By James A. Loyola
When putting up a formal business, it is necessary to register it with either the Department of Trade and Industry for single proprietorships or the Securities and Exchange Commission for partnerships and corporations.
An entrepreneur has to first decide whether to go solo and register his business as a single proprietor or as a corporation or partnership.
Single proprietorships are the most common and easiest to register. Under this set-up, the owner and the business are one and the same, thus, the gains and liabilities or the business are also that of the owner.
On the other hand, partnerships have two or more owners and are preferred by groups of licensed professionals. Under a partnership, income is divided equally unless there is an agreement for the division of profits. Liabilities may be equally shared by the partners or by the main investor called the general partner while other partners may only have limited liability.
Finally, there is the corporation which may be the more difficult to register because of the many requirements but it shields the shareholders from being personally liable for the debt and other obligations of the company since it is considered a separate legal entity.
Because ownership in a corporation is based on the number of shares of stocks held, it is easier to get additional capital or new investors by the simple sale or subscription of shares.
While the law had previously required corporations to be set up by at least five incorporators, the new securities law now allows the setting up of a corporate by just a single person.
The Securities and Exchange Commission has been taking various steps to make it easier to register a corporation or go through the process of incorporation and all information can be found at its website: sec.gov.ph. The site also has online application forms as well as the complete list of requirements which also depend on the type of business the new corporation will be engaged in.
The Commission has even made it possible to complete the process of incorporation within one day for as long as the applicant has all the requirements and all paperwork is in order.
The SEC has recently launched a new special lane in its company registration system (CRS) to make one-day processing and approval of applications possible.
The special lane called Lane for Express Application Processing (LEAP) allows for the registration of companies using pro-forma online application forms, where applicants simply need to tick off applicable items and input the required information.
The use of the pro-forma online application forms saves applicants from crafting their own provisions or uploading documents, which a human processor will then have to review and, thus, will require more time to be processed.
The Commission introduced LEAP as part of efforts to address the backlog of applications tagged as “Still for Processing” and “For Compliance Stages” during the transition to an automated CRS. Prior to the launch of LEAP, there was Regular Lane and Fast Track Lane of CRS.
In Regular Lane, all types of corporations may register. In this lane, the entire incorporation process is done online and requires a stable Internet connection and reliable computer. The only time an applicant will have to come to the SEC is when the Certificate of Incorporation is to be claimed.
Fast Track, on the other hand, is a hybrid-manual transition measure that facilitates faster resolution or approval of pending CRS applications.
Applicants still need to encode or upload their application online but they should manually submit original copies of notarized documents for checking and processing prior to claiming their Certificates of Registration.
Corporations which require secondary licenses and prior endorsements from other agencies (i.e. Lending Companies, Financing Companies, Broker/Dealers in Securities, etc.) may be processed using the Fast Track.
LEAP is just one of the proactive interventions and improvements made by SEC to improve the registration processing times and enhance the client experience. Currently, only Corporations which do not need to upload additional documentary requirements (i.e. general purpose/non-specialized corporations) may utilize LEAP.
The new streamlined steps of Lane for Express Application Processing are followed in this order: Account Creation, Name Verification, Filling Up of CRS Pro-Forma Online Application Form, Payment, Submission of Proof of Payment, Submission of Signed and Notarized Articles of Incorporation and By-laws, and finally, the Issuance of Certificate of Incorporation.
Nevertheless, new applicants may still choose from the Three Lanes of CRS in processing their company registration. However, their option must be based on the type of their corporation and the required documents they need to submit.
For clarifications, applicants may call the following telephone numbers: Direct Lines: 818-5554; 818-8803 or Trunk Line: 818-0921 extension 279, 256, 284, 214. For assistance on LEAP and other registration related matters, they may visit the Company Registration and Monitoring Department, Ground Floor, Secretariat Building, PICC Complex, Roxas Boulevard, Pasay City and its SEC Satellite and Extension Offices.
The SEC has also posted online video tutorials for the registration of corporations here: SEC CRS | Online Company Registration Tutorial Series.