Regulatory Framework for Business Transactions
What the regulatory framework tests
Regulatory Framework for Business Transactions tests the statutes that shape commercial activity: the Revised Corporation Code, Securities Regulation Code, General Banking Law, Insurance Code, Intellectual Property Code, Data Privacy Act, E-Commerce Act, and consumer and competition rules. Expect entity formation, corporate governance, securities offerings, regulated intermediaries, and digital transactions.
Core rules
- Under the Revised Corporation Code, a corporation may be formed by one to fifteen natural-person incorporators; majority must be Philippine residents, and each incorporator must subscribe to at least one share.
- Regular and special meetings require a quorum of majority of the outstanding capital stock unless the bylaws require a higher percentage; the board acts by majority of directors.
- The Securities Regulation Code regulates offering and sale of securities, registration of securities and brokers, and insider trading.
- The Data Privacy Act requires lawful, fair, and transparent processing, with consent and security measures.
- Intellectual property protection covers copyright, patents, trademarks, and trade secrets under the IP Code.
Worked example
A corporation has 100,000 outstanding shares. Its bylaws require a majority quorum. At a stockholders meeting, 60,000 shares are represented. 50,001 shares are needed, so a quorum exists. If the bylaws instead required two-thirds, 66,667 shares would be needed and the meeting could not validly transact absent the required quorum.
Traps
Do not confuse quorum for stockholders with board quorum. Do not assume all securities offerings need SEC registration; exemptions exist. Do not treat data privacy consent as unlimited. Watch whether a law regulates the entity, the transaction, or the professional practice.