In 2019, the Philippine Securities and Exchange Commission began accepting applications for One person Corporations, following the passage of the Revised Corporation Code in the country, also referred to as Republic Act No. 11232. The legislature was written and passed in accordance with efforts to to facilitate the ease of doing business in the Philippines.
This new law allows individuals to register their businesses as corporations with only one shareholder. This is a significant decrease from the previous ruling that required corporations to be composed of at least five shareholders. Clearly, this initiative is a big step in creating business opportunities for local companies that do not meet the right numbers before. Now, even an individual can enjoy the benefits of establishing a corporation over a sole proprietorship.
If you are looking to start your entrepreneurial journey in the Philippines, deciding what business structure would work best for you is the first step of the process. The recent addition of the OPC business structure expands your options, allowing you to see which structure brings the most benefits. Here are all the key features about One Person Corporations that you need to know for when you register your company and how you can apply.
Important Features of the OPC
With minimal requirements upon registering your business with the BIR, you can enjoy faster processing and expending less resources. Take a look at the benefits of setting up an OPC. :
1. Single Stockholder
By the name itself, One Person Corporations are owned by a single stockholder. Therefore, the OPC must be formed by a natural person of legal age (18 and above), trust, or estate. However, it is important to note that while this is a single stockholder corporation, the company is still required to appoint a nominee and alternate nominee to take over the management functions of the OPC upon retirement, incapacity or death of the single stockholder. In addition, the OPC may opt to appoint a Secretary or Treasurer (both of whom must be Filipino Citizens) or may opt for self-appointed positions by the Single Stockholder.
2. Limited Liability
OPCs in the Philippines are limited liability corporations (LLC). This means that all the personal assets of the “owner” or stockholder are protected. If the company defaults on its loans, the debtor will have to go after the corporation as a separate entity. The extent to which the shareholder is liable is only to the extent of their capital contribution to the business.
3. Virtually Unlimited Life
The OPC, being a corporation, may operate in “perpetua” unless the incorporators wish to set a term. Remember, corporations are considered separate legal entities, so your corporation can have an indefinite lifespan because it does not hinge on the life of the founders of the business.
4. Convertible to Regular Corporation
Should the shareholders wish to expand the company and convert it to a regular five person corporation, they may do so, as long as provisions and rules on conversion set by the Security and Exchange Commission are followed. Similarly, regular corporations may be converted to an OPC provided that a single shareholder acquires the total shares and is in compliance with the rules of the Securities and Exchange Commission on conversion.
5. No Minimum Paid-Up Capitalization
When applying for OPC, the company is required to issue authorized stock. Under the new provisions of the R.A 11232, the applicant needs to declare an amount; however, there is no minimum set unless certain laws require so based on the nature and operations of the business.
How to Register and Apply
Check out the quick steps on how to apply for a corporation below:
1. Verify and approve your business name
2. Submit registration forms and documents (articles of incorporation, consents, etc.)
3. Pay filing fees and other fees
4. Submit proof of payment and notarized documents
5. Collect the receipt of certification of registration.
You can also read this detailed step-by-step guide here for converting your 5 person corporation into an OPC. This one includes all the proper forms and requirements you need to prepare for successful business registration.
If you need help registering your business with the BIR, you can count on our team for the swift processing of documents. We can also help you with accounting, bookkeeping, and auditing. So call us for a free 30-minute consultation to get you started on your journey to becoming a legitimate OPC or One Person Corporate entity in the Philippines.