At last, the answer to the question ‘Can one person own a corporation in the Philippines?’ is yes.
With the implementation of the Revised Corporation Code (Republic Act No. 11232), the Philippines now allows the establishment of One Person Corporations (OPC).
Who can register it, and what are the key benefits, requirements, and restrictions? In this article, we have covered the essential facts you need to know about One Person Corporation in the Philippines.
What is One Person Corporation?
On 6 May 2019, the Securities and Exchange Commission of the Philippines (SEC) started accepting applications for registering a company in the Philippines with only one shareholder.
In other words, it is now possible to register a company in the Philippines without the need for four other shareholders or a board of directors.
This type of company is classified as a One Person Corporation (OPC), and it is especially beneficial for micro, small, and medium-sized businesses.
One of the key benefits of an OPC is that unlike in sole proprietorship where there is no distinction between the owner and the business, and the owner is financially liable for all debts and losses, the shareholder’s liability in an OPC is limited to the extent of the shareholder’s assets.
To distinguish One Person Corporations from other companies, the corporate name of an OPC must indicate the suffix ‘OPC’ either below or at the end of its name.
Who can register a One Person Corporation in the Philippines?
The single shareholder of an OPC can be a:
- Natural person
If the incorporator is a natural person, he or she must be of legal age. Also, note that natural persons who are licensed to exercise a profession are not allowed to operate as an OPC. For example, accountants or lawyers.
The term of existence of an OPC is indefinite or defined in the Articles of Association. However, if the shareholder is a trust or an estate, its term of existence is co-terminus with the existence of the trust or estate.
Which industries are forbidden for One Person Corporations?
OPCs are not allowed for banks, financial institutions, and other financial entities.
Insurance companies, public and publicly listed companies and government-owned and -controlled corporations are also prohibited from establishing a One Person Corporation.
Can a foreigner register a One Person Corporation?
Yes, foreign investors can also set up One person Corporations in the Philippines. However, they are still subject to the Philippines’ Foreign Investment Negative List (FINL), and the industry they choose must allow full foreign ownership.
Requirements for One Person Corporation in the Philippines
Minimum paid-up capital requirement
There is no minimum capital requirement for setting up a One Person Corporation, and no portion of authorized capital is required to be paid up at the time of incorporation unless a special law or regulation requires otherwise.
Nominee of a One Person Corporation
When setting up an OPC in the Philippines, the single stockholder must also designate a nominee and an alternate nominee who will replace the stockholder in the event of the latter’s death or incapacity.
The nominees must also be named in the Articles of Incorporation, and the written consent of both the nominee and alternate nominee must be attached to the application for the incorporation.
The single stockholder may at any time change its nominee and alternate nominee by submitting the names of the new nominees and corresponding written consent to the Commission.
In case of incapacity or death of the single stockholder, the nominee will take over the management of the OPC until the end of the inability of the stockholder or until the new shareholder is determined.
Corporate officers of One Person Corporations
Once your One Person Corporation in the Philippines is registered, you must also appoint a Corporate Secretary, a Treasurer, and other officers.
You need to appoint the corporate officers within 15 days from the company’s establishment and you must also notify SEC no later than five days from the appointment.
You, as the single shareholder, will be the sole Director as well as the President of the OPC. Additionally, you will also need to appoint a Corporate Secretary who must be a Filippino citizen and a Treasurer who must be a resident in the Philippines.
Citizen of the Philippines
Resident in the Philippines
If you are a resident in the Philippines, you can also appoint yourself as the Treasurer of the OPC.
However, in that case, a bond will be required for the self-appointed treasurer. The bond will be calculated based on the authorized capital stock of the OPC.
Authorized capital stock
Surety bond coverage
1 to 1,000,000 PHP
1,000,001 to 2,000,000 PHP
2,000,001 to 3,000,000 PHP
3,000,001 to 4,000,000 PHP
4,000,001 to 5,000 000 PHP
5,000,001 and above
Surety bond coverage is equal to the authorized capital stock of the OPC
The bond is subject to renewal every two years, and it is a continuous recruitment for as long as the single stockholder is the self-appointed Treasurer of the OPC. It can be canceled by appointing another person as the Treasurer.
Compliance requirements for One Person Corporations
One Person Corporations, just as other legal entities in the Philippines, are subject to corporate compliance requirements.
An OPC needs to submit:
- Audited financial statement
- Disclosure of self dealings
- Other reports the SEC may require
Ready to register a One Person Corporation in the Philippines?
Emerhub can assist you. Contact us at [email protected] or via the form below for a personal consultation. Our consultants will gladly support you in setting up your business in the Philippines.