ONE PERSON CORPORATION (OPC) IN THE PHILIPPINES - Everything You Need to Know

Summary

In this video, Heidi explains the benefits and limitations of the One Person Corporation (OPC) in the Philippines, a business structure that allows foreigners to own 100% of a company with limited liability. While OPCs offer full ownership and protection from personal liability, they come with restrictions, such as limitations on land ownership and challenges in transferring shares. Heidi also outlines the process for setting up an OPC, including required documents, registration steps, and the importance of consulting experts to navigate the complexities of business formation in the Philippines. This informative video provides essential insights for foreign entrepreneurs looking to start a business in the country.

Takeaways

• 😀 OPC (One Person Corporation) in the Philippines allows foreigners to own a business 100%, offering limited liability protection like a corporation.
• 😀 An OPC is a good option for foreigners who want full ownership of their business without the complicated capital requirements of a traditional corporation.
• 😀 Foreigners can only own 100% of an OPC in the Philippines, but they must appoint two nominees to take over the business in case of emergencies or death.
• 😀 Foreigners cannot directly own land in the Philippines, even if they own a corporation. Land ownership restrictions apply to all business structures, including OPCs.
• 😀 OPCs cannot own land, but a domestic corporation (with at least 40% foreign ownership) can own land. However, the foreigner doesn't technically own the land.
• 😀 Foreigners interested in buying land should consider setting up a domestic corporation with a 60/40 Filipino ownership structure to navigate land ownership laws.
• 😀 The process for registering a business in the Philippines can be complex and may take months due to the required back-and-forth with the government.
• 😀 Starting an OPC requires a few key documents: a tax ID, passport, and basic personal information. The registration process now includes online payment and submission, making it easier than before.
• 😀 Business owners setting up an OPC cannot transfer shares easily. Those planning to sell shares should consider a traditional corporation instead of an OPC.
• 😀 The government of the Philippines maintains restrictions on foreign business operations through a 'negative list' that dictates what types of businesses foreigners can engage in.
• 😀 Foreigners seeking business advice in the Philippines should consider hiring an agency to help navigate the complicated process of business registration, especially since local law requires physical notarization of some documents.

Q & A

What is a One Person Corporation (OPC) in the Philippines?

A One Person Corporation (OPC) in the Philippines is a business structure that combines the features of a sole proprietorship and a corporation. It allows a single person to own and operate the business, while providing limited liability protection, similar to a corporation.

How is OPC different from a sole proprietorship?

Unlike a sole proprietorship, where the owner is personally liable for business debts, an OPC offers limited liability. This means that the owner’s liability is limited to their share in the business, protecting personal assets.

Can a foreigner own 100% of an OPC in the Philippines?

Yes, a foreigner can own 100% of an OPC in the Philippines. However, the foreign owner must designate two nominees: one primary nominee and one alternate nominee, who will take over the business if the owner is unable to do so.

What are the restrictions on foreign ownership in the Philippines?

Foreign ownership in the Philippines is restricted in certain sectors, as defined by the 'negative list.' These restrictions outline industries where foreigners cannot invest fully or at all, ensuring that some areas remain controlled by Filipinos.

Why is the OPC a good option for foreign entrepreneurs?

The OPC is ideal for foreign entrepreneurs who want full control of their business, as it allows 100% ownership, unlike traditional corporations, where foreigners can only own up to 40%. It also offers limited liability protection.

Can a foreigner use an OPC to own land in the Philippines?

No, foreigners cannot use an OPC to own land in the Philippines. The Philippines' Constitution restricts land ownership to Filipinos, and even if a foreigner owns an OPC, the business cannot acquire land.

What is the role of the nominees in an OPC?

In an OPC, the nominees—one primary and one alternate—are individuals designated to take over the business if something happens to the sole owner. However, the nominees do not own the business; they just serve as placeholders in case of unforeseen events.

How can foreigners set up an OPC in the Philippines?

To set up an OPC in the Philippines, foreigners need a Tax Identification Number (TIN), a passport, and basic personal details such as name, address, and birthdate. After submitting these documents to the Securities and Exchange Commission (SEC), there is a review process before the registration is finalized.

What are the challenges foreigners face when starting a business in the Philippines?

One of the main challenges is the complexity and time-consuming process of business registration. Unlike some countries where the process can be completed quickly, in the Philippines it can take months due to paperwork, back-and-forth corrections, and the involvement of various government agencies.

Can foreigners sell shares in an OPC?

No, an OPC is a one-person business structure, so it does not allow for the sale of shares. If a foreigner plans to expand the business and sell shares, it would be better to opt for a traditional corporation instead of an OPC.