Steps to Form a One Person Corporation in the Philippines

Disclaimer: This article provides general information based on Philippine law and practice. It is not legal advice. For assistance with your unique legal or business issues, always consult a qualified lawyer or accountant.

How to Form a One Person Corporation (OPC) in the Philippines

The One Person Corporation (OPC) is an innovation under the Revised Corporation Code of the Philippines (Republic Act No. 11232). Before 2019, an individual entrepreneur needed at least four other incorporators to form a corporation. Today, with an OPC, a single stockholder can create and run a corporation on their own—streamlining operations, protecting personal assets, and benefiting from limited liability.

This article delves into everything you need to know about forming an OPC in the Philippines, from understanding legal requirements and necessary documents, to post-incorporation compliance and practical tips.

1. Introduction to the One Person Corporation

1.1. Key Features of an OPC

  1. Single Stockholder
    Only one person owns all shares in the corporation. That single stockholder can be a natural person, trust, or an estate.
  2. Limited Liability
    Much like a traditional corporation, the stockholder’s liability is generally limited to their investment in the OPC.
  3. Separate Legal Personality
    Despite having only one owner, an OPC is treated as a distinct legal entity separate from its stockholder.
  4. No Minimum Capital Stock (Generally)
    With certain exceptions (e.g., industries that require a minimum paid-up capital), there is no general minimum capital requirement, making it accessible for smaller businesses.
  5. Streamlined Corporate Formalities
    There is no need to constitute a Board of Directors. The sole stockholder essentially acts as both the incorporator and the sole director, or “director/trustee” in name.

1.2. OPC vs. Single Proprietorship

Aspect Single Proprietorship One Person Corporation (OPC)
Legal Personality Not separate from the owner (the business and the owner are the same legal entity) Separate juridical personality (distinct from its single stockholder)
Liability Unlimited liability (the owner’s personal assets can be used to pay business debts) Limited liability (the owner’s risk is limited to the subscribed capital)
Formalities Fewer registration requirements More corporate requirements (e.g., compliance with SEC regulations)
Continuity Ends upon the owner’s death or incapacity Can continue even if the single stockholder dies, depending on nominee setup

2. Who Can Form an OPC?

Under the law, nearly any natural person, trust, or estate can incorporate an OPC, with a few exceptions:

  1. Natural Persons – Filipinos of legal age can form an OPC. Foreign nationals may be permitted depending on the industry sector and foreign ownership restrictions under the Philippine Constitution and laws.
  2. Trusts and Estates – A trust or an estate can form an OPC if represented by a duly designated trustee, executor, administrator, or other legal representative.
  3. Restrictions – Banks, quasi-banks, preneed, trust, insurance, public and publicly listed companies, and non-chartered government-owned and controlled corporations may not incorporate as an OPC. Additional restrictions may apply to sectors governed by specialized laws that have minimum capitalization or ownership structure requirements.

3. Requirements to Form an OPC

Before registering with the Securities and Exchange Commission (SEC), it is crucial to prepare the following:

  1. Proposed Corporate Name

    • Must be distinct and not already in use.
    • Under the SEC’s naming guidelines, it must include the suffix “OPC” to identify it as a One Person Corporation.

  2. Articles of Incorporation (AOI)

    • This document sets out basic corporate information (e.g., corporate name, principal office address, term of existence, purpose, authorized capital stock).
    • For OPCs, the AOI is simplified and does not require corporate by-laws.

  3. Written Consent of the Nominee and Alternate Nominee

    • Because the OPC has only one stockholder, the law requires that a “nominee” and an “alternate nominee” be designated in case of the stockholder’s incapacity or death.
    • These nominees must signify their acceptance of the role in writing.

  4. Proof of Capitalization (if required)

    • Certain industries (e.g., lending companies, financing companies, recruitment agencies) and certain foreign ownership situations require submission of proof of inward remittance or bank certificate.

  5. Subscription Documents

    • The single stockholder must subscribe to at least one share.
    • The subscription must be reflected in the AOI.

  6. Registration Fees

    • SEC registration fees will vary based on the corporation’s authorized capital stock. Additional fees may apply for name reservation or special endorsements.

4. Step-by-Step Procedure to Register an OPC

Below is a general outline of how to register an OPC with the Philippine SEC:

4.1. Secure a Name Reservation

  1. Conduct a Name Availability Search
    • Check the SEC’s online platform for name availability to ensure your chosen name is not yet taken or too similar to an existing entity.
  2. Reserve Your Chosen Name
    • File a name reservation with the SEC. This typically involves a nominal reservation fee.
    • Remember to include the “OPC” suffix (e.g., “ABC Trading OPC”).

4.2. Prepare the Incorporation Documents

  1. Draft the Articles of Incorporation
    • State the corporate name, the primary purpose, principal office address, term (usually perpetual), and the authorized capital.
    • Since there is only one incorporator, no need for a separate set of corporate by-laws.
  2. Nominee and Alternate Nominee Certificates
    • Prepare written consent from the nominee and the alternate nominee.
    • These must also be attached to the AOI or submitted separately, as required.

4.3. Submission to the SEC

  1. Online Filing/Manual Filing
    • Depending on the SEC’s guidelines (which change from time to time), you may need to submit online via the Electronic Simplified Processing of Application for Registration of Company (eSPARC) system or via manual filing at the SEC office.
  2. Pay the Necessary Fees
    • SEC fees depend on the corporation’s authorized capital stock (ACS).
    • You may pay through the SEC cashier or authorized payment centers, depending on the SEC’s instructions.
  3. Wait for the Certificate of Incorporation
    • The SEC will review your documents. If all requirements are met, the SEC will issue your OPC’s Certificate of Incorporation.
    • Keep in mind processing times may vary.

4.4. Post-Registration Steps

  1. Obtain Local Government Permits
    • Secure your barangay clearance, business permit from the Mayor’s Office where the principal office is located, and other local permits specific to your line of business.
  2. Register with the Bureau of Internal Revenue (BIR)
    • Apply for a Tax Identification Number (TIN) if the OPC does not have one yet.
    • Register your accounting books and receipts/invoices.
    • Obtain the Certificate of Registration (COR) from the BIR.
  3. Register with Other Government Agencies (If Applicable)
    • Depending on your industry, you may need to register with the Department of Trade and Industry (DTI), Board of Investments (BOI), or other bodies.
    • If you have employees, register with the Social Security System (SSS), Philippine Health Insurance Corporation (PhilHealth), and Home Development Mutual Fund (HDMF or Pag-IBIG).

5. Corporate Governance and Compliance

Although the OPC structure is simpler than traditional multi-person corporations, several ongoing compliance requirements remain:

5.1. Corporate Meetings

  1. No Board Meetings
    • Since there is only one stockholder who also effectively acts as the director, formal board meetings are not needed.
  2. Decision-Making
    • The sole stockholder documents decisions and actions in written resolutions.
    • All decisions must be in writing to have legal effect.

5.2. Submission of Financial Statements

  1. Annual Financial Statements (AFS)
    • Every OPC must prepare and file an audited financial statement with the SEC (unless exempt under certain thresholds set by the SEC).
    • Due dates typically fall in April or May, depending on the OPC’s fiscal year.
  2. General Information Sheet (GIS)
    • While it is simplified for an OPC, the GIS must be submitted annually to the SEC.
    • It discloses basic corporate information including the single stockholder’s details, nominee, and alternate nominee.

5.3. Books and Records

  1. Bookkeeping
    • Maintain records of your transactions, including receipts, invoices, and disbursement journals.
    • These must be registered with the BIR.
  2. Corporate Records
    • Keep updated minute books (or written decisions of the single stockholder) and stock & transfer books (even if you have one stockholder, you must maintain the ledger of share issuance).

5.4. Taxes and Other Regulatory Duties

  1. Taxes
    • File and pay monthly, quarterly, and annual tax returns as required by the BIR (e.g., Value-Added Tax (VAT), Percentage Tax, Corporate Income Tax).
    • Remit withholding taxes for compensation if you have employees.
  2. Local Government Renewals
    • Business permits must be renewed annually with the local government unit.
  3. SSS, PhilHealth, and Pag-IBIG
    • If you have employees, register them and remit the required contributions monthly.

6. Key Responsibilities of the Single Stockholder

  1. Act as President and Treasurer
    • By default, the single stockholder is also the President.
    • The law allows the single stockholder to be the corporate treasurer, but the OPC must comply with certain bonding requirements or special rules set by the SEC for the treasurer’s position.
  2. Appoint Officers, If Needed
    • The sole stockholder can appoint officers to handle day-to-day operations (e.g., corporate secretary, compliance officer).
    • An OPC must still appoint a corporate secretary and (in certain cases) a treasurer distinct from the secretary.
  3. Maintain the Nominee and Alternate Nominee
    • Ensure the designated nominee and alternate nominee are qualified and willing to step in should incapacity or death occur.
    • Update the SEC if there are any changes in the nominee/alternate nominee.

7. Special Considerations

7.1. Foreign Ownership Restrictions

Some business activities in the Philippines are subject to foreign ownership limitations under the Foreign Investments Negative List. If a foreign national wishes to form an OPC, or if a Filipino OPC contemplates foreign equity involvement in certain activities, it is crucial to verify whether the specific industry imposes restrictions.

7.2. Minimum Paid-Up Capital Requirements

While the general rule is that no minimum paid-up capital is required for an OPC, certain industries (e.g., financing companies, recruitment agencies) impose higher paid-up capital thresholds. Always check the relevant government agency or the specific law governing your industry.

7.3. Tax Incentives and Special Registrations

The Philippines offers incentives and special registrations (e.g., with the Board of Investments (BOI), Philippine Economic Zone Authority (PEZA)) depending on the nature of the business. An OPC might be eligible for these incentives if it meets the criteria.

7.4. Conversion into a Regular Corporation

If business growth or strategic changes require adding more shareholders, an OPC can convert into a regular corporation. The process involves amending the Articles of Incorporation, adding shareholders, and meeting the requirements for a multi-stockholder corporation.

8. Practical Tips for Entrepreneurs

  1. Assess Long-Term Goals
    • An OPC is ideal if you want full control over decision-making and are primarily self-funded.
    • If you foresee needing investors or partners soon, a multi-stockholder corporation might be more appropriate to accommodate investors.
  2. Ensure Compliance Infrastructure
    • Even if you are the sole owner, compliance with SEC, BIR, and local government requirements can be complex.
    • Hire or consult with accountants and legal advisers to maintain good standing.
  3. Plan Succession
    • The nominee and alternate nominee system ensures continuity. However, it is advisable to execute a formal shareholders’ agreement or a will indicating how the corporation’s shares will be handled upon your incapacity or death.
  4. Stay Updated
    • Regulatory guidelines sometimes change. Keep track of SEC notices, especially regarding online registration systems and new forms.

9. Conclusion

The One Person Corporation (OPC) offers a viable legal structure in the Philippines for entrepreneurs who wish to conduct business under a corporate framework without needing multiple shareholders. The limited liability feature, separate juridical personality, and simplified incorporation requirements make it an appealing option. However, compliance with SEC regulations, tax laws, and industry-specific requirements remains essential.

By understanding the key requirements—from drafting the Articles of Incorporation and securing the nominee documents to ongoing annual filings—you can confidently navigate the process of registering and operating your OPC. If in doubt, consult legal and accounting professionals to help you meet your regulatory obligations, protect your personal assets, and position your OPC for long-term success.

Disclaimer: This guide is intended only as an overview of OPC formation under Philippine law and regulations. It should not be construed as legal or professional advice. Always consult with appropriate legal and accounting professionals for tailored guidance.

Disclaimer: This content is not legal advice and may involve AI assistance. Information may be inaccurate.

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