Guidelines on the Registration of a One-Person Corporation

“Should I register as a Sole Proprietor or as a Corporation?”  – This is one of the most common questions that we get from new business owners and entrepreneurs.

Both options have their own advantages and disadvantages. A single proprietorship is simple, while a corporation is a bit more complicated and has more reportorial requirements. Despite this, many still opt to establish a corporation since it protects your personal assets in cases of bankruptcy. For most businesses, the ideal business structure is somewhat a combination of the two.

Fortunately, under the Revised Corporation Code, you can now register your business not as a single proprietorship but under a newly-created juridical entity – One Person Corporation (OPC).

What is a One-Person Corporation (OPC)?

An OPC is a single-stockholder corporation that is a natural person, trust, or estate. The lone stockholder acts as the sole incorporator, director, and President.

This new business setup offers the complete control of a single proprietorship and the limited obligations of a corporation.

Life of an OPC

The OPC’s term of existence is perpetual in the case of a single stockholder who is a natural person.

In case of death or incapacity, the nominee or alternate nominee, which must be named in the Articles of Incorporation, shall take over the company’s reign.

For OPC under a trust or estate, the company’s life is co-terminus with the trust or estate’s term of existence.

Appointment of Directors and Officers

As mentioned above, the stockholder shall be the Director and President of the OPC. He shall appoint a Treasurer, Corporate Secretary, and other officers within 15 days from receipt of the Certificate of Incorporation.

The OPC shall notify the Securities and Exchange Commission (SEC) about the appointment of officers within five days from the appointment using the Appointment Form as may be prescribed by the SEC.

The single stockholder shall not act as the Corporate Secretary but may assume the role of a Treasurer. Suppose a single stockholder takes on the Treasurer’s functions. In that case, the SEC requires a surety bond.

The corporation may cancel the bond upon proof of appointment of another person as the Treasurer.

Documentations Needed to Form an OPC

1. Articles of Incorporation (AOI)

This basic information is required to be included in the AOI:

• primary purpose;
• principal office address;
• term of existence;
• names and details of the single stockholder;
• the nominee and alternate nominee;
• the subscribed and paid-up capital; and
• other matters consistent with law and which may be deemed necessary and convenient.

2. Nominee and Alternate Nominee’s Written Consent

The sole stockholder is required to designate a nominee and alternate nominee. They will take over the company’s operations in the event of the death or incapacity of a single stockholder.

The written consents of the nominees must be attached to the AOI upon filing with the SEC.

Note:

The OPC isn’t required to submit and file the company’s Bylaws nor accumulate a minimum capital stock unless required by special law.

Reportorial Requirements

The company is required to submit the following documents within the period required by the SEC:

• Annual audited financial statements* within 120 days from the end of its fiscal year as indicated in its AOI;
• The President’s reply on the qualification, reservation, or adverse remarks made by the auditor in the financial statements;
• A disclosure of all self-dealing and related party transactions entered into between the OPC and the single stockholder; and
• Other reports as the SEC may require.

*Note: The financial statements must be certified under oath by the OPC’s Treasurer if the total assets or total liabilities of the OPC are less than Php 600,000.00.

Other Important Notes

1. A natural person licensed to exercise a profession may not organize as an OPC to exercise such a profession, except as otherwise provided under special laws.

2. A foreign natural person may put up an OPC, subject to the applicable requirements and restrictions;

3. An ordinary corporation may apply for conversion to an OPC by following the SEC guidelines.

Entrepreneurs should take advantage of this new business setup. Registrants can have the best of traditional organizations – complete control and authority over their business in a single proprietorship and the limited liability of a company.

—————————-

Do you need help registering your business as an OPC or are you planning to convert your existing business to an OPC?

We’d be happy to assist you. Just email us at info@djkaaccounting.com for more details.