Significant Aspects in the Establishment of a One Person Corporation (OPC)
On 25 April 2019, the Securities and Exchange Commission (“SEC”) issued Memorandum Circular No. 7, series of 2019, regarding the “Guidelines on the Establishment of a One Person Corporation (OPC)” (“M.C. No. 7”), which provides guidelines, rules and regulations in the establishment of an OPC. Published on 01 May 2019, M.C. No. 7 took effect immediately upon its publication in two (2) newspapers of general circulation.
According to M.C. No. 7, an OPC is a corporation involving a single stockholder, who can only be a natural person, trust or estate. The single stockholder shall be the lone director and president of the OPC. He shall not take the role of the corporate secretary but may carry out the role of the treasurer. The single stockholder who undertakes the role of treasurer is required to post a surety bond.
For clarification purposes, the “trust” referred to in M.C. No. 7 does not suggest a trust entity, but refer to the subject being managed by a trustee. Although the term of existence of an OPC is perpetual, in the case of a trust or an estate, its term is coterminous with the existence of such trust or estate.
One of the important features of an OPC is that the single stockholder is required to designate a nominee and an alternate nominee named in the Articles of Incorporation (“AI”) for the purpose of replacing the single stockholder in the event of the latter’s death and/or incapacity.
An OPC can easily be determined since the suffix “OPC” shall be shown either below or at the end of its corporate name. It shall file its AI in accordance with the requirements of Section 14 of the Revised Corporation Code stating the 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 mandated by law. An OPC is not required to submit by-laws, nor to have minimum authorized capital stock, except as otherwise provided by a special law.
It is worth mentioning that banks, non-bank financial institutions, quasi-banks, pre-need, trust, insurance, public and publicly listed companies, non-chartered government-owned and controlled corporations (“GOCCs”) are not allowed to incorporate as an OPC. Except as otherwise provided under special laws, a natural person, licensed to exercise a profession, may not organize as an OPC with the intention of exercising a profession.
Lastly, a foreign natural person may establish an OPC subject to pertinent capital requirements in accordance with the Constitution and foreign restrictions in specific investment activities.
The documentary requirements for the establishment of an OPC is manually submitted at the SEC Head Office. There is no option for an OPC incorporation via online registration in the Company Registration System (“CRS”).