SEC Clarifies Liquidation Beyond the 3-Year Winding Up Period

On 4 April 2024, the Securities and Exchange Commission (“SEC”) Office of the General Counsel (“OGC”) issued SEC-OGC Opinion No. 06-24 regarding whether a corporation can liquidate its investments, particularly shares of stock in another company, after the lapse of 3 years from the revocation of its primary registration. The SEC stated that “while Section 122 of the Corporation Code (now Section 139 of the Revised Corporation Code) gives a dissolved corporation three (3) years to continue as a body corporate for purposes of liquidation, the disposition of the remaining undistributed assets must necessarily continue even after such period.”

This opinion aligns with an earlier SEC Commission En Banc decision in the case of Northern Luzon Transportation Inc. and Isabela Cultural Corporation (SEAC No. 347, 07 October 1991). In that case, the SEC ruled that the corporation “should be allowed to continue liquidating its remaining assets in order to complete the process of dissolving the corporation. Likewise, it should be allowed to distribute the proceeds from said disposition to its stockholders or creditors, if any.”

Thus, a corporation can liquidate its investments even after the lapse of 3 years from the revocation of its primary registration, ensuring that all remaining assets are properly disposed of and distributed.