On 23 February 2019 Republic Act (RA) 11232 or the Revised Corporation Code of the Philippines became effective and amended a significant portion of Batas Pambansa (BP) 68 the old corporation code.
One of the most significant amendment that RA 11232 brought is the allowance of a one-person corporation. Previously, to start a corporation you must have at least five (5) stockholders making it difficult for a person who wants to chart on his own to start a corporation. However, because of this amendment, people have another option other than single proprietorship if they want to start their solo business.
Below is a simple guide for establishing a One Person Corporation:
Who may form a One Person Corporation (OPC)?
Only natural persons, trusts, and estates may establish an OPC.
Can foreigners establish an OPC in the Philippines?
Yes, provided that they follow the capitalization rules and the nationality rules as provided in the law.
Is an OPC required to submit to the Securities and Exchange Commission (SEC) an Articles of Incorporation and By Laws?
An OPC is required to submit an Articles of Incorporation (AOI) with the SEC for its registration. If an OPC is formed by a trust or an estate, it needs to submit together with its AOI an authority that the person assigned with the fiduciary duties of the OPC is duly authorized.
With regards to By Laws, an OPC is not required to submit the same with the SEC for registration.
Who shall be the officers and directors of an OPC?
The single stockholder shall be the sole director and president of the One Person Corporation.
Within fifteen (15) days from the issuance of its certificate of incorporation, the One Person Corporation shall appoint a treasurer, corporate secretary, and other officers as it may deem necessary and notify the SEC.
The single stockholder may not be appointed as a Corporate Secretary. If the single stockholder shall appoint himself/herself as the treasurer he/she is required to provide a bond with the SEC.
What are the reportorial requirements of an OPC with the SEC?
(a) Annual financial statements audited by an independent certified public accountant: Provided, That if the total assets or total liabilities of the corporation are less than Six Hundred Thousand Pesos (P600,000.00), the financial statements shall be certified under oath by the corporation’s treasurer and president.
(b) A report containing explanations or comments by the president on every qualification, reservation, or adverse remark or disclaimer made by the auditor in the latter’s report;
(c) A disclosure of all self-dealings and related party transactions entered into between the OPC and the single stockholder; and
(d) Other reports as the Commission may require.
What is the liability of a single stockholder in an OPC?
The single stockholder shall not be answerable for the liabilities of the OPC. Provided, that he/she shows that the OPC was adequately funded.
In case where the single stockholder cannot prove that the property of the OPC is independent of the stockholder’s personal property, the stockholder shall be jointly and severally liable for the debts and other liabilities of the OPC.
Can an ordinary corporation convert into an OPC?
Yes, an ordinary corporation can be converted into an OPC, provided that the all the stocks of the corporation shall be acquired by a single stockholder. Further, the single stockholder must submit the required documents for an OPC with the SEC.
Can an OPC convert into an ordinary stock corporation?
Yes, an OPC can be converted into an OPC, provided that all the requirements of an ordinary stock corporation be complied and submitted to the SEC.
Written by: Atty. Jon Dominic Penaranda