OPC: A New Entity Under Philippine Law
In the Philippines, business enterprises are organized principally in one of four forms, the single proprietorship, the general partnership, the limited partnership, and the corporation.
Section 16, Article XII of the 1987 Constitution allows the Congress to enact a general law that will provide for the formation of private corporations in the Philippines, to wit:
“Section 16. The Congress shall not, except by general law, provide for the formation, organization, or regulation of private corporations. Government-owned or controlled corporations may be created or established by special charters in the interest of the common good and subject to the test of economic viability.”
Under the corporation code, old or revised, a corporation is defined as an artificial being created by operation of law, having the right of succession and the powers, attributes, and properties expressly authorized by law or incidental to its existence.
On 23 February 2019, Republic Act No. 11232, otherwise known as the Revised corporation code of the Philippines (“Revised Corporation Code”) took effect and it introduced, particularly Chapter III of the law, the establishment of the so-called One Person Corporation (“OPC”).
Who May or May Not Incorporate as OPC?
Unlike in Batas Pambansa Bilang 68 which generally requires a minimum of 5 and a maximum of 15 incorporators in a corporation, a one person corporation is a corporation which requires only a single stockholder who can be a natural person (must be of legal age), trust (subject being managed by the trustee), or an estate.
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.
However, banks and quasi-banks, pre-need, trust, insurance, public and publicly-listed companies, and non-chartered government-owned and controlled corporations may not incorporate as One Person Corporations. A natural person who is licensed to exercise a profession may not also organize as a One Person Corporation for the purpose of exercising such profession except as otherwise provided under special laws.
Term of Existence of OPC
Securities and Exchange Commission (”SEC”) Memorandum Circular No. 07, or otherwise known as the Guidelines on the Establishment of One Person Corporation states that the term of existence of the OPC shall be perpetual. However, in case of the trust or estate, its term of existence shall be co-terminus with the existence of the trust or estate.
Corporate Name, Director, Officers, Nominee, and Alternate Nominee
In OPC, the suffix “OPC” should be indicated by the one person corporation either below or at the end of its corporate name.
The single stockholder shall be the sole director and president of the OPC. The Revised corporation code also requires the designation of a nominee and an alternate nominee named in the Articles of Invorporation who shall replace the single stockholder in the event of the latter’s death (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) and/or incapacity. 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. The written consent of the nominee shall be attached to the application for incorporation.
The OPC shall appoint a Treasurer, Corporate Secretary, and other officers within 15 days from the issuance of its Certificate of Incorporation, and notify the SEC within five (5) days of appointment. The single stockholder shall not be appointed as Corporate Secretary but may assume the role of a treasurer.
What Documents are Needed in OPC?
The OPC is not required to submit and file its by-laws unlike other corporations. The only document needed is the Articles of Incorporation (AI) in accordance with the requirements of the Revised corporation code. The AI must set forth the corporation’s primary purpose, principal office address, term of existence, names and details of the single stockholder, the nominee and alternate nominee and the authorized subscribed and paid-up capital and such other matters consistent with law and which may be deemed necessary and convenient.
Peculiarities of One Person Corporation
- By-laws are not required.
- The OPC is not required to have a minimum authorized capital stock except as otherwise provided by the special law.
- No portion of the authorized capital is required to be paid-up at the time of incorporation, unless otherwise required by applicable laws or regulations.
And finally, the OPC must submit the following documents, as reportorial requirements, to wit:
- Annual audited financial statements within 120 days from the end of its fiscal year as indicated in its Articles of Incorporation. 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;
- A report on all explanations or comments by the president on the qualification, reservation, or adverse remarks made by the auditor in the financial statements;
- A disclosure of all self-dealings and related party transactions entered into between the OPC and the single stockholder; and
- Other reports as the SEC may require.
About Nicolas and De Vega Law Offices
If you need assistance in corporate law, commercial law, corporate or commercial litigation including One Person Corporations, or civil or other criminal law-related issues, we can help you. Nicolas and de Vega Law Offices is a full-service law firm in the Philippines. You may visit us at the 16th Flr., Suite 1607 AIC Burgundy Empire Tower, ADB Ave., Ortigas Center, 1605 Pasig City, Metro Manila, Philippines. You may also call us at +632 84706126, +632 84706130, +632 84016392 or e-mail us at [email protected]. Visit our website https://ndvlaw.com.