to Lift Suspended Status, respectively. The petitions are to be incorporated in the Petition to Revive, upon settlement of the corresponding penalties imposed on the corporations.
On the other hand, those corporations which have completed the liquidation of their assets are not eligible to apply for revival. Further, those corporations which have been dissolved after undergoing receivership by virtue of Section 6(c) and (d) of the Presidential Decree No. 902-A, as amended by Presidential Decree No. 1799, may not apply for revival.
Finally, corporations which have already availed of re-registration in accordance with circulars issued by the SEC pertaining to re-registration are not allowed to apply for revival. However, note that the Guidelines state that such corporations may be allowed to file for revival, provided that the re-registered corporation has provided its consent and has undertaken to undergo voluntary dissolution or change its corporate name, as the case may be, immediately after the issuance of the Petitioner’s Certificate of Revival.
In the case of stock corporations, initiating the revival may be done through the vote of at least a majority by the Board of Directors of the expired corporation, and the vote of at least the majority of outstanding capital stock. In the case of non-stock corporations, initiation may be done through the vote of at least a majority of the board of trustees and the vote of the majority of the members.
Additionally, petitions from banks, banking and quasi-banking institutions, preneed, insurance and trust companies, non-stock savings and loan associations, pawnshops, corporations engaged in money service business, and other financial intermediaries must be accompanied by a favorable recommendation of appropriate government agencies.
To apply for the revival of an expired corporation, the Petitioner-corporation shall file a Petition for the Revival of Corporate Existence with the Company Registration and Monitoring Department of the SEC or any Satellite or Extension Office. It shall be verified by the duly elected directors or trustees, and officers of the Petitioner.
It shall likewise contain statements on the approval of the action to revive by the majority of the outstanding capital stock or members. Should there be changes in the composition of the stockholders or members since the expiration of the corporate term, there must be a reconciliation of the changes in the composition of the stockholders or members from the date of expiration up to the date of the stockholders’ or members’ approval of the resolution to file the Petition. For such purpose, the reconciliation must be accompanied by supporting evidence of the changes in the composition of the stockholders or members.
Parties-in-interest may file a Verified Opposition to the Petition with a clear statement on the grounds relied upon. It is also worthy to note at this point that that the revival of corporate existence is without prejudice to the appraisal right of dissenting stockholders in accordance with the RCC.
The Guidelines show relative clarity on how to revive a corporation that has once been in existence. Nevertheless, a valid question can be raised: is the revival of an expired corporation easier than to incorporate one from scratch? Where gathering the approval of the expired corporation’s stockholders or members and directors may prove to be a difficult task, incorporation may be the way to go. On the other hand, in the case of corporations whose Certificates of Registration have only been revoked or suspended, reviving the corporation might be an easier route for getting back to normal operations. In the end, it appears that the answer will depend on the circumstances of the case. At least with these Guidelines, expired corporations have the option to decide to start from where they left off, instead of starting over.
For further information, please contact:
Joben Mariz J. Odulio, Angara Abello Concepcion Regala & Cruz (ACCRALAW)
jjodulio@accralaw. com
