Suppose you are thinking of converting your Ordinary Stock Corporation (OSC) or five-person corporation to a One Person Corporation (OPC) to simplify your operations. In that case, you can do so easily now as the Securities and Exchange Commission (SEC) released its guidelines via Memorandum Circular 27-2020. The advantages include simplified management with a single stockholder who is also the director and president. This also assures less corporate documentation, as you don’t need by-laws while facilitating faster decision-making as you can dispense of usual board meetings. Below are the simple steps you must take to make a successful conversion to an OPC.
Step 1: Acquire All Outstanding Shares
Any natural individual of legal age, an estate, or a trust applying for the OSC to OPC conversion must first acquire all the outstanding stocks. Hence, you must fix this so that you can secure a copy of the eCAR or Electronic Certificate Authorizing Registration and tax clearance given by the Bureau of Internal Revenue (BIR).
Step 2: Get Proper SEC Monitoring Clearance
The SEC will require you to undergo a few processes before the formal application for amendment. You need to get monitoring clearance on reportorial compliance. What does this mean? You will need to submit copies of the following:
- Related amendments
- Financial statements
- Latest general info sheet
- Stock and transfer book registration page
- Other requirements based on industry
Noteworthy, should the SEC discover deficiencies and issues, you will be levied penalties that you’re required to pay. Upon payment, they will process the application and furnish the clearance. Those who don’t encounter any problems will be given the said clearance immediately.
Step 3: Amend the Original Articles of Incorporation to Tailor Fit It for OPC
Amending the articles entails the submission of several documents. For a successful process, prepare the following:
- Cover sheet
- Application for Conversion of an OSC to OPC (use template of the SEC) signed by the single stockholder who acquired all the shares.
- Original or certified copies of ownership (ex. Deeds of Assignment)
- BIR tax clearance or Certificate Authorizing Registration
- Notarized certificate of no dispute from the OSC Secretary
- Articles of Incorporation of OPC (following SEC guidelines)
- Letter of acceptance of appointment of the nominee and alternate nominee
- If applicable, self-appointed treasurer bond
- Name reservation
- Monitoring clearance from other SEC departments
- If applicable, endorsements of other agencies
- Change the corporation name executed under oath by the sole stockholder
- Undertaking to assume liabilities of OSC by the sole stockholder.
Step 4: Results of SEC Approval
The final step includes waiting for SEC approval. Notably, upon the issuance of the Certificate of Filing of Amended Articles of Incorporation reflecting OPC conversion, the original Articles of Incorporation and the By-law of the OSC will be officially superseded. The date of issuance of the certificate is also the date of approval. The SEC registration will remain, along with the Corporate name, now with the suffix OPC attached to it.
Final Wrap Up
If you believe that an OPC and its features are beneficial for your business, you should consider the conversion. Read up on the benefits of an OPC to determine if this is really the best choice for your business. To help you analyze and process the steps, our team can help you out. We give free 30-minute consultations to get you jump started in the right direction.