The Securities and Exchange Commission (SEC) issues guidelines on the establishment of One Person Corporation

The SEC issued Memorandum Circular No. 7, s. 2019 (MC 7) dated 25 April 2019 providing for the guidelines on establishing a One Person Corporation (OPC) under the Revised Corporation Code. MC 7 became effective May 01, 2019.

An OPC is a corporation with a single stockholder, who can be any of the following:

  • A natural person who must be of legal age, a Filipino or a foreigner subject to the applicable capital requirement, and constitutional and statutory restrictions on foreign participation in certain investment areas or activities. A natural person who is licensed to exercise a profession may not organize as an OPC except as otherwise provided under special laws.
  • A trust or the subject being managed by a trustee, and not a trust entity. If the single stockholder is a trustee or other person exercising fiduciary duties, this person must submit proof of authority to act on behalf of the trust or estate at the time of incorporation.
  • An estate.

OPCs are required to submit Articles of Incorporation that comply with the following:

  • Corporate name - The OPCs must append “OPC” either below or at the end of its corporate name.
  • Term of existence - In general, the term of existence of the OPC is perpetual, except that of the trust or estate, which shall co-exist with the trust or estate or subject to dissolution under means allowed by law.
  • Names and details of the single stockholder, the nominee, and alternate nominee:

Single stockholder

Nominee and alternate nominee

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

The nominee can take over the management of the OPC as director and president in case the OPC becomes incapacitated. At the end of the incapacity, the single stockholder can resume the management of the OPC.

In case of death or permanent incapacity of the single stockholder, the nominee will take over the management of the OPC 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.

The nominee and the alternate nominee must be designated by the OPC in the Articles of Incorporation, which must have the attached consent in writing of the nominee and alternate nominee.

The nominee and alternate nominee may be changed from time to time by the OPC upon notification with the SEC.

If the single stockholder 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

  • Authorized, subscribed, and paid up capital - There is no required minimum authorized capital stock and paid up portion, except as otherwise provided by applicable laws or regulations.
  • Appointment of officers

Obligation of the OPC

Restrictions and other requirements

Within fifteen (15) days from issuance of the Certificate of Incorporation by the SEC, the OPC shall appoint a Treasurer, Corporate Secretary, and other officers.

The single stockholder cannot be appointed as Corporate Secretary.

If the single stockholder assumes the role of the Treasurer, s/he is required to post a surety bond to be computed based on the authorized capital stock of the OPC.

The bond is subject to renewal every two (2) years or as may be required, upon review of the annual submission of the Audited Financial Statements (AFS).

The bond is a continuing requirement so long as the single stockholder remains as the Treasurer of the OPC.

It is subject to cancellation upon proof of appointment of another person as the Treasurer and filing of amended form for appointment of officers.

Within five (5) days from appointment, the OPC must notify the SEC using the form that the latter may prescribe.

OPCs must also comply with the following reportorial requirements:

  • (a) annual audited financial statements with 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;
  • (b) a disclosure of all self-dealings and related party transactions entered between the OPC and the single stockholder; and
  • (c) other reports as the SEC may require.

Click here to read the entire text of MC 7 with attached sample Articles of Incorporation of an OPC.

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