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How to Set up a One Person Corporation in the Philippines for Foreign Entrepreneurs

How to Set up a One Person Corporation in the Philippines for Foreign Entrepreneurs

For entrepreneurs looking to start a business, there is a near-universal question that needs to be answered — to begin as a sole proprietorship or create a corporation?

A sole proprietorship offers freedom and simplicity, while a corporation protects limited liability. For many, the ideal business structure lies somewhere in between the two.

Thankfully, in February 2019, Republic Act No. 11232, otherwise known as the Revised Corporation Code of the Philippines (RCC) was introduced, and with it, the One Person Corporation (OPC).

The OPC allows a single person (citizen or foreign) to form a corporation without the need for a board of directors or shareholders. With an OPC, the company owner is the director, sole shareholder, and president.

Let’s take a look at how you can set up a One Person Corporation in the Philippines. We’ll look at exactly what an OPC is, the pros and cons of an OPC, and what’s required in terms of documentation and registration.

What is a One Person Corporation?

A One Person Corporation (OPC) is simply a company with just one stockholder. This single stockholder is also the sole incorporator, director, and president.

This single stockholder’s liability is limited to the extent of their assets, combining the best of both worlds between a sole proprietorship and a limited liability company.

An OPC’s company name will have the suffix “OPC” either below or at the end of its corporate name.

Favourably, and OPC does not need a minimum capital stock, except where specified by law. This extends to foreigners looking to set up an OPC in the Philippines — as long as laws and regulations are met, there should not be any minimum capital stock requirements.

An OPC also will not need to pay up a portion of any capital stock at the time of incorporation, except specified by law.

An OPC does need to appoint some administrative staff, however:

  • A Corporate Secretary must be appointed within 15 days from the date of incorporation
    • The Corporate Secretary cannot be the single stockholder
    • The Corporate Secretary must be a Filipino citizen
  • A Treasurer must be appointed within 15 days from the date of incorporation
  • A Nominee and Alternate Nominee to take over management and operation in the event of the single stockholder’s death or incapacity

What Are the Bond Requirements for a Self-Appointed Treasurer?

If the director/single stockholder of the OPC decides to become the self-appointed treasurer, they will need to submit a surety bond that is based on their capital stock. Values are in Philippine Peso (₱).

  • ₱1 to ₱1,000,000 of Authorised Capital Stock
    • ₱1,000,000 Surety Bond
  • ₱1,000,000 to ₱2,000,000 of Authorised Capital Stock
    • ₱2,000,000 Surety Bond
  • ₱2,000,000 to 3,000,000 of Authorised Capital Stock
    • ₱3,000,000 Surety Bond
  • ₱3,000,000 to ₱4,000,000 of Authorised Capital Stock
    • ₱4,000,000 Surety Bond
  • ₱4,000,000 to ₱5,000,000 of Authorised Capital Stock
    • ₱5,000,000 Surety Bond
  • ₱5,000,000 or more of Authorised Capital Stock
    • Surety Bond to be equal to OPC’s authorised capital stock

Who Can Form an OPC in the Philippines?

  • A natural person of legal age (local or foreign)
  • A trust**
  • An estate

Please note, a foreign natural person can start up an OPC, under limitations in areas of investment partially or completely restricted from foreign involvement or as specified in the Foreign Investments Negative List (FINL).

Additionally, in this scenario, a trust does not refer to a trust entity, but rather to the subject being managed by a trustee.

Who Cannot Form an OPC in the Philippines?

  • Natural persons licensed to exercise a profession (if the OPC is to operate in this profession)
  • Public and publicly-listed companies
  • Pre-need, trust, and insurance companies
  • Banks, non-bank financial institutions, and quasi-banks
  • Non-chartered Government-Owned and Controlled Corporations (GOCCs)

What are the Pros and Cons of an OPC in the Philippines?

Pros of an OPC in the Philippines:

  • Limited liability (only the legal entity of the company is liable for its debts, rather than the director as a person)
  • Perpetual existence (despite bankruptcy, transfer of shares, change of director, etc.)
  • Complete control of the business (more like a sole proprietorship rather than a traditional corporation with a board of directors)
  • No minimum capital requirements (unless stated by law)
  • An existing corporation can restructure as an OPC (if a single stockholder acquires all shares of the company)

Cons of an OPC in the Philippines:

  • More complex than a sole proprietorship (due to more administration requirements)
  • Some limitations on foreign ownership (a foreigner cannot incorporate an OPC in an industry included on the Foreign Investments Negative List)
  • Tax obligations are subjective on a case-to-case basis (most sole proprietorships only pay 8% income tax, while the corporate income tax rate is 30% — however, there are many more tax benefits that come with a corporation)

What Documents Are Required to Register an OPC in the Philippines?

  • Articles of Incorporation, including
    • Names and details of the single stockholder
    • Primary purpose
    • Term of existence
    • Principal office address
    • Nominee and alternate nominee
    • The authorized, subscribed, and paid-up capital
    • Other matters that are consistent with the law and may be necessary and convenient
  • Consent in writing from the Nominee and Alternate Nominee
  • Other requirements (if applicable by case)
    • Foreign Investments Act (FIA) Application Form (for use by foreign natural persons)
    • Authority to Act on Behalf of the Estate or Trust (for use by estates and trusts incorporating as an OPC)
    • Affidavit of Undertaking to Change Company Name (in the case this is not included in the Articles of Incorporation)
    • Tax Identification Number (TIN) for a Filipino citizen director
    • Passport Number or Tax Identification Number (TIN) for a foreign director

What Are the Filing Fees for Registering an OPC?

  • Articles of Incorporation – 0.5 per cent of the authorised capital stock (but no less than ₱2,000)
  • Name Reservation – ₱100.00 per company name/trade name
  • FIA Application Fee – ₱3,000.00 if applicable
  • Legal Research Fee (LRF) – 1 percent of the Registration/Filing Fee (but no less than ₱20)
  • Documentary Stamp – ₱30

What Are the Steps for Registering an OPC?

  • Submit your proposed company name to SEC
  • Submit your documents to SEC for pre-processing
  • Pay any applicable filing fees
  • Submit hard copies of signed and notarized documents with proof of payment of applicable filing fees
  • Claim Certificate of Registration from SEC

If your company name is rejected (i.e. it is already in use, it is deemed inappropriate, etc.), you may submit a Letter of Appeal to the SEC.

As mentioned earlier, you must appoint a treasurer, corporate secretary, and other officers within 15 days of the issuance of your Certificate of Registration.

Conclusion — What’s Next for Incorporating Your OPC in the Philippines?

While we are not able to go into depth within this relatively short article, one thing is clear — an OPC creates an organisational structure that keeps the best of both worlds. With an OPC you have the freedom and control of a sole proprietorship, all while keeping the limited liability benefits of a traditional corporation.

We would consider incorporating an OPC of moderate complexity, so we highly recommend you talk to a trusted and competent company incorporation service provider.

With the right assistance, incorporating an OPC in the Philippines can be virtually seamless, saving you time, money, and stress.


FAQs

Can a foreigner form an OPC in the Philippines?

Yes. A foreigner may establish an OPC in the Philippines, subject to any applicable capital requirements and any statutory restrictions on foreign equity in certain investment sectors.

Is an OPC required to have a minimum authorized capital stock?

No. An OPC is not required to have a minimum authorized capital stock, except where otherwise stated in the law. Unless otherwise necessitated by applicable laws or regulations, no authorized capital is required to be paid-up at the time of incorporation.

Who serves as the director and officers of an OPC?

The single stockholder shall be the president and sole director of the OPC. This sole director can be the Treasurer, but not the Corporate Secretary.

How do I apply for an OPC in the Philippines?
  • Submit your proposed company name to the SEC
  • Submit your documents to the SEC for pre-processing
  • Pay any applicable filing fees
  • Submit hard copies of signed and notarized documents with proof of payment of applicable filing fees.
  • Claim Certificate of Registration from SEC

Let Us Make Setting Up an OPC in the Philippines Easy for You

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InCorp Content Team

InCorp's content team includes talented copywriters from our regional group and globally. We contribute informative, thought leadership, and market-trending articles to guide aspiring business entrepreneurs to a higher level across the Asia-Pacific region.

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