FAST FACTS: One Person Corporation in the Philippines

Roadmap

The concept of a corporation with a single stockholder was introduced by Republic Act No. 11232, otherwise known as the Revised Corporation Code of the Philippines, which took effect in 23 February.

The Securities and Exchange Commission (SEC) has released in 15 March draft guidelines listing documentary requirements for putting up a one-person corporation (OPC) and providing how ordinary stock corporations can be converted into OPCs.

In 1 May, after considering public’s comments, the SEC adopted the guidelines, rules and regulations in the establishment of an OPC, thru SEC Memorandum Circular (MC) No. 7-2019.

The SEC will start accepting applications for registration of an OPC in 6 May.

Background

Section 10 of the Revised Corporation Code paves the way for the creation of an OPC by removing the minimum number of incorporators that may organize a corporation. It further defined an OPC in Chapter III.

The Single Stockholder

The single stockholder (SS) can only be a natural person, trust or estate.

If the SS is a trustee, administrator, executor, guardian, conservator, custodian, or other person exercising fiduciary duties, proof of authority to act on behalf of the trust or estate must be submitted at the time of incorporation.

A foreign natural person may put up an OPC, subject to the applicable capital requirement and constitutional and statutory restrictions on foreign participation in certain investment areas or activities.

Who are Not Allowed to Form OPCs

A natural person who is licensed to exercise a profession may not organize as an OPC for the purpose of exercising such profession.

Banks, non-bank financial institutions, quasi-banks, pre-need, trust, insurance, public and publicly listed companies, non-chartered government-owned and -controlled corporations cannot incorporate as OPC.

The Incorporator

The incorporator must be of legal age.

Officers

The SS shall be the sole director and president of the OPC. S/he shall not be appointed as Corporate Secretary but may assume the role of a Treasurer.

The SS who assumes the position of the Treasurer shall post a surety bond (SB) to be computed based on the ACS (up to 1 million ACS = P1 million SB; up to 2 million from 1,000,001 ACS = P2 million ACS and so on; 5,000,001 ACS and above = amount of SB coverage shall be equal to the ACS).

Within fifteen (15) days from the issuance of its Certificate of Incorporation, the OPC shall appoint its officers and notify the SEC within five (5) days from appointment.

Nominee and Alternate Nominee

The SS is required to designate a nominee and an alternate nominee named in the Articles of Incorporation (AoI) who shall replace the SS in the event of the latter’s death and/or incapacity. At the end of the incapacity, the SS can resume the management of the OPC.

In case of death and permanent incapacity of the SS, the nominee will take over the management of the OPC until the legal heirs of the SS have been lawfully determined and the heirs have agreed among themselves who will take the place of the deceased.

Nominee and alternate nominee may be changed by the SS by submitting to the SEC. The AoI need not be amended.

Term of Existence

The term of existence of an OPC is perpetual. However, in the case of trust or estate, it shall be co-terminous with the existence of trust or estate.

Corporate Name

The suffix “OPC” should be indicated either below or at the end of its corporate name.

Capital Stock

Minimum capital stock is not required. Further, no portion of the authorized capital stock (ACS) is required to be paid-up at the time of incorporation.

Documentary Requirements

Only AoI is required. The same shall be filed in accordance with the requirements of Section 14 of the Revised Corporation Code. Applicants may follow the attached sample of the

The OPC is not required to submit and file its Bylaws.

Reportorial Requirements

  1. Annual audited financial statements (FS) within 120 days from the end of its fiscal year. If the total assets or total liabilities of the OPC are less than P600 thousand, the FS shall be certified only under oath by the OPC’s treasurer.
  2. A report on all explanations or comments by the President on the qualification, reservasion or adverse remarks made by the auditor in the FS.
  3. A disclosure of all self-dealings and related party transactions entered into between the OPC and the SS.

How to Apply

What are the Requirements

  1. Cover Sheet
  2. AoI
  3. Written Consent from the Nominee and Alternate Nominee
  4. Other Requirements, if applicable:
    1. Proof of Authority to Act on Behalf of the Trust or Estate (for trusts and estates incorporating as OPC)
    2. Foreign Investments Act (FIA) Application Form (for foreign natural person)
    3. Affidavit of Undertaking to Change Company Name, in case not incorporated in the Articles of Incorporation
    4. Tax Identification Number (TIN) for Filipino single stockholder
    5. TIN or Passport Number for Foreign single stockholder
  5. Filing Fees:
    1. Name Reservation – P100
    2. AoI – -1/5 of 1% of the ACS but not less than P2,000
    3. Legal Research Fee (LRF) – 1% of the Registration/Filing Fee but not less than P20
    4. FIA Application Fee – P3,000, if the SS is a foreign national
    5. Documentary Stamp – P30

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About the Author

Paul Michael Jaramillo
Paul Michael JaramilloExecutive Editor
Paul is a Certified Public Accountant (CPA), a youth and environmental advocate, leader, writer, blogger, filmmaker and an organist. He’s the former Chairperson of the College Editors Guild of the Philippines-Ilocos Chapter. As a writer, he has found focus and interest on reproductive health, deaf rights, youth development. At the age of 14, he has fully embraced the call of leadership by leading student organizations and college publications. He was a recipient of the PGMA Campus Journalism Award. He joined and won national contests and published some articles related to the United Nations Millennium Development Goals in a Spanish paper and website. Some of his articles were also published in leading Philippine news websites and featured in international organizations website.

He launched his career as a CPA in KPMG R.G. Manabat & Co. Paul is currently leading the Data and Analytics Network (and its university arm) of KPMG in the Philippines. He is also the Business Lead for Innovation. He provides trainings to KPMG professionals in the Philippines. He also joined Financial Services Academy for Shared Service Centres (SSC) as a presenter. He is part of the Technical Advisory Group of the Firm's Department of Professional Practice, focusing on data and analytics, audit methodology, accounting standards, root cause analysis, system of quality management, and financial statement quality control review. He represents the Firm as a resource and motivational speaker, arbiter, adjudicator and judge in academic conferences, audit conventions, accounting and audit cups, and audit case study competitions. He sits as a member of Root Cause Analysis team of the Firm. Paul is an Audit Methodology Champion and Workforce of the Future Champion of the Firm. He is also the Firm's System of Quality Management Implementation Manager.

Paul is the Review Master and Head Coach of PREMIERE Review School.

Paul is a member of the Iglesia Ni Cristo (Church Of Christ) and a Church officer in their locale congregation.