Republic Act No., 11232, better known as the Revised Corporation Code of the Philippines (RCCP), was signed into law by President Rodrigo Duterte on February 20, 2019. One of the major changes in the Revised Corporation Code is the inclusion of a One Person Corporation (OPC) – a corporation established with only one stockholder.
Who may be a stockholder?
In the previous Code, the law required at least five incorporators who are natural persons for a corporation to be formed. Under the Revised Corporation Code, it is now possible to form a corporation with only one stockholder who is either a natural person, trust, or an estate.
However, banks and quasi-banks, preneed, trust, insurance, public and publicly-listed companies, and non-chartered government-owned and –controlled corporations cannot incorporate as an OPC.
Natural persons who are licensed professionals also cannot organize an OPC for the purpose of exercising their profession.
Single stockholder as sole director and president
The single stockholder will serve as the sole director and president. They are not allowed to act as the Corporate Secretary, but may assume the role of Treasurer. In this case, the Security and Exchange Commission (SEC) may require them to give a bond that shall be renewed every two years unless otherwise specified.
No minimum capitalization
The new Code does not require OPCs to establish a minimum authorized capital stock. However, they are required to have at least 25% of the capitalization at the time of subscription with a minimum of P5,000 paid-up capital.
Only Articles of Incorporation needed
OPCs do not need to submit corporate by-laws and only need to submit an Articles of Incorporation (AOI). The AOI should indicate their primary business, corporate address, capitalization, and the details of the single stockholder. Should they have nominees, their details and extent of authority should be mentioned as well.
Also, for a trust or an estate operating as an OPC, the Articles of Incorporation should contain the following:
- The name, nationality, and residence of the trustee
- The name of the administrator, executor, guardian, conservator, custodian, or other person
- Exercising fiduciary duties together with the proof of such authority to act on behalf of the trust or estate
- The name, nationality, residence of the nominee and alternate nominee, together with the extent, coverage, and limitation of the authority
Liability of single stockholder
The single stockholder and OPC are treated as separate legal entities. Thus, the single stockholder does not share any liabilities acquired by the OPC.
However, the single stockholder is duty bound to adequately finance the OPC. If the single stockholder is unable to prove that their personal property is independent from that of the OPC, they shall be liable for the debts and other liabilities of the corporation.
Conversion to and from an ordinary corporation
An ordinary corporation may be converted to an OPC. This can be done when a single stockholder acquires all of the stocks of an ordinary corporation. Should the application be approved, the Securities and Exchange Commission (SEC) shall issue an amended Articles Of Incorporation. It should be noted that any liabilities of the ordinary corporation are passed on to the OPC.
On the other hand, an OPC may also be converted to an ordinary corporation. OPCs can do this by giving due notice to the SEC within 60 days of detailing the circumstances leading to the conversion. OPCs shall also comply with all the requirements of an ordinary corporation.
Before you convert your company to or from a One Person Corporation, consult with Duran & Duran-Schulze Law. Give them a call at (+632) 478 5826 or send them an email to [email protected].
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