SEC says going digital brings new businesses

Digital transformation has encouraged business formation, the Securities and Exchange Commission (SEC) said, as it recorded a significant rise in the number of local companies and partnerships.

“The launch of the Electronic Simplified Processing of Application for Registration of Company (eSPARC) led to a sharp jump in the number of newly registered domestic corporations and partnerships in 2021, rising by 50.5% and 33.4%, respectively, despite the pandemic,” SEC said in a press release.

eSPARC is a web-based system that allows the online registration of one-person corporations (OPCs) as well as stock and nonstock domestic corporations.

Under it, is a subsystem called the One Day Submission and E-registration of Companies, which allows applicants to complete the registration process within a day.

eSPARC is integrated with the SEC cashiering system and online payment portal, Electronic System for Payments to SEC, which provides the public a more convenient means to pay fees.

It is also linked to the Philippine Business Hub, which is the government’s centralized platform that allows the public to access forms and submit requirements related to business registrations.

“The digitalization of company registration in the country complemented legislative reforms aimed at making doing business in the Philippines easier,” SEC said.

It cited Republic Act No. 11232 or the Revised Corporation Code of the Philippines, which introduced OPCs, eased capital requirements, removed residency requirements for incorporators and directors, and allowed for the perpetual existence of corporations, among others.

The regulator also said that through eSPARC and other reforms, the business registration process was shortened to six steps in over eight days from 16 steps spanning 34 days.

Separately, the SEC said that a company may issue shares of stock at a premium without increasing its capital stock. It made the statement through an opinion in response to a query from Fleet Marine Cable Solutions, Inc.

“It is legal for a company to issue shares at a premium or over the par value of the shares as stated in its articles of incorporation, and for the subscribers of a corporation to pay more than the par value of the shares they subscribed as there is no law, rule or regulation that prohibits [it],” SEC said.

The regulator also said that a company is allowed to have paid-up capital that is more than its authorized capital stock (ACS).

A company’s ACS is defined by the SEC as the “minimum amount of capital which the corporation will receive when it issues all its shares.” Its paid-up capital pertains to shares that were actually subscribed and paid.

The SEC said that in the case of Fleet Marine, the paid-up capital of the corporation would possibly be more than the ACS fixed in its articles of incorporation, especially if the capital stock is fully subscribed.

The commission’s opinion involves the case of an Indonesian national who is a holder of a special investor’s resident visa. The Indonesian invested P3.75 million in Fleet Marine, raising the company’s paid-up capital to P13.25 million and exceeding the authorized capital of P10 million. — Justine Irish DP. Tabile