One person corporation open to foreigners

The Securities and Exchange Commission (SEC) is allowing foreigners to put up one person corporations in the Philippines.

This is part of the released draft guidelines it issued for the establishment of OPCs as provided by the newly enacted Revised Corporation Code of the Philippines which took effect last month.

In the draft guidelines, the SEC said 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.

It also said that only a natural person, trust, or estate may form an OPC. It, however, clarifies the incorporator shall be a natural person of legal age.

Furthermore, it noted that 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.

Non-bank financial institutions may not incorporate as OPC aside from banks, quasi-banks, pre-need, trust and insurance companies, public and publicly listed companies and non-chartered government-owned and/or -controlled corporations, the guidelines also said.

The SEC is now seeking comments on the draft guidelines on the establishment of OPCs.

SEC chairperson Emilio Aquino said 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.

“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,” Aquino said.

The guidelines also define the parameters for the conversion of an ordinary stock corporation into an OPC.

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 also 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, among others.