16 Foreign Corporations Flashcards
What are the relevant provisions in Title XV - Foreign Corporations?
Title XV. Foreign Corporations
* Sec. 140. Definition and Rights of Foreign Corporations;
* Sec. 141. Application to Existing Foreign Corporations;
* Sec. 142. Application for a License;
* Sec. 143. Issuance of a License;
* Sec. 144. Who May be a Resident Agent;
* Sec. 145. Resdient Agent; Service of Process;
* Sec. 146. Law Applicable;
* Sec. 147. Amendments to Articles of Incorporation or Bylaws of Foreign Corporations;
* Sec. 148. Amended License;
* Sec. 149. Merger or Consolidation Involving a Foreign Corporation Licensed in the Philippines;
* Sec. 150. Doing Business Without a License;
* Sec. 151. Revocation of License;
* Sec. 152. Issuance of Certificate of Revocation; and
* Sec. 153. Withdrawal of Foregin Corporations.
There are 14 provisions
What is a Foreign Corporation?
SEC. 140. Definition and Rights of Foreign Corporations. – For purposes of this Code, a foreign corporation is one formed, organized or existing under laws other than those of the Philippines’ and whose laws allow Filipino citizens and corporations to do business in its own country or State. It shall have the right to transact business in the Philippines after obtaining a license for that purpose in accordance with this Code and a certificate of authority from the appropriate government agency.
What are the rights of a foreign corporation?
SEC. 140. Definition and Rights of Foreign Corporations. – For purposes of this Code, a foreign corporation is one formed, organized or existing under laws other than those of the Philippines’ and whose laws allow Filipino citizens and corporations to do business in its own country or State. It shall have the right to transact business in the Philippines after obtaining a license for that purpose in accordance with this Code and a certificate of authority from the appropriate government agency.
What are the requirements that a foreign corporation must submit to the SEC when applying for a license?
SEC. 142. Application for a License. – A foreign corporation applying for a license to transact business in the Philippines shall submit to the Commission a copy of its articles of incorporation and bylaws, certified in accordance with law, and their translation to an official language of the Philippines, if necessary. The application shall be under oath and, unless already stated in its articles of incorporation, shall specifically set forth the following:
(a) The date and term of incorporation;
(b) The address, including the street number, of the principal office of the corporation in the country or State of incorporation;
(c) The name and address of its resident agent authorized to accept summons and process in all legal proceedings and all notices affecting the corporation, pending the establishment of a local office;
(d) The place in the Philippines where the corporation intends to operate;
(e) The specific purpose or purposes which the corporation intends to pursue in the transaction of its business in the Philippines: Provided, That said purpose or purposes are those specifically stated in the certificate of authority issued by the appropriate government agency;
(f) The names and addresses of the present directors and officers of the corporation;
(g) A statement of its authorized capital stock and the aggregate number of shares which the corporation has authority to issue, itemized by class, par value of shares, shares without par value, and series, if any;
(h) A statement of its outstanding capital stock and the aggregate number of shares which the corporation has issued, itemized by class, par value of shares, shares without par value, and series, if any;
(i) A statement of the amount actually paid in; and
(j) Such additional information as may be necessary or appropriate in order to enable the Commission to determine whether such corporation is entitled to a license to transact business in the Philippines, and to determine and assess the fees payable.
Attached to the application for license shall be a certificate under oath duly executed by the authorized official or officials of the jurisdiction of its incorporation, attesting to the fact that the laws of the country or State of the applicant allow Filipino citizens and corporations to do business therein, and that the applicant is an existing corporation in good standing. If the certificate is in a foreign language, a translation thereof in English under oath of the translator shall be attached to the application.
The application for a license to transact business in the Philippines shall likewise be accompanied by a statement under oath of the president or any other person authorized by the corporation, showing to the satisfaction of the Commission and when appropriate, other governmental agencies that the applicant is solvent and in sound financial condition, setting forth the assets and liabilities of the corporation as of the date not exceeding one (1) year immediately prior to the filing of the application.
Foreign banking, financial, and insurance corporations shall, in addition to the above requirements, comply with the provisions of existing laws applicable to them. In the case of all other foreign corporations, no application for license to transact business in the Philippines shall be accepted by the Commission without previous authority from the appropriate government agency, whenever required by law.
When will the SEC issue a license to the applicant-foreign corporation?
SEC. 143. Issuance of a License. – If the Commission is satisfied that the applicant has complied with all the requirements of this Code and other special laws, rules and regulations, the Commission shall issue a license to transact business in the Philippines to the applicant for the purpose or purposes specified in such license.
When may the foreign corporation commence business transactions (operations) in the Philippines?
Sec. 143. Issuance of a License – […] 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.
What is the deposit requirement for foreign corporations?
- Deposit to be made within 60 days after issuance of license;
- Purpose of deposit: for present and future creditors in the Philippines
- What to deposit: securitis, debt instruments, any other instrument with at least PHP 500K market value
- May be increased if gross income of FC increases to more than PHP 10M; amount of increase is 2% of excess;
- Additional may be required if actual market value of deposit decreases by at least 10%;
- Additional may be returned if the actual market value of the deposit increases back to 10%
- FC is entitled to the dividends and interests;
- Shall be returned upon dissolution provided FC proves that it has no liability in PH anymore (including liability to PH Gov’t)
Sec. 143 Issuance of a License – […] Within sixty (60) days after the issuance of the license to transact business in the Philippines, the licensee, except foreign banking or insurance corporations, shall deposit with the Commission for the benefit of present and future creditors of the licensee in the Philippines, securities satisfactory to the Commission, consisting of *bonds or other evidence of indebtedness *of the Government of the Philippines, […], shares of stock or debt securities that are registered under […] “The Securities Regulation Code”, shares of stock in domestic corporations listed in the stock exchange, shares of stock in domestic insurance companies and banks, any financial instrument determined suitable by the Commission, or any combination thereof with an actual market value of at least Five hundred thousand pesos (P500,000.00) or such other amount that may be set by the Commission: Provided, however, That within six (6) months after each fiscal year of the licensee, the Commission shall require the licensee to deposit additional securities or financial instruments equivalent in actual market value to two percent (2%) of the amount by which the licensee’s gross income for that fiscal year exceeds Ten million pesos (P10,000,000.00). The Commission shall also require the deposit of additional securities or financial instruments if the actual market value of the deposited securities or financial instruments has decreased by at least ten percent (10%) of their actual market value at the time they were deposited. The Commission may, at its discretion, release part of the additional deposit if the gross income of the licensee has decreased, or if the actual market value of the total deposit has increased, by more than ten percent (10%) of their actual market value at the time they were deposited. The Commission may, from time to time, allow the licensee to make substitute deposits for those already on deposit as long as the licensee is solvent. Such licensee shall be entitled to collect the interest or dividends on such deposits. In the event the licensee ceases to do business in the Philippines, its deposits shall be returned, upon the licensee’s application and upon proof to the satisfaction of the Commission that the licensee has no liability to Philippine residents, including the Government of the Republic of the Philippines. For purposes of computing the securities deposit, the composition of gross income and allowable deductions therefrom shall be in accordance with the rules of the Commission.
Who may be a resident agent?
SEC. 144. Who May be a Resident Agent. – A resident agent may be either an individual residing in the Philippines or a domestic corporation lawfully transacting business in the Philippines: Provided, That an individual resident agent must be of good moral character and of sound financial standing: Provided, further, That in case of a domestic corporation who will act as a resident agent, it must likewise be of sound financial standing and must show proof that it is in good standing as certified by the Commission.
Note: no requirement for citizenship, must only be a resident in the PH.
What must be filed with the SEC as a condition to the issuance of the license of a foreign corporation to transact business in the PH?
- Written power of attorney authorizing resident agent to receive summons or other legal processes;
- Agreement that the SEC may also receive summons or other legal processes in case FC ceases to oeprate in the PH and there is no longer any resident agent.
SEC. 145. Resident Agent; Service of Process. – As a condition to the issuance of the license for a foreign corporation to transact business in the Philippines, such corporation shall file with the Commission a written power of attorney designating a person who must be a resident of the Philippines, on whom summons and other legal processes may be served in all actions or other legal proceedings against such corporation, and consenting that service upon such resident agent shall be admitted and held as valid as if served upon the duly authorized officers of the foreign corporation at its home office. Such foreign corporation shall likewise execute and file with the Commission an agreement or stipulation, executed by the proper authorities of said corporation, in form and substance as follows:
“The (name of foreign corporation) hereby stipulates and agrees, in consideration of being granted a license to transact business in the Philippines, that if the corporation shall cease to transact business in the Philippines, or shall be without any resident agent in the Philippines on whom any summons or other legal processes may be served, then service of any summons or other legal process may be made upon the Commission in any action or proceeding arising out of any business or transaction which occurred in the Philippines and such service shall have the same force and effect as if made upon the duly authorized officers of the corporation at its home office.”
What is the duty of the SEC whenever summons are served upon it pursuant to Sec. 145 RCC?
Sec. 145. Resident Agent; Service of Process. – […] Whenever such service of summons or other process is made upon the Commission, the Commission shall, within ten (10) days thereafter, transmit by mail a copy of such summons or other legal process to the corporation at its home or principal office. The sending of such copy by the Commission shall be a necessary part of and shall complete such service. All expenses incurred by the Commission for such service shall be paid in advance by the party at whose instance the service is made.
In case of change of resident agent’s address, who is obligated to inform the SEC?
Resident Agent.
It shall be the duty of the resident agent to immediately notify the Commission in writing of any change in the resident agent’s address. (Sec. 143, RCC)
What is the applicable law in disputes relating to foreign corporations?
SEC. 146. Law Applicable. – A foreign corporation lawfully doing business in the Philippines shall be bound by all laws, rules and regulations applicable to domestic corporations of the same class, except those which provide for the creation, formation, organization or dissolution of corporations or those which fix the relations, liabilities, responsibilities, or duties of stockholders, members, or officers of corporations to each other or to the corporation.
What is the duty of the FC when it amends it AOI or BL?
SEC. 147. Amendments to Articles of Incorporation or Bylaws of Foreign Corporations. – Whenever the articles of incorporation or bylaws of a foreign corporation authorized to transact business in the Philippines are amended, such foreign corporation shall, within sixty (60) days after the amendment becomes effective, file with the Commission, and in the proper cases, with the appropriate government agency, a duly authenticated copy of the amended articles of incorporation or bylaws, indicating clearly in capital letters or underscoring the change or changes made, duly certified by the authorized official or officials of the country or State of incorporation. Such filing shall not in itself enlarge or alter the purpose or purposes for which such corporation is authorized to transact business in the Philippines.
When shall a FC obtain an amended license?
SEC. 148. Amended License. – A foreign corporation authorized to transact business in the Philippines shall obtain an amended license in the event it changes its corporate name, or desires to pursue other or additional purposes in the Philippines, by submitting an application with the Commission, favorably endorsed by the appropriate government agency in the proper cases.
May a FC merge with a domestic corp?
Yes. Conditions are:
* FC must be authorized to transact business in PH
* Merger of the corporations are allowed under PH law
* Merger of the corps are also allowed in the foreign law
* Compliance with merger and consolidation provisions in RCC
SEC. 149. Merger or Consolidation Involving a Foreign Corporation Licensed in the Philippines. – One or more foreign corporations authorized to transact business in the Philippines may merge or consolidate with any domestic corporation or corporations if permitted under Philippine laws and by the law of its incorporation: Provided, That the requirements on merger or consolidation as provided in this Code are followed.
