Definition of a One Person Corporation
A one person corporation or OPC is a form of business structure with the qualities of both a sole proprietorship and a corporation. Introduced last 2019 in the Revised Corporation Code of the Philippines or Republic Act No. 11232, an OPC allow an individual to create an enterprise without requiring a board of directors. A one person corporation can have the owner as the president, director, and shareholder.
Pros and Cons of a One Person Corporation
As with all business entities, creating a one person corporation has its pros and cons. Read below to find out what they are.
Pros of a One Person Corporation
- Existing corporations can restructure themselves as an OPC if an individual obtains all the enterprise shares.
- A foreigner may become the sole shareholder unless the industry he is engaged in is part of the Foreign Investment Negative List.
- The sole shareholder has liabilities only up to the extent of his assets.
- The OPC’s legal entity, not the shareholder, is the one liable for the company’s debts.
- An OPC has perpetual existence despite bankruptcy, change of ownership, etc.
- It does not typically require a minimum capital requirement unless stated by the law.
Cons of a One Person Corporation
- The income tax rate for corporations is thirty percent (30%) compared to sole proprietorships’ eight percent (8%). Despite this, corporations can benefit from more tax exemptions.
- Foreigners owning OPCs will not be able to incorporate their corporations if their industry belongs to the Foreign Investments Negative List.
- Requirements include the appointment of a treasurer, a secretary, and other officers within fifteen (15) days of setting up.
- The incorporation process includes depositing a paid-up share Philippine Peso capital equivalence of US$200,000 to a local Philippine bank.
Who Can Form a One Person Corporation
- A natural person of legal age
- A foreign natural person may also establish an OPC but is subject to capital requirements and limitations on foreign participation in specific investment areas.
*Trust does not refer to a trusted entity, but the subject being managed by the trustee
Who Cannot Form a One Person Corporation
- Banks, non-bank financial institutions, and quasi-banks
- A natural person licensed to exercise a profession**
- Non-chartered government-owned and controlled corporations (GOCC)
- Pre-need, trust, and insurance companies
- Public and publicly listed companies
** If the purpose of the OPC establishment is to exercise their profession
General Requirements for OPC Registration
- Articles of Incorporation stating:
- Name of corporation
- Name and details of the sole stockholder
- Main objective
- Terms of existence
- Nominee and alternate nominee
- Tax Identification Number and Passport Number
- Letter of Intent (Cover Letter)
- Consent Letter from the nominee or alternate nominee
- Other requirements, if applicable:
- Foreign Investments Act Application Form (FIA) for foreign natural persons
- Authorization to act on behalf of the estate or trust
- Tax Identification Number for Filipino stockholder(s)
- Tax Identification Number for foreign single stockholder
- Affidavit to change company name if not incorporated in the Articles of Incorporation
Steps for One Person Corporation Registration
- Check the availability of the proposed company name at the Securities and Exchange Commission (SEC) office in Pasay City.
- Submit required documents to SEC for assessment and processing.
- Pay the fees.
- Submit copies of the signed and notarized documentary requirements and the proof of payment to the SEC Company Registration and Monitoring Department (CRMD).
- Claim your certificate of registration as an OPC from the SEC.
- Within 15 days after issuing the Certificate of Registration, the single stockholder must appoint a company treasure, secretary, and other officers. Afterward, the stockholder should inform the SEC within five days of the appointment.
Get Ready to Set Up a One Person Corporation
Start your journey towards setting up a one person corporation in the Philippines. If you still have questions or need help starting, let BusinessRegistrationPhilippines.com guide you through the process.
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