Dissolved company has 3 years to wind up operations, says SEC

Business Mirror

Feb 21, 2206

 

Dissolved company has 3 years to wind up operations, says SEC

By the rule
Emeterio Sd. Perez

HERE is a legal opinion that might be of help to companies that the Securities and Exchange Commission (SEC) has ordered dissolved either for their failure to comply with the reportorial requirements or for violation of other rules of the commission.

 

The opinion was dated January 31, 2006 and signed by SEC general counsel Vernette G. Umali-Paco. Quoting from the Corporation Code, it says Section 122 provides that a corporation whose corporate existence is terminated "shall nevertheless be continued as a body corporate for three years after the time when it would have been dissolved."

 

Why should a dissolved corporation be allowed to exist for three years when it has already been dissolved? After all, the SEC has already ordered its dissolution. The SEC opinion says under the law, the three-year period is "for the purpose of prosecuting and defending suits by, or against it and enabling it to settle and close its affairs, to dispose of and convey its property and distribute its assets, but not for the purpose of continuing the business for which it was established."

 

Once dissolved, a company is not allowed to continue its business. "It can no longer issue shares of stock and sell the same as that would be tantamount to continuing its business as a going concern," the SEC rules.

 

But the SEC says a corporation whose certificate of registration it has ordered revoked for not complying with reportorial requirements "has three years within which to file a petition to lift the order of revocation with the commission."

 

"Generally, the effect of the reinstatement is that it relates back to the date of dissolution [or revocation] as if the dissolution [or revocation] has never occurred," the SEC says.

 

What the SEC opinion does not categorically state is whether or not the reinstatement is automatic once a petition is filed. Will the commission be as lenient as it has been to other companies whose penalty for noncompliance with reportorial requirements it has generously reduced?

SHAREHOLDERS' AGREEMENT . Indonesian-controlled First Pacific Co. Ltd. of Hong Kong and NTT Communications Corp. and NTT DoCoMo have signed a shareholders' agreement in January, to strengthen their control of the board of Philippine Long Distance Telephone Co. (PLDT).

First Pacific filed the agreement with the New York Stock Exchange and the Philippine Stock Exchange where PLDT's ADS (American depositary shares) are listed.

 

Probably, it has also furnished the Philippines ' Securities and Exchange Commission (SEC) a copy of the covenant between itself and the NTT group. However, it should not have done that. After all, the local SEC has ruled that such a deal among stockholders of a company listed on the local exchange need only to file for petition for "confidentiality."

 

Anyone out there who wants to test the consistency of SEC officials in dealing with such petitions?

 

CAREmittance. Honda Cars Philippines has found a new marketing strategy. It signed on Monday a marketing tie-up with the Bank of Philippine Islands (BPI) and BPI Family Savings Bank to tap a very lucrative market-the overseas Filipino workers (OFW).

 

The partners call it CAREmittance, which is self-explanatory. Through the program, Honda provides the cars for sale to OFWs with the payments remitted through and/or financed by BPI and BPI Family Savings.

 

How lucrative is the OFW market? If the statistics for last year were to be the basis, then Honda, BPI and BPI Family Savings are looking at a $10.7-billion market.

 

Officials of the banks and those of Honda won't talk about projections but are optimistic on the success of the tie-up.

 

The deal works in three ways. For Honda, it can sell more cars. For BPI and BPI Family, it would earn more remittance fees and additional interest earnings from financing the OFWs' acquisition of Honda cars at fixed rate of 4-percent over Treasury bills. For OFWs, the advantages are easy access to credit and safe dollar remittance to their families back home.

 

http://www.businessmirror.com.ph/2006/0221/21%20cos%20dissolve.php

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