The Revised Corporation Code (“RCC”) now allows the formation of a corporation by a sole stockholder.
While the old Corporation Code (Batas Pambansa Blg. 68) requires at least five (5) natural persons to form a corporation, the RCC has permitted the formation of a One Person Corporation (“OPC”) which, as the name implies, may be formed by a single stockholder, which may be a citizen or foreign natural person, a trust or an estate.
The amendment allowing corporations with single incorporators is expected to provide an environment conducive not just for big business, but will make the corporate vehicle an appealing prospect for start-ups and entrepreneurs.
With that avowed purpose in mind, the RCC has made it easy to incorporate OPCs by not imposing any minimum capital stock or paid-in capital, except when required under special laws. Furthermore, OPCs are not required submit By-Laws to the Securities and Exchange Commission (“SEC”) upon its incorporation.
Considering that it is a one-person entity, OPCs need not hold regular or special meetings. It shall be sufficient to prepare a written resolution, signed and dated by the single stockholder, and recorded in the minutes book of the OPC.
The single stockholder shall be the sole director and president of the OPC. The former may further designate himself as the treasurer. However, the single stockholder may not appoint himself as the corporate secretary.
What should make the OPC attractive to sole proprietorships is that the OPC has limited liability. What this means is that the entrepreneur, in the event of unfortunate or adverse circumstances, may not be made liable in excess of his or her investment in the corporation. Nonetheless, it should be noted that a sole shareholder claiming limited liability has the burden of affirmatively showing that the corporation was adequately financed, otherwise said shareholder shall be jointly and severally liable for the debts and other liabilities of the OPC.
The single stockholder must designate a nominee and an alternate nominee in its Articles of Incorporation who shall, in the event of the single stockholder’s death or incapacity, take the place of the single stockholder as director and shall manage the OPC’s affairs. Moreover, if the single stockholder shall assume the position of Treasurer, he must post a surety bond, which is approximately equal to the authorized capital stock (“ACS”) of the OPC:
|ACS (in PhP)||Surety Bond Coverage (in PhP)|
|1.00 to 1,000,000.00||1,000,000.00|
|1,000,001.00 to 2,000,000.00||2,000,000.00|
|2,000,001.00 to 3,000,000.00||3,000,000.00|
|3,000,001.00 to 4,000,000.00||4,000,000.00|
|4,000,001.00 to 5,000,000.00||5,000,000.00|
|5,000,001.00 and above||Equal to the OPC’s ACS|
In order to incorporate an OPC, the SEC requires the filing of the following documents:
- Articles of Incorporation;
- Written consent from the Nominee and Alternate Nominee;
- Affidavit of Undertaking to Change Company Name, in case not incorporated in the Articles of Incorporation;
- Tax Identification Number (“TIN”) for Filipino single stockholder or either TIN or Passport Number for foreign single stockholder;
- Proof of Authority to Act on Behalf of the Trust or Estate, if trust or estate OPC; and
- Foreign Investments Act Application Form, if for the stockholder is foreign natural person.
The RCC also allows regular corporations to convert into OPCs, in the event that a single stockholder acquires all the stocks of an ordinary stock corporation, the said stockholder may apply for conversion of the corporation into an OPC.