One Person Corporation
The Philippine government issued the Revised Corporation Code (RCC) in February 2019 to support the country’s rapidly expanding infrastructure and lure foreign investors to establish business there. The formation of a new legal organization, the One Person Corporation, was one of the primary requirements of the RCC (OPC).
An OPC is a type of organization that can be formed by a single person without the need for shareholders or a board of directors. The corporation’s owner is the single shareholder, acting director, and president. This essay will walk you through the benefits and drawbacks of establishing an OPC in the Philippines to give you a better understanding of the new company structure.
Advantages of a One Person Corporation
The OPC was created to help the Philippines’ increasing micro, small, and medium enterprise (MSMEs) sector by allowing a lone proprietor to register their business as a corporation without a minimum number of shareholders.
By forming an OPC, you ensure that only the firm is responsible for its debts and responsibilities. Personal assets of the owner will be considered separate and protected from creditors. The “corporate veil,” which isolates an organization’s actions from those of its shareholders, provides this protection.
Perpetual Existence
The previous Corporation Code set a restriction of 50 years for corporations, with the option to renew with the Securities and Exchange Commission (SEC). Corporations are now allowed to exist indefinitely under the RCC unless their Articles of Incorporation (AOI) state otherwise.
These changes were made to lessen the likelihood of enterprises closing down prematurely and to allow them to invest in long-term value.
No Minimum Capital Requirement
An OPC can be registered by foreign investors. It must, however, be in a sector that allows 100 percent foreign ownership. Manufacturing, export, retail, and e-commerce are all acceptable industries.
The Foreign Investments Negative List contains a complete list of blacklisted industries. In addition, foreign nationals must provide at least US$200,000 in paid-in capital.
Complete Control of the Enterprise
In contrast to a regular corporation, an OPC’s director has complete power over the company. They are not subject to shareholder scrutiny and are not required to seek board of director approval. All business decisions are made solely at the discretion of the director, and all profits are solely theirs.
Only natural persons, trusts, and estates are eligible.
The RCC prohibits professionals from turning their practice into a corporation. This is to protect the fields of medicine, law, and other regulated professions from corporate interests and ensure that patient and client welfare comes first. Also prohibited from setting up an OPC are banks, quasi-banks, and other financial institutions to protect the public interest.
Complexity and more paperwork
OPCs have higher administrative obligations than sole proprietorships. OPCs must also file the following documents in addition to the AOI:
- Financial statements that have been audited every year
- In response to the audit findings and recommendations, an explanatory report was written (s)
- All self-dealings between the OPC and the director must be disclosed.
- As needed, other reports
Depending on the size of your company, these additional documents may need you to work longer hours to meet these obligations in addition to your regular business activities.
Existing Corporations Can Restructure Into One Person Corporations
A domestic ordinary stock corporation (OSC) that is already in existence can apply to convert to an OPC. All of the company’s shares must be purchased by a single investor. The company secretary and treasurer positions must be filled.
The treasurer may be appointed by the board of directors, while the corporate secretary cannot. Following the completion of these requirements, the following documents must be submitted to the SEC:
- Articles of Incorporation Amended (AOI)
- Certificate of the Secretary of State
- Evidence of stock purchase
- Both nominees must sign an affidavit of acceptance.
- The name of the corporation has been reserved.
- Clearance monitoring
- For additional information on the OPC registration process, see to the SEC’s official website.
