The Securities and Exchange Commission is promoting the creation of One Person Corporations (OPCs) to address operational and organizational issues inherent in the single proprietorship and regular corporations of the country.
“Among the issues addressed by the OPCs are the proliferation of intra-corporate squabbles affecting decision making, liabilities of single proprietorship owners inherent in sole proprietorships, and reportorial and other requirements inherent in the business forms allowed under the old Corporation Code,” said Lee Franco P. Magtrayo, Security Specialist of the SEC Cagayan de Oro Extension office during a seminar on the topic held last January 31st.
“One of the key revisions of the Revised Corporation Code (Republic Act no. 11232 or the RCC) which became effective Feb. 23, 2019, (replacing Batas Pambansa Bldg. 68), and removing the minimum number of incorporators required to organize a corporation and allowed the formation of one-person corporation, a corporation with a single stockholder and without a minimum authorized capital stock required,” he added.
“As early as the late 80s and early 90s we had already identified that our law on corporations needed to be proactive and dynamic. During our annual strategic planning, we identified provisions in the Corporation Code that we encountered at our level that needed to be amended.,” said Atty. Renato V. Egypto, regional director of the SEC Cagayan de Oro Extension office.
“However, our recommendations did not prosper beyond the committee level in both houses of Congress,” he added. “It was only last year that the new law and amendments to the old Corporation Code were operationalized.”
Egypto said the roll-out of the OPCs was further delayed by the slow response time on verification of OPC names last year. However this process has been expedited and so far 34 OPCs have already been registered with the SEC CDO Extension Office.
“Starting this month, we will hold roadshows outside the city and region in addition to our present in-house seminars,” Egypto noted. “We will be closely coordinating with the chambers of commerce and this will be a year round activity in response to the clamor of businessmen.”
Following are some of the salient features of OPCs discussed during the recent orientation seminar:
A one person corporation (OPC) is a corporation with a single stockholder, who can only be a natural person, trust or estate. The incorporator of an OPC being a natural person must be of legal age.
As an incorporator, the ‘trust’ as used by the law does not refer to a trust entity, but as subject being managed by a trustee.
If the single stockholder is a trustee, administrator, executor, guardian, conservator, custodian, or other person exercising fiduciary duties, proof of authority to act on behalf of the trust or estate must be submitted at the time of incorporation.
The suffix “OPC” should be indicated by the one person corporation either below or at the end o fits corporate name.
The OPC is not required to have a minimum authorized capital stock except as otherwise provided by special law. Section 12 provides that Corporations shall not be required to have a minimum capital stock, except as otherwise specifically provided by special law capital stock required.
Not allowed to form OPCs are banks, non-bank financial institutions, quasi-banks, pre-need, trust and insurance companies, public and publicly listed companies, non chartered GOCCs.
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.
A foreign natural person may put up an OPC, subject to the applicable constitutional and statutory restrictions on foreign participation in certain investment areas or activities.
The single stockholder shall be the sole director and president of the OPC. He or she may not be appointed as corporate secretary but may assume the role of treasurer. The single stockholder who also assumes the position of Treasurer shall post a surety bond to be computed based on the authorized capital stock of the OPC.
The single stockholder is required to designate a nominee and alternate nominee named in the Articles of Incorporation in the event of death and incapacity. The written consent of both the nominee and alternate nominee shall be attached to the application for incorporation.
The single stockholder may, at any time, change its nominee and alternate nomine by submitting to the Commission the names of the new nominees and their corresponding written consent. The Articles of Incorporation need not be amended.
In case the single stockholder becomes incapacitated, 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 or permanent incapacity of the single stockholder, the nominee will take over the management of the OPC until the legal heirs of the single stockholders have been lawfully determined and the heirs have agreed among themselves who will take the place of the deceased or disabled.
The OPC is not required to submit and file its Bylaws.
The OPC shall file its Articles of Incorporation (AI) in accordance with the requirements of Section 14 of the RCC.
The AI must set forth its primary purpose, principal office address, term of existence, names and details of the single stockholder, the nominee and alternate nominee, and the authorized, subscribed, and paid-capital and such other matters consistent with law and which may be deemed necessary and convenient.
For more details contact Lee Franco P. Magtrayo, tel # (088) 857-4325 or email firstname.lastname@example.org
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