According to Section 116 of the Republic Act No. 11232 an act providing for the Revised Corporation Code of the Philippines, a One Person Corporation is a corporation with a single stockholder. Provided, that only a natural person, trust, or an estate may form a One Person Corporation.
A foreign natural person may put up an OPC, subject to the applicable capital requirement and constitutional and statutory restrictions on foreign participation in certain investment areas or activities.
Who are not allowed to form an OPC?
The following cannot incorporate as an OPC:
- Banks
- non-bank financial institutions
- quasi-banks
- pre-need
- trust
- insurance
- public and publicly listed companies
- non-chartered government-owned and controlled corporations (GOCCs)
Also 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 laws.
How is an OPC run?
The single stockholder shall be the sole director and president of the One Person Corporation. A single stockholder may be appointed as Treasurer provided that the single stockholder/treasurer shall undertake in writing to faithfully administer the OPC’s fund to be received as Treasurer, disburse and invest the same. The single stockholder may change, at any time, its nominee and alternate nominee by submitting to the SEC the names of the new nominees and their written consent and the Articles of Incorporation need not be amended.
What happens when the single stockholder is incapacitated or dies?
At the time of incorporation, the single stockholder shall designate also a Nominee and Alternate Nominee who shall, in the event of the single stockholder’s death or incapacity, take the place as director and shall manage the corporation’s affair until the legal heirs of the single stockholder have been lawfully determined. The nominee or alternate nominee shall transfer the shares to the duly designated heir or estate within 7 days from the receipt of either an affidavit of heirship or self-adjudication executed by the sole heir or any legal document declaring the legal heirs of the single stockholder and notifies the SEC of the transfer. The alternate nominee shall sit as director and manage the OPC in case of the nominee’s incapacity, death or refusal to discharge the functions as director of the corporation, and only for the same term and under the same conditions applicable to the nominee.
What differentiates an OPC from a Sole Proprietorship?
An OPC having a separate juridical personality from its single stockholder which means that a single stockholder is liable only up to the extent of the asset invested while a single proprietor is directly liable up to the extent of personal assets. In the event that the single stockholder cannot prove that the property of the OPC is independent of the stockholder’s personal property, the stockholder shall be jointly and severally liable for the liabilities of the OPC. The principles of piercing of the corporate veil apply also with OPC as with other corporations.
For income tax purposes, an OPC may opt for the Itemized Deduction or 40% Optional Standard Deduction. The corporation may deduct direct costs first plus the 40% OSD from its gross income. While sole proprietorship on the other hand may deduct the 40% OSD only from its gross income.
Conversion from an Ordinary Corporation to a One Person Corporation. When a single stockholder acquires all the stocks of an ordinary stock corporation, the later may apply for conversion into a One Person Corporation, subject to the submission of such documents as the Commission may require. If the application for conversion is approved, the Commission 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 later and be legally responsible for all the latter’s outstanding liabilities as of the date of conversion.
Conversion from One Person Corporation to an Ordinary Stock Corporation. – A One Person Corporation may be converted into an ordinary stock corporation after due notice to the Commission of such fact and of the circumstances leading to the conversion, and after compliance with all other requirements for stock corporations under this Code and applicable rules. Such notice shall be filed with the Commission within sixty (60) days from the occurrence of the circumstances leading to the conversion into an ordinary stock corporation. If all requirement a have been complied with, the Commission shall issue a certificate of filing or amended articles of incorporation reflecting the conversion.
