SEC RELEASES DRAFT GUIDELINES ON ONE-PERSON CORPORATION

Republic Act 11232, or the Revised Corporation Code of the Philippines, now allows corporations to have a single stockholder

Those interested to submit comments on the draft guidelines are asked to send an email to srladrido@sec. gov.ph by March 29.

The Securities and Exchange Commission (SEC) has released draft guidelines setting forth the process and documentary requirements for organizing a one person corporation (OPC).

In separate notices to all interested parties on March 15, the Commission requested for comments on the draft Guidelines on the Establishment of a One Person Corporation (OPC) and Guidelines on the Conversion of an Ordinary Stock Corporations into a One Person Corporation (OPC).

The concept of a corporation with a single stockholder was introduced by Republic Act 11232, otherwise known as the Revised Corporation Code of the Philippines, which took effect on Feb. 23.

Section 10 of the Revised Corporation Code paves the way for the creation of an OPC by removing the minimum number of incorporators that may organize a corporation. It further defined an OPC in Chapter III.

“The provision for a one person corporation should encourage the formation of more businesses in the country by making it easier for entrepreneurs to start a limited liability company,” SEC Chairperson Emilio B. Aquino said.

“This is especially beneficial in an economy where micro, small and medium enterprises comprise more than 99 percent of business establishments and generate around 63 percent of jobs.”

Establishment of an OPC

Among others, the draft guidelines on the establishment of an OPC reiterates that only a natural person, trust or estate may form an OPC. It, however, clarifies the incorporator must be a natural person of legal age.

The “trust” does not refer to a trust entity but a 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 draft also clarifies that nonbank financial institutions may not be incorporated as an OPC aside from banks, quasi-banks, preneed, trust and insurance companies, public and publicly-listed companies, and non-chartered government-owned and/or -controlled corporations.

Meanwhile, 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.

Conversion to an OPC

The draft guidelines on the conversion of an ordinary stock corporation into an OPC operationalizes Section 131 of the Revised Corporation Code.

Under the draft guidelines, only a domestic stock corporation may be converted into an OPC and the single stockholder may only apply for conversion after acquiring all outstanding capital stock of the corporation.

The process is the same as amending articles of incorporation to include the suffix OPC in the corporation’s name and remove any suffix indicating an ordinary stock corporation such as corporation and incorporation.

The corporation must amend its articles of incorporation to reduce the number of directors, name a nominee and alternate nominee, and amend or remove provisions distinctive to ordinary stock corporations,.

All interested parties may submit their views, comments and inputs to SEC Assistant Director Sampaguita Ladrido. /