SEC Registration of a One-Person Corporation - Atty. Gilbert P. Aslor - Licensed Tax and Corporate Lawyer in Makati, Philippines

SEC Registration of a One-Person Corporation

When it comes to setting up a business entity in the Philippines, sole proprietorship, general partnership, and regular corporations are the basic business structures that first come to our recollection. Of course, the three business structures have their advantages and disadvantages over the other.

One example is that in a corporate set-up, the liabilities of its owners are generally limited to their capital investment, unlike in a partnership, and a sole proprietorship where the general partner or the sole proprietor is liable not only to their invested capital but their liability extends to their personal assets. However, the trade-off in the limited liability under a corporate set-up is that the decision-making process is inflexible since all decisions of a corporation must be through its elected board of directors, contrasting this to a sole proprietorship where a single individual dominates the decision. 

Thus, if you like the limited liability found under the corporate set-up and is comfortable with having complete dominion over the business decisions, then a One Person Corporation (OPC) is the perfect set-up for you.

What is a One-Person Corporation (OPC), and who can be an incorporator of an OPC?

An OPC is a corporation with only one stockholder who may either be a natural person, trust, or an estate. The term “Trust” as an incorporator does not refer to a trust entity but the subject being managed by a trustee.

Who are not allowed to establish an OPC?

The following are not allowed to establish an OPC:

  1. Bank and non-bank financial institutions.
  2. Quasi-banks, pre-need, trust, and insurance corporations.
  3. Public and publicly listed companies.
  4. Non-chartered government-owned and controlled corporations.
  5. A licensed professional for the purpose of exercising their licensed profession.

Can a foreign national establish an OPC?

A foreign national can establish an OPC, provided the applicable minimum capital requirements, and the constitutional and statutory restrictions on foreign equity participation in nationalized investment areas or activites are met.

What are the requirements to be an incorporator of an OPC?

If the incorporator is a natural person, he/she must be of legal age.
If the single incorporator 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.
What must be filed to the Securities and Exchange Commission (SEC) to establish an OPC?

Only the Articles of Incorporation (AOI) are needed. The AOI must indicate the following:

  1. The primary purpose.
  2. Principal office address.
  3. Term of existence.
  4. Name and details of the single stockholder.
  5. The nominee and alternate nominee.
  6. Authorized, subscribed, and paid-up capital.
  7. Other matters consistent with the law and may be deemed necessary.

By-Laws are no longer required to be submitted to the SEC.

Who may be appointed as nominees and alternate nominees, and why is it needed?

Any qualified person may be appointed in the AOI as a nominee and alternate nominee of the single stockholder. The nominee or alternate nominee shall replace the single stockholder in the event of the latter’s death or incapacity.

The written consent of the nominee and alternate nominee shall be attached to the application for incorporation.

Can the single stockholder change the nominee or alternate nominees?

Yes. The nominee and alternate nominee can be changed by the single stockholder, at any time, by submitting to the SEC the names of the new nominees together with their written consent.

The AOI need not be amended by reason of the change of the nominees.

Is there any minimum capital requirement?

Generally, the is no minimum authorized capital stock or paid-up capital stock requirement in establishing an OPC. The only exception to this is when a special law requires minimum capitalization.

Who are qualified to become director or officer of an OPC?

The single stockholder shall be the sole director and president of the OPC.

Within fifteen (15) days from the issuance of the Certificate of Incorporation, the OPC shall appoint a Treasurer, Corporate Secretary, and other officers. The OPC shall further notify the SEC within five (5) days from the appointment of the officers.

The single stockholder cannot act as the Corporate Secretary but may assume the role of Treasurer. The single stockholders who also acts as the Treasurer shall be required to post a surety bond computed based on the authorized capital stock of the OPC. The surety bond is a continuing requirement if the single stockholder also acts as the Treasurer. It will only be cancelled if the single stockholder appoints another person to act as the Treasurer.

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