On May 6, 2019, the Securities and Exchange Commission (SEC) has begun to accept applications for ONE PERSON CORPORATIONS (OPC) wherein one can register a company/corporation with only one incorporator.
How is this possible?
This is possible due to the implementation of the Revised Corporation Code (Republic Act No. 11232), which took effect on February 23. Section 10 of the Code paved the way for the creation of OPC by removing the minimum number of incorporators that may organize a corporation. It is further defined an OPC in Chapter III.
Why was this implemented?
According to SEC Chairperson Emilio B. Aquino, "the concept of a one person corporation, along with the other provisions of the Revised Corporation Code of the Philippines, makes doing business in the country easier."
"An OPC offers the agility and complete dominion of a sole proprietorship and the limited liability of a corporation. We encourage everyone to take advantage of this provision to pursue their entreprenuerial aspirations."
What is the difference of OPC and Sole Proprietorship?
Entreprenuers registering as sole proprietors mean that they become personally liable for all the risks that their businesses take. There is no distinction between the owner and the business. The owner is financially liable for all debts and losses, making it risky for a sole proprietor.
This risk does not apply to an entrepreneur registered under OPC. One of the key benefits of an OPC is that the business owner can claim limited liability, which means that the company's assets and the owner's personal assets are treated separately.
In a scenario wherein the business goes under debt, creditors of sole proprietors can demand for the entreprenuers personal assets as payment whereas in OPCs, the shareholder's liability is limited to the extent of the shareholder's assets in the company.
OPCs are corporations. They have a fixed income tax rate of 30%. Sole proprietors are treated as individuals when taxed, which means their applicable rates would vary depending on their gross sales.
Who can register an OPC?
Under the Guidelines, a natural person, trust or estate may form an OPC. The "trust" does not refer to a trust entity, but to the subject being managed by a trustee.
The incorporator shall be a natural person of legal age. A natural person who is licensed to exercise a profession is not allowed to organize an OPC for the purpose of exercising such profession unless provided under special laws. For example, an accountant cannot put up an OPC to practice accountancy.
A foreign natural person may put up an OPC but is subject to the applicable constitutional and statutory restrictions on foreign participation in certain investment areas or activities.
As for banks, non-bank financial institutions, quasi-banks, preneed, trust and insurance companies, publicly listed companies, and non-chartered government-owned and/or -controlled corporations are prohibited to establish as an OPC.
How can I register an OPC?
Five main steps for OPC registration:
1. Verification and approval of Company Name
2. Submission of Registration Documents
3. Payment of filing fees
4. Submission of notarized documents for proof of payment
5. Receipt of Certification of Registration
SEC will only process applications for OPCs manually, which means that the interested entreprenuers must go to the SEC head office in the Philippine International Convention Center (PICC) to complete the process. This is the only applicable process for the time being.
Unique Features of an OPC
1.) OPCs must add "OPC" to their corporate names.
For example: "Smart Transportation and Solutiuons OPC"
2.) Corporate Bylaws are not required to be submitted, only Articles of Incorporation.
3.) The incorporator would be appointed as both the director and the president.
4.) OPCs must appoint a corporate secretary, treasurer, and other necessary officers within 15 days from date of incorporation. The business owner cannot take the role of corporate secretary but may assume the role of the treasurer provided that they submit a bond to SEC.
5.) Registrants must submit written consents of a nominee and an alternate nominee to be designated as those who may take over the business in case of the founder's death or incapacity. They will handle the company's operations until a heir is legally recognized.
6.) There is no minimum capital requirement and no portion of the authorized capital is required to be paid up at the time of incorporation unless a special law or regulation requires otherwise.
Ready to register a One Person Corporation in the Philippines?
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