A One Person Corporation is a corporation with a single stockholder, who must be a natural person, trust, or an estate. It must not be confused with a corporation sole. The creation of a One Person Corporation or OPC is provided in Title XIII (Special Corporations) of Republic Act No. 11232, also known as the “Revised Corporation Code”. The guidelines, as provided in SEC Memorandum Circular No. 7, series of 2019, are discussed below.
I. ARTICLES OF INCORPORATION; BYLAWS
The One Person Corporation is not required to submit and file corporate bylaws. However, it must file its articles of incorporation, which must set forth:
- Corporate name. A One Person Corporation shall indicate the letters “OPC” either below or at the end of its corporate name.
- The primary purpose.
- Principal office address.
- Term of existence. The term of existence of the OPC shall be perpetual. However, in case of the trust or estate, its term of existence shall be co-terminous with the existence of the trust or estate.
- Names and details of the single stockholder, the nominee and the alternate nominee. The details include the nationality, residence, and the extent, coverage and limitation of the authority of the nominee. [See Who are Allowed/Not Allowed to Set Up a One Person Corporation.]
- Authorized, subscribed and paid-up capital. A One Person Corporation shall not be required to have a minimum authorized capital stock except as otherwise provided by special law. Further, unless otherwise required by applicable laws or regulations, no portion of the authorized capital is required to be paid up at the time of incorporation.
- Other matters consistent with the law and which may be deemed necessary and convenient.
If the single stockholder is a trust or an estate, the name, nationality, and residence of the trustee, 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
For facility of registration, the Securities and Exchange Commission (SEC) has provided a sample of the Articles of Incorporation of a One Person Corporation. [See How to Register a One Person Corporation: Requirements and Application Process.]
The single stockholder shall be the sole director and president of the One Person Corporation. Within 15 days from the issuance of its certificate of incorporation, the One Person Corporation shall appoint the officers and inform the SEC of such fact, within 5 days from the appointment. The officers are:
- Treasurer. The single stockholder may act as the treasurer, in which case he/she must post a bond.
- Corporate secretary. The single stockholder may not be appointed as the corporate secretary.
- Other officers as it may deem necessary
III. BOND REQUIREMENT
As a rule, there is no bond required for a single stockholder in a One Person Corporation. However, in the event that the single stockholder also appoints himself/herself as the corporate treasurer, he/she must post a bond:
|ACS||Surety Bond Coverage*|
|1 to 1,000,000||1,000,000|
|1,000,001 to 2,000,000||2,000,000|
|2,000,001 to 3,000,000||3,000,000|
|3,000,001 to 4,000,000||4,000,000|
|4,000,001 to 5,000,000||5,000,000|
|5,000,001 and above =||Amount of survey bond coverage shall be equal to the OPC’s ACS|
*Subject to renewal every 2 years or as may be required, upon review of the annual submission of the AFS/FS certified under oath by the company’s President and Treasurer.
**The bond is a continuing requirement for so long as the single stockholder is the self-appointed Treasurer of the OPC.
*** The bond may be cancelled upon proof of appointment of another person as the Treasurer and Filing of Amended Form for Appointment of Officers.
The said stockholder/treasurer shall undertake in writing to faithfully administer the One Person Corporation’s funds to be received as treasurer, and to disburse and invest the same according to the articles of incorporation as approved by the SEC. The bond shall be renewed every 2 years or as often as may be required.
IV. SPECIAL FUNCTIONS OF THE CORPORATE SECRETARY
In addition to the functions designated by the One Person Corporation, the corporate secretary shall:
- (a) Be responsible for maintaining the minutes book and/or records of the corporation;
- (b) Notify the nominee or alternate nominee of the death or incapacity of the single stockholder, which notice shall be given no later than 5 days from such occurrence;
- (c) Notify the Securities and Exchange Commission of the death of the single stockholder within 5 days from such occurrence and stating in such notice the names, residence addresses, and contact details of all known legal heirs; and
- (d) Call the nominee or alternate nominee and the known legal heirs to a meeting and advise the legal heirs with regard to, among others, the election of a new director, amendment of the articles of incorporation, and other ancillary and/or consequential matters.
V. LIABIILITY OF SINGLE SHAREHOLDER
A sole shareholder claiming limited liability has the burden of affirmatively showing that the corporation was adequately financed.
Where the single stockholder cannot prove that the property of the One Person Corporation is independent of the stockholder’s personal property, the stockholder shall be jointly and severally liable for the debts and other liabilities of the One Person Corporation. The principles of piercing the corporate veil applies with equal force to One Person Corporations as with other corporations.
VII. NOMINEE AND ALTERNATE NOMINEE
The single stockholder is required designate a nominee and an alternate nominee named in the Articles of Incorporation who shall replace the single stockholder in the event of the latter’s death and/or incapacity.
The written consent of the nominee and alternate nominee shall be attached to the application for incorporation. Such consent may be withdrawn in writing any time before the death or incapacity of the single stockholder.
The alternate nominee shall sit as director and manage the One Person Corporation in case of the nominee’s inability, incapacity, death, or refusal to discharge the functions as director and manager of the corporation, and only for the same term and under the same conditions applicable to the nominee.
The single stockholder may, at any time, change its nominee and alternate nominee by submitting to the SEC the names of the new nominees and their corresponding written consent. The Articles of Incorporation need not be amended. [See sample form for the Notice of the Change of Nominee and Alternate Nominee.]
VI. INCAPACITY OR DEATH OF SINGLE STOCKHOLDER
In case of incapacity of the single proprietor, 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 of the single stockholder, the nominee or alternate nominee shall:
- 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 decedent.
- Transfer the shares to the duly designated legal heir or estate within 7 days from receipt of either an affidavit of heirship or self-adjudication executed by a sole heir, or any other legal document declaring the legal heirs of the single stockholder and notify the SEC of the transfer.
- Within sixty 60 days from the transfer of the shares, the legal heirs shall notify the SEC of their decision to either wind up and dissolve the One Person Corporation or convert it into an ordinary stock corporation. The ordinary stock corporation converted from a One Person Corporation shall succeed the latter and be legally responsible for all the latter’s outstanding liabilities as of the date of conversion.
VIII. RECORDS IN LIEU OF MEETINGS; MINUTES BOOK
When action is needed on any matter, it shall be sufficient to:
- prepare a written resolution, signed and dated by the single stockholder, and
- recorded in the minutes book of the One Person Corporation
The date of recording in the minutes book shall be deemed to be the date of the meeting for all purposes. A One Person Corporation shall maintain a minutes book which shall contain all actions, decisions, and resolutions taken by the One Person Corporation.
IX. REPORTORIAL REQUIREMENTS
The One Person Corporation must comply with a number of reportorial requirements. The SEC may place the POC under delinquent status in case of failure to submit the reportorial requirements 3 times (whether consecutively or intermittently) within a period of 5 years. [See Reportorial Requirements of One Person Corporations]
X. CONVERSION TO/FROM REGULAR CORPORATION
Ordinary Corporation to OPC
When a single stockholder acquires all the stocks of an ordinary stock corporation, the latter may apply for conversion into a One Person Corporation, subject to the submission of such documents as the SEC may require.
If the application for conversion is approved, the SEC shall issue a certificate of filing of amended articles of incorporation reflecting the conversion. The One Person Corporation converted from an ordinary stock corporation shall succeed the latter and be legally responsible for all the latter’s outstanding liabilities as of the date of conversion.
OPC to Ordinary Stock Corporation
A One Person Corporation may be converted into an ordinary stock corporation after due notice to the SEC of such fact and of the circumstances leading to the conversion, and after compliance with all other requirements for stock corporations under the Revised Corporation Code and applicable rules.
Such notice shall be filed with the SEC within 60 days from the occurrence of the circumstances leading to the conversion into an ordinary stock corporation. If all requirements have been complied with, the Commission shall issue a certificate of filing of amended articles of incorporation reflecting the conversion.
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