Understanding ‘One Person Corporation’ Under the Revised Corporation Code.

One Person Corporation (OPC) is a new development introduced in the Revised Corporation Code of the Philippines (RCC) which took effect on the 23rd day of February 2019, and which repealed the old Corporation Code of the Philippines (Batas Pambansa Blg. 68). Under the old Corporation Code, the limitation on the number of incorporators was not less than five (5) but not more than fifteen (15). On the other hand, under the RCC, and Securities and Exchange Commission (SEC) Memorandum Circular No. 16 series of 2019 (M.C. No. 16 s.2019) providing for the guidelines on the number and qualifications of incorporators under the RCC, two (2) or more persons, but not more than fifteen (15), may now organize themselves and form a corporation. Further, only a OPC may have a single stockholder, as well as a sole director.

What are some of the advantages of a One Person Corporation?

a. As opposed to a sole proprietorship, the corporation in a One Person Corporation has a personality separate and distinct from that of the single stockholder. This means that the stockholder may not be made personally liable for corporate debts and liabilities; and

b. An entrepreneur may register his or her own corporation without having to collaborate with others or to look for business partner/s.

To give full effect to the newly introduced provision on OPC, SEC issued M.C. No. 07 s.2019 which provides for the guidelines for the establishment of a One Person Corporation as follows:

What is the minimum authorized capital stock?

The is no requirement of minimum authorized capital stock except as otherwise provided by special law[1].

Is there a requirement to submit Articles of Incorporation (AI)? How about Bylaws?

Yes, the OPC shall file its AI in accordance with the requirements of Sec. 14 of the RCC.[2]

On the other hand, there is no need to submit corporate Bylaws or the procedure to be followed in the conduct of its corporate internal affairs[3]. Considering that there is only one stockholder, the requirement of Bylaws may be dispensed with.

Why is the single stockholder required by law to designate a nominee and alternate nominee?

This is so that there will be someone who will replace him/her in the event of his/her death and/or incapacity.[4]

In case the single stockholder becomes incapacitated, the nominee can take over the management of the OPC as director and president. At the end of the incapacity, the single stockholder can resume the management of the OPC.[5]

In case of death or permanent incapacity of the single stockholder, the nominee will take over the management of the OPC until the legal heirs of the single stockholder have been lawfully determined and the heirs have agreed among themselves who will take the place of the deceased.[6]

The alternate nominee on the other hand, shall take the place of the nominee in the event of nominee’s inability, incapacity, death, or refusal to discharge the functions as director and manager of the corporation, and only for the same term and under the same conditions applicable to the nominee.[7]

What are the limitations in the appointment of officers?

The single stockholder may not be appointed as the corporate secretary[8], however, he/she may assume the role of a treasurer provided that the bond required shall be posted. The bond shall be computed based on the authorized capital stock (ACS) of the OPC as shown below:

ACS Bond

P 1.00 to P 1M P 1M

Above P 1M to P 2M P 2M

Above P 2M to P 3M P 3M

Above P 3M to P 4M P 4M

Above P 4M to P 5M P 5M

Above P 5M Equal to ACS

The bond is subject to renewal every two (2) years or as may be required, upon review of the annual submission of the Audited Financial Statements/Financial Statements certified under oath by the Company’s President and Treasurer. It shall be a continuing requirement for so long as the single stockholder is the self – appointed Treasurer of the OPC.[9]

Who are not allowed to form an OPC?

The following cannot incorporate as OPC:

a. Banks;

b. Non-bank financial institutions;

c. Quasi-banks;

d. Pre-need;

e. Trust;

f. Insurance;

g. Public and publicly listed companies;

h. Non-chartered government-owned and controlled corporations (GOCCs); and

i. A natural person who is licensed to exercise a profession, for the purpose of exercising such profession, except as otherwise provided under special laws.[10]

May a foreign natural person establish a One Person Corporation?

Yes, 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.[11] You may see our related post on Foreign Equity Restrictions in the Philippines.

[1] M.C. No. 07 s.2019, Section 8. [2] Id. at Sec. 6. [3] Id. at Sec. 7. [4] Id. at Sec. 5. [5] Id. at Sec. 12. [6] Id. [7] RCC, Sec. 125, paragraph 3. [8] Id. at Sec. 122, par. 2. [9] M.C. No. 07 s.2019, Sec. 10. [10] Id. at Sec. 14. [11] Id. at Sec. 15.

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