Philippines – What is the One-Person-Corporation (OPC)?
The One Person Corporation (OPC) is a significant innovation introduced by the Revised Corporation Code of the Philippines, enacted through Republic Act No. 11232 on February 20, 2019[4]. This new corporate structure allows for the formation of a corporation with a single stockholder, marking a departure from the previous requirement of having at least five incorporators[1][4].
Definition and Key Features
An OPC is defined as a corporation with a single stockholder, who can be a natural person, trust, or estate[1][2]. This structure offers several advantages:
- Limited Liability: The OPC provides limited liability protection, meaning the shareholder is only liable to the extent of their assets within the legal entity[1].
- 100% Foreign Ownership: OPCs allow for full foreign ownership, subject to restrictions in the Philippines Foreign Investment Negative List (FINL)[1].
- Perpetual Existence: OPCs have a perpetual term of existence, except in cases where the single stockholder is a trust or estate, in which case the term is co-terminous with the existence of the trust or estate[2][4].
Legal Framework
The primary legislation governing OPCs is Republic Act No. 11232, also known as the Revised Corporation Code of the Philippines[4]. The Securities and Exchange Commission (SEC) of the Philippines has also issued guidelines, particularly SEC Memorandum Circular No. 7 Series of 2019, to provide further clarity on OPC regulations[2].
Eligibility and Restrictions
While OPCs offer new opportunities for business formation, there are certain restrictions:
- Eligible Incorporators: Natural persons of legal age, trusts, or estates can form an OPC[1][2].
- Ineligible Entities: Banks, non-bank financial institutions, quasi-banks, pre-need companies, trust companies, insurance companies, publicly-listed companies, and government-owned corporations are not allowed to form OPCs[3][5].
- Professional Practice: Natural persons licensed to exercise a profession (e.g., accountants, lawyers) are not allowed to operate as an OPC for that specific profession, unless permitted by special laws[1][5].
Corporate Structure and Governance
The OPC structure simplifies corporate governance:
- Single Stockholder as Director and President: The single stockholder serves as both the sole director and president of the OPC[1][3].
- Corporate Officers: Within 15 days of incorporation, the OPC must appoint a Treasurer and Corporate Secretary[3]. The single stockholder cannot be the Corporate Secretary but can serve as the Treasurer[3].
- Nominee and Alternate Nominee: The single stockholder must designate a nominee and an alternate nominee who will take over management in case of the stockholder’s death or incapacity[1][2].
Compliance and Reporting Requirements
OPCs are subject to various compliance and reporting obligations:
- Annual Financial Statements: OPCs must submit audited financial statements to the SEC within 120 days from the end of their fiscal year[3].
- Disclosure of Self-Dealings: OPCs must disclose all self-dealing and related party transactions between the OPC and the single stockholder[3].
- Other Reports: Additional reports may be required by the SEC as deemed necessary[3].
Corporate Name Requirements
OPCs must include the suffix “OPC” either below or at the end of their corporate name to clearly identify their corporate structure[2].
Advantages of OPCs
The introduction of OPCs offers several benefits:
- Simplified Structure: OPCs provide a streamlined corporate structure, reducing administrative complexities.
- Flexibility: They offer greater flexibility in business operations and decision-making.
- Foreign Investment: OPCs can attract foreign investors by allowing 100% foreign ownership in eligible sectors.
- Limited Liability: The single stockholder enjoys limited liability protection, separating personal assets from business liabilities.
Conversion and Dissolution
Regular corporations can convert into OPCs if a single foreign shareholder acquires all company shares[1]. In the case of OPCs formed by trusts or estates, dissolution can occur upon proof of partition or termination of the trust[2].
Conclusion
The One Person Corporation represents a significant development in Philippine corporate law, offering a flexible and simplified structure for small to medium-sized businesses. By allowing single-shareholder corporations, the Philippines has aligned itself with global trends in corporate governance, potentially enhancing its competitiveness in attracting both local and foreign investments. However, businesses considering this structure should carefully review the eligibility criteria, compliance requirements, and potential limitations to ensure it aligns with their specific needs and objectives.
Citations:
[1] https://emerhub.com/philippines/one-person-corporation-philippines-guide/
[2] https://orbis-alliance.com/orbis-news/one-person-corporation-under-the-revised-corporation-code
[3] https://ndvlaw.com/a-guide-on-one-person-corporations-in-the-philippines/
[4] https://www.respicio.ph/bar/2025/mercantile-and-taxation-laws/business-organizations/republic-act-no-11232
[5] https://republicact.com/widget/provision/267641
[6] https://lawphil.net/statutes/repacts/ra2019/ra_11232_2019.html
