The concept of the One Person Corporation (OPC) was introduced through the Revised Corporation Code of the Philippines or the Republic Act No. 11232, which took effect in 2019. This law provides an opportunity for both local and foreign entrepreneurs to establish a corporation independently.
What is One Person Corporation (OPC)?
According to Republic Act No. 11232, also known as the Revised Corporation Code of the Philippines, a One Person Corporation (OPC) is a corporation with a single stockholder who serves as the incorporator, sole director, and president of the corporation. This type of corporation is beneficial for micro, small, and medium-sized businesses, which offers limited liability and similar benefits of a sole proprietorship. Additionally, this business structure allows the corporation to be 100% owned by a foreign national since there is only one shareholder.
For foreign single stockholders, they must appoint a Treasurer, Corporate Secretary and other officers. They cannot serve as the Corporate Secretary, as this position must be filled by a Filipino citizen. However, they can be appointed as Treasurer, provided they submit a surety bond to the Securities and Exchange Commission (SEC) and are residents of the Philippines. Foreign single stockholders must also appoint a nominee and an alternate nominee who shall be indicated in the Articles of Incorporation to have an authority to act as replacements in the event of the stockholder’s death or incapacity to operate the corporation.
Who is Eligible to Establish a One Person Corporation in the Philippines?
According to the Revised Corporation Code of the Philippines, the following individuals/entities are eligible to establish a One Person Corporation in the Philippines:
- A local and foreign natural person of legal age subject to restrictions outlined in the Foreign Investments Negative List (FINL) regarding areas partially or fully restricted foreign investment;
- A trust managed by a trustee, but not a trust entity; and
- An estate.
What are the Restrictions on Setting Up a One Person Corporation (OPC) in the Philippines?
In accordance with Section 116 of the Revised Corporation Code, the following entities and individuals are restricted on setting up a One Person Corporation in the Philippines:
- Banks, non-bank financial institutions, and quasi-banks;
- Pre-need, trust, and insurance companies;
- Public and publicly-listed companies;
- Non-chartered Government-Owned and Controlled Corporation (GOCCs); and
- A natural person who is licensed to exercise a profession may not organize as a One Person Corporation for the purpose of exercising such profession except as provided under special laws.
What is the Bond Requirement for a Self-Appointed Treasurer?
If the single stockholder appoints himself/herself as Treasurer, he/she is required to post a surety bond based on the authorized capital stock of the One Person Corporation, as follows:
Authorized Capital Stock | Surety Bond Coverage |
PHP 1.00 to PHP 1,000,000.00 | PHP 1,000,000.00 |
PHP 1,000,000.00 to PHP 2,000,000.00 | PHP 2,000,000.00 |
PHP 2,000,000.00 to PHP 3,000,000.00 | PHP 3,000,000.00 |
PHP 3,000,000.00 to PHP 4,000,000.00 | PHP 4,000,000.00 |
PHP 4,000,000.00 to PHP 5,000,000.00 | PHP 5,000,000.00 |
PHP 5,000,000.00 and above | Amount of surety bond coverage shall be equal to the OPC’s Authorized Capital Stock |
What are the Requirements for One Person Corporation (OPC) in the Philippines?
The following documents must be submitted when registering a business as an OPC or Open Person Corporation with the Securities and Exchange Commission (SEC):
- Articles of Incorporation (Natural Person, Trust or Estate), including:
- Names and details of the single stockholder or director;
- Primary purpose;
- Term of existence;
- Principal office address;
- Nominee and Alternate Nominee;
- Authorized, subscribed and paid-capital; and
- Other information that may be necessary and compliance with law
- Written Consent from the Nominee and Alternate Nominee
- Proof of Authority to Act on Behalf of the Trust or Estate, for trusts and estates incorporating as OPC
- Foreign Investments Act (FIA) Application Form, for foreign natural persons
- Affidavit of Undertaking to Change Company Name, in case not included in the Articles of Incorporation
- Tax Identification Number (TIN), for Filipino single stockholder
- Tax Identification Number (TIN) or Passport Number, for Foreign single stockholder
How to Register One Person Corporation (OPC) in the Philippines?
In the Philippines, to register your business as an One Person Corporation, the following steps must be followed:
- Company Name Verification. It is advisable to prepare at least three (3) proposed names for your business before applying for a registration. Ensure that the proposed business name is available in the Securities and Exchange Commission (SEC) database. If validated, your business name will be suffixed with OPC.
- Application. Complete the online form on the SEC website. Ensure that all the information is accurate and complete. After submitting the form, an application reference number will be given.
- Monitor the Status. You may check and track the status of your application by inputting your reference number in the SEC website.
- Payment of Fees. Pay the registration fee once the application is approved.
- Notarization. Submit the hard copies of signed and notarized documentary requirements along with the proof of payment of filing fees. These documents are the following:
- SEC Cover Sheet
- Articles of Incorporation
- Written documentation of consent from nominee and alternate nominee
- Other documents, such as Tax Identification Number, FIA Application Form for foreign nationals, and Proof of Authority for Trusts and Estates, depending on the type of application.
- Issuance. Once all the necessary documents are submitted and completed, the SEC will issue a Certificate of Business Registration. However, in some circumstances, incorporators may be requested to submit some additional supporting documents.
How Much Does It Cost to Register a One Person Corporation (OPC) in the Philippines?
The filing fees for registering an OPC are as follows:
Type of Fee | Cost |
Company Name and/or Trade Name Reservation | PHP 100.00 |
Articles of Incorporation | One half 1% of the Authorized Capital Stock but not less than PHP 2,000.00 |
Legal Research Fee | 1% of the Registration or Filing Fee, but not less than PHP 20.00 |
FIA Application Fee (for Foreign single stockholder) | PHP 3,000.00 |
Documentary Stamp | PHP 30.00 |
Please note that fees are subject to change, and other fees may apply depending on specific circumstances.
What are the Pros and Cons of Owning a One Person Corporation (OPC)?
Owning an OPC has both advantages and disadvantages, which are as follows:
Advantages of Owning a One Person Corporation
- Limited Liability. This type of corporation allows the sole stockholder to register his/her corporation without needing a minimum number of shareholders. Therefore, their personal assets are protected as it is deemed separate and safe from creditors, meaning the shareholder is only liable to their capital contribution to the business.
- No Minimum Capital Requirement. Pursuant to Section 117 of the Revised Corporation Code, a One Person Corporation (OPC) is not required to have a minimum authorized capital stock except as otherwise provided by special law. However, they will still be required to pay fees, such as the company name and/or trade name reservation fee, filing fees, legal research fee, and for Foreign single stockholder, FIA application fee.
- Foreign Ownership. Considering that there is only one shareholder in OPC, a foreign national can 100% own the corporation and can be appointed as Treasurer given that they have submitted a surety bond to the SEC and reside in the Philippines. However, they cannot be the Corporate Secretary since they must be a Filipino citizen.
- Control on Management. Unlike other types of corporation, the owner of OPC has the overall control of the company. The business operations and decisions are at the sole discretion of the director, so as all the profits earned.
Disadvantages of Owning a One Person Corporation
- Eligibility. In setting up an OPC in the Philippines, there are qualifications that must be met, which the sole owner must either be a natural person of legal age, a trust, or an estate. To ensure the public welfare comes first, individuals in the field of medicine, law, and other professions are not allowed to turn their practice into a corporation. Additionally, any financial institutions are prohibited to set up an OPC to protect the public interest.
- Restrictions. A foreign natural person may register as an OPC, but there are industries that are subject to limitations as specified in the Foreign Investment Negative List (FINL). They are also required to provide at least US $200,000 capital.
- Administrative Requirements. Registering an OPC requires more documentary requirements compared to a sole proprietorship. These requirements include annual audited financial statements, explanatory report of audit findings and recommendations, disclosure of all self-dealings between the OPC and the director, and other necessary reports.
- Tax Obligations. This business structure is subject to a corporate tax rate between 20% to 30%, along with the potential tax benefits specific to corporations.
Need further information and assistance regarding One Person Corporation (OPC)? Talk to our team at Duran & Duran-Schulze Law to know more about the requirements and process. Call us today at (+632) 8478 5826 or +63 917 194 0482, or send an email to info@duranschulze.com for more information.
