Corporations 11: One Person Corporation (Philippines)

Summary

In this episode, the vlogger discusses the One Person Corporation (OPC), a business structure introduced in the revised Corporation Code. The OPC allows a single individual to establish a corporation, providing benefits for entrepreneurs, especially micro, small, and medium enterprises (MSMEs). The video covers the advantages, limitations, incorporation process, officer roles, and reportorial requirements for OPCs. It also explains the rules around nominees and alternate nominees in case of the sole stockholder’s death or incapacity. The vlogger further outlines the process of converting between OPCs and ordinary stock corporations, offering valuable insights for business owners and aspiring entrepreneurs.

Takeaways

• 😀 OPC (One Person Corporation) is a corporation with only one stockholder, offering benefits similar to regular corporations but without the need for multiple incorporators.
• 😀 The OPC structure encourages entrepreneurship and small businesses by avoiding the need for dummy incorporators.
• 😀 Only natural persons, trusts, or estates can form an OPC. Banks, publicly listed companies, and certain other entities are prohibited from forming OPCs.
• 😀 Licensed professionals (lawyers, CPAs) cannot form an OPC to practice their profession, unless a special law allows it.
• 😀 The OPC has a separate legal personality from the stockholder, meaning its debts and liabilities are distinct from the stockholder's personal assets.
• 😀 The OPC’s stockholder enjoys limited liability, but must prove that the corporation is adequately financed to avoid 'piercing the corporate veil'.
• 😀 An OPC is not required to have minimum capital stock, but must follow special laws if applicable (e.g., certain contracting laws may require capital thresholds).
• 😀 The sole stockholder of an OPC is the director and president, but other officers (treasurer, corporate secretary) must be appointed within 15 days of incorporation.
• 😀 The corporate secretary cannot be the sole stockholder but must fulfill essential duties such as managing records and notifying the SEC in case of the stockholder's death or incapacity.
• 😀 In case of the stockholder’s death or incapacity, a nominee and alternate nominee are required to manage the OPC until the stockholder or heirs make decisions about succession.
• 😀 OPCs must submit annual financial statements, reports on related-party transactions, and other documents. Non-compliance can result in delinquent status and potential revocation of the OPC’s registration.
• 😀 OPCs can be converted into ordinary stock corporations, and vice versa, with the proper filing and SEC approval. Conversion may occur due to a stockholder acquiring all shares or changes in the corporation’s status.

Q & A

What is a One Person Corporation (OPC)?

A One Person Corporation (OPC) is a type of corporation that is owned and operated by a single stockholder. It is governed primarily by Sections 115 to 132 of the Revised Corporation Code, with additional provisions from the general corporate law.

Who can form an OPC?

An OPC can only be formed by a natural person, a trust, or an estate. Corporations or other entities, such as banks or insurance companies, cannot form an OPC.

Are there any restrictions on OPC formation?

Yes, there are specific restrictions. Banks, quasi-banks, public companies, and licensed professionals (like lawyers and accountants) are generally prohibited from forming an OPC unless specified by special laws.

What is the primary purpose of allowing OPCs to exist?

OPCs were introduced to encourage entrepreneurship and facilitate the formation of small businesses, providing the benefits of a corporation while avoiding the need for multiple incorporators, such as using dummies or nominal members.

What is the liability of the sole stockholder in an OPC?

The liability of the sole stockholder in an OPC is limited to their investment in the corporation. However, they must demonstrate that the OPC is adequately financed and that its property is separate from their personal assets, or they may face personal liability.

What is the requirement for the corporate name of an OPC?

The corporate name of an OPC must follow the same rules as regular corporations, but it must also include the designation 'OPC' either below or at the end of the corporate name to indicate its one-person nature.

Can the sole stockholder of an OPC hold multiple OPCs?

Yes, the law allows a single individual to own and operate more than one OPC. There is no limit to the number of OPCs a person can establish.

Who can serve as officers in an OPC?

The sole stockholder of an OPC automatically serves as the sole director and president. The OPC must also appoint a treasurer, corporate secretary, and other necessary officers, but the sole stockholder cannot be the corporate secretary.

What happens if the sole stockholder of an OPC dies or becomes incapacitated?

In the event of the death or incapacity of the sole stockholder, a designated nominee or alternate nominee takes over the management of the OPC. The legal heirs must notify the SEC and decide whether to dissolve or convert the OPC into a regular stock corporation.

What are the reportorial requirements for OPCs?

OPCs must submit annual financial statements, audited by a certified public accountant, or certified by the treasurer and president if the OPC has less than 600,000 pesos in assets or liabilities. They must also disclose related-party transactions and self-dealing activities.