S.E.C. Draft Guidelines on the Establishment of One Person Corporation

On March 15, 2019, the Securities and Exchange Commission, in relation to Section 179 of Republic Act No. 11232, otherwise known as the Revised Corporation Code, has released the initial draft on its Guidelines on the Establishment of a One Person Corporation (OPC).


In its website at www.sec.gov.ph, “the Commission is inviting all interested parties, market participants and the investing public to submit their views, comments and inputs to the proposed guidelines.

Commenters may submit, not later than 29 March 2019, their views, comments and inputs electronically to Assistant Director Sampaguita R. Ladrido, through email address : srladrido@sec.gov.ph

The draft of the guidelines is reproduced below:

DRAFT

SEC MEMORANDUM CIRCULAR No. ______

Series of 2019

 TO : ALL CONCERNED

SUBJECT:          GUIDELINES ON THE ESTABLISHMENT OF A ONE PERSONCORPORATION (OPC)

x_______________________________________________________________________x

In accordance with the power and function of the Securities and Exchange Commission to formulate and enforce standards and policies to carry out the provisions of Republic Act 11232, the Act providing for the Revised Corporation Code of the Philippines (RCC), the following guidelines, rules and regulations in the establishment of a One Person Corporation (OPC) are hereby adopted:

I. Definition and Incorporator

A one person corporation (OPC) is a corporation with a single stockholder, who can only be a natural person, trust or estate.

The incorporator of an OPC being a natural person must be of legal age.

As an incorporator, the “trust” as used by the law does not refer to a trust entity, but as subject being managed by a trustee.

If the single stockholder is a trustee, administrator, executor, guardian, conservator, custodian, or other person exercising fiduciary duties, proof of authority to act on behalf of the trust or estate must be submitted at the time of incorporation.

II. Corporate Name

The suffix “OPC” should be indicated by the one person corporation either below or at the end of its corporate name.

III. Single Stockholder as Director and Officer

The single stockholder shall be the sole director and president of the OPC.

IV.         Designation of Nominee and Alternate Nominee

The single stockholder is required to designate a nominee and an alternate nominee named in the Articles of Incorporation in the event of death and incapacity. The written consent of both the nominee and alternate nominee shall be attached to the application for incorporation.

V. Only Articles of Incorporation Needed

The OPC shall file its Articles of Incorporation (AI) in accordance with the requirements of Section 14 of the Revised Corporation Code of the Philippines. The AI must set forth its primary purpose, principal office address, term of existence, names and details of the single stockholder, the nominee and alternate nominee and the authorized, subscribed and paid-up capital and such other matters consistent with law and which may be deemed necessary and convenient.

For facility of registration, applicants may follow the attached sample of the Articles of Incorporation of an OPC.

VI.         By-Laws

The OPC is not required to submit and file its By-Laws.

VII.       Minimum Capital Stock Not Required

The OPC is not required to have a minimum authorized capital stock except as otherwise provided by special law.

VIII.     Officers

Within fifteen (15) days from the issuance of its certificate of incorporation, the OPC shall appoint a treasurer, corporate secretary, and other officers, and notify the SEC thereof within five (5) days from appointment, using the Appointment Form as may be prescribed by the SEC.

The single stockholder may not be appointed as corporate secretary but may assume the role of a treasurer.

IX.         Bond Requirement for the Self-Appointed Treasurer

The single stockholder who assumes the position of the Treasurer shall post a surety bond to be computed based on the authorized capital stock of the OPC.

X. Change of Nominee or Alternate Nominee

The single stockholder may, at any time, change its nominee and alternate nominee by submitting to the Commission the names of the new nominees and their corresponding written consent. The Articles of Incorporation need not be amended.

Attached is the sample form for the Notice of the Change of nominee and alternate nominee.

XI.         Incapacity or Death of the Single Stockholder

In case the single stockholder becomes incapacitated, the nominee can take over the management of the OPC as director and president. At the end of the incapacity, the single stockholder can resume the management of the OPC.

In case of death or permanent incapacity of the single stockholder, the nominee will take over the management of the OPC until the legal heirs of the single stockholder have been lawfully determined and the heirs have agreed among themselves who will take the place of the deceased.

XII.        Reportorial Requirements

The OPC must submit the following documents within the period required by the SEC:

  1. annual audited financial statements within 120 days from the end of its fiscal year as indicated in its Articles of Incorporation;
  • a report on all explanations or comments by the president on the qualification, reservation or adverse remarks made by the auditor in the financial statements;
  • a disclosure of all self-dealings and related party transactions entered into between the OPC and the single stockholder; and
  • other reports as the SEC may require.

XIII.     Who are not allowed to form OPCs

Banks, non-bank financial institutions, quasi-banks, pre-need, trust, insurance, public and publicly listed companies, non-chartered government-owned-and controlled corporations (GOCCs) cannot incorporate as OPC.

A natural person who is licensed to exercise a profession may not organize as an OPC for the purpose of exercising such profession except as otherwise provided under special.

XIV.      Foreign National

A foreign natural person may put an OPC, subject to the applicable constitutional and statutory restrictions on foreign participation in certain investment areas or activities.

This Memorandum Circular shall take effect immediately after its publication in a newspaper of general circulation

Secretariat Building, PICC, Pasay City.

_____ March 2019.

EMILIO B. AQUINO

Chairperson

Download full copy of the guidelines and the forms:


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