How to Register a One Person Corporation (OPC) with the SEC: A Definitive Guide

With the increasing number of Filipinos foraying into the world of eCommerce and starting their own business at this time of uncertainty, it’s essential that they operate within the law to avoid unnecessary headaches. If you are one of these entrepreneurs, you have to register your business properly.

Luckily, the Securities and Exchange Commission (SEC) now eases the process of doing business and created a new juridical entity under the newly-passed amended Corporation Code.

In this post, you’ll learn about the newest type of corporation, and how you can fully benefit from it so you can successfully kickstart your venture.

• What is an OPC
• Difference between OPC and Single Proprietorship
• Registration requirements
• How to register
• What to do after
• FAQs

What is a One Person Corporation (OPC)

A One Person Corporation (OPC) is a corporation with a single stockholder who can be a natural person, trust, or estate. It offers the full control of a sole proprietorship and the limited liability of a corporation.

Unlike a regular corporation that has a need for at least four other incorporators or the existence of a board of directors, OPCs need only a single stockholder—i.e. the owner who will act as the president and sole director of the company. 

The removal of this requirement is a game-changer.

Before, the OPC used to be limited to religious corporations wherein the chief archbishop or presiding elder of the religious organization can apply.

Now, entrepreneurs no longer need to find dummy incorporators if they want to register a corporation.

There is also no minimum authorized capital stock required unless otherwise provided by a special law. Also, unless otherwise required by applicable laws or regulations, no portion of the authorized capital of a One Person Corporation is required to be paid-up at the time of incorporation. More on this below.

Don’t forget—OPCs are also corporations, which means they have a fixed income tax rate of 30%. But we’ll talk about taxes some other time.

Regardless, these changes are better. The Corporation Code of the Philippines has recently been repealed by the Revised Corporation Code or the Republic Act 11232 in 2019. The former Corporation Code was untouched for almost 40 years, and the Revised Corporation Code lightens the registration process and makes it easier for Filipinos to pursue their entrepreneurial aspirations. This also aims to support micro, small, and medium enterprises (MSMEs) which makes up 99.6% of all registered businesses in the Philippines.

What is the difference between an OPC and a Sole Proprietorship

The One Person Corporation and Sole Proprietorship may sound similar but they have unique provisions, exceptions, and structure that only applies to each one. For example, an OPC allows a single person to run a company limited by shares while a Sole Proprietorship defines the owners and the business as a single entity.

Watch this video by SKY Law.

Before the approval of the Revised Corporation Code, entrepreneurs have to get four other incorporators to meet the five-person requirement. Their only two options are to register as a sole proprietorship or find dummy incorporators.

While being registered as a sole proprietor is the simplest form of business, it also entails the highest risk to the owner as there is no distinction between the owner and the business.

For example, if a sole proprietor’s business goes under debt or bankruptcy and they don’t have money to pay, the creditor can go after the owner’s personal assets (house, car, etc.). On the other hand, OPC’s personal assets are treated separately from the owner. That means creditors can only go after the assets of the company.

Below you’ll find a table of the major differences between the two business types:

Important notes and reminders

Do note that while in the OPC, you may have limited liability, this has to be proven: A sole shareholder claiming limited liability has the burden of affirmatively showing that the corporation was adequately financed.  Where the single stockholder cannot prove that the property of the One Person Corporation is independent of the stockholder’s personal property, the stockholder shall be jointly and severally liable for the debts and other liabilities of the One Person Corporation.

Costs above are also estimates. There are a lot of factors that affect business registration costs such as capitalization. Another would be whether you’ll do it yourself or outsource/hire a third party to do it for you.

Who can and who can’t apply as OPC

The One Person Corporation or single shareholder of an OPC must be one of the following:

• A natural person
• Trust*
• Estate**

The OPC, also known as an incorporator, must be of legal age as well and must reside in the Philippines. The OPC shall be the sole director and president. 

Foreigners may register as OPC but are still subject to foreign ownership limits, applicable capital requirement and constitutional, and statutory restrictions on foreign participation or as specified in the Foreign Investment Negative List (FINL).

The following are not allowed to form an OPC unless provided under special laws:

• Natural persons who are licensed professionals
• Banks, non-bank financial institution, and quasi-banks 
• Pre-need, trust, and insurance companies
• Public and publicly-listed companies 
• Non-chartered government-owned and government-controlled corporations (GOCCs)  

If the applicant passes the qualifications, he or she may proceed with the registration process.

*The trust does not refer to a trust entity, but to the subject being managed by a trustee. 

**It is the estate of the deceased that is allowed to form the OPC and not the administrator.

What are the requirements for registering an OPC

Under the guidelines of the SEC, all applications and transactions should be filed manually or online with the SEC’s Company Registration and Monitoring Department or its affiliated website.

Of course, the best choice is to register online.

The documentary requirements for registering an OPC are as follows:

• Cover sheet
• Articles of incorporation
  • You can download a Word (docx) sample of the Articles of Incorporation for OPCs here
• Written consent from the nominee and alternate nominee
  • You can find a template for this here

If you noticed, by-laws aren’t included in this list because it is optional for OPCs (unlike for regular corporations).

Below are the other requirements that you may prepare if applicable:

• Proof of authority to act on behalf of the trust or estate
• Foreign Investments Act Application Form (for foreign natural persons)
• Affidavit of Undertaking to Change Company Name, in case the chosen one isn’t approved
• Tax Identification Number for Filipino single stockholder
• Tax Identification Number or Passport Number for Foreign single stockholder
• Capitalization details – Maximum number of shares, per value, subscribed amount, and paid-up.
• Accounting year-end preference—calendar or fiscal year

Entrepreneurs registering as OPCs are not required to submit and file corporate bylaws or the official regulations of a company.

The designated nominees will replace the single stockholder if they die or become incapacitated to operate the OPC. At any time, the single stockholder may change its Nominee and Alternate Nominee by submitting to the SEC the names of the new nominees and their corresponding written consent. For this purpose, the Articles of Incorporation need not be amended.

How to register an OPC: A simple 5-step process

Registering an OPC is not rocket science. And it only involves three phases:

1. Online name reservation
2. Prepare documents and other requirements
3. Submit manually to a SEC office

Look, I know it may seem daunting to register your business, but doing so also avoids any potential business problems in the future. And with the SEC releasing a memorandum last April 2020 allowing online registration of OPC, everything just becomes a breeze.

By the way it’s always best to consult a lawyer who is knowledgeable about corporate law so you can discuss your specific needs. Don’t rely on stuff you read online (yes, including this one).

1. Research possible business names

You should prepare at least three names for your business and check if the proposed name is still available. You can do this easily by heading to the SEC’s website and type in the names you want. If something matches, your name might get denied.

You can skip this step, but know that your application may get denied. You can submit a Letter of Appeal when that happens, but why risk wasting time, right?

Also note that a requirement is that you business name will have a suffix of “OPC.” For example, Juan Dela Cruz OPC or JDC Marketing OPC.

Pro Tip: Go beyond this step by making sure your proposed name is also available online for your website. Google your proposed name to see if a website comes up. Or even better, check for its availability directly here.

2. Fill out the application form online

This step is really self-explanatory. Visit the SEC Registration Application Form and fill out the form completely and accurately. The more details you provide, the higher your chances of getting approved.

You will be advised of the status through the email address indicated on the application form within 3 working days. An application reference number will be provided once the form is successfully submitted and can be used for tracking.

PS: Check your spam folder as the email may get flagged by your email provider.

3. Pay the filing fees

Once approved, the next step is to pay the necessary fees

You can pay the registration fees specified on the payment assessment form (PAF) which you can estimate using the SEC fee calculator below.

Sample SEC Business Registration Calculator

For your reference, here’s a breakdown of the fees you can expect:

• Name Reservation - Php 100.00 per company name or trade name
• Articles of Incorporation - ⅕ of 1% the authorized capital stock but not less than Php 2,000.00
• Legal Research Fee - 1% of the registration fee but not less than Php 20.00
• FIA Application Fee - Php 3,000.00 if the single stockholder is a foreigner and Php 30.00 for the documentary stamp.
• Documentary Stamp - Php 30.00

If your application is disapproved...

Take note of the corrections made by the reviewing officer. This will be included in the notification sent to you.

You can fill-up the registration form again after making the necessary changes.

4. Prepare and submit notarized hard copies with proof of payment

After the necessary fees are paid, prepare the necessary documents, sign it, have it notarized, then submit it manually to the SEC office you chose in the registration application form. You'll need three (3) sets of hard copies of these documents along with the proof of payment.

At the moment, payment and submission of these documents are required within 30 working days from the lifting of the Enhanced Community Quarantine (ECQ).

5. Claim your certificate of registration

Once everything is cleared and approved, the final step is claiming the Certificate of Registration (COR) from the SEC. 

For inquiries and assistance, please email [email protected] or [email protected].

What to do after you receive your certificate of registration

Once you received your SEC Certificate of Registration, you still need to go through the entire business registration process. Remember, the SEC COR is only the first step—the business name registration.

The following permits are essential for you to fully operate a business in the Philippines:

• Barangay Clearance
• Mayor's Permit
• BIR Registration

The incorporator must also submit the following documents and reportorial requirements within the period required by SEC:

• Annual audited financial statements within 120 days from the end of its fiscal year as indicated in its Articles of Incorporation. The financial statements should be certified under oath by the corporation's appointed treasurer provided that the total assets or liabilities of the corporation are less than Php 600,000.00.
• A report on all explanations or comments by the president on the qualification, reservation or adverse remarks made by the auditor in the financial statements.
• A disclosure of all self-dealing and related party transactions entered into between the OPC and the single stockholder.
• Other reports that the SEC may require.

Don’t forget that your permits have to be renewed annually. You can check the validity and renewal deadlines here.

The SEC may also place a One Person Corporation under delinquent status if it fails to submit the requirements three times, consecutively or intermittently, within five years.

Lastly, you might also want to register with the different government agencies such as SSS, PhilHealth, HDMF, and DOLE.

Additional SEC Requirements

Once you have been issued with the certificate, the single stockholder must appoint within 15 days a Treasurer, Corporate Secretary, and other officers. He or she can appoint himself or herself as the treasurer too but not as the Corporate Secretary.

If the single stockholder assumes the position of the Treasurer, they must post a surety bond that is computed based on the authorized capital stock of the OPC as shown in the table below:

The stockholder should notify the SEC within 5 days of the appointment. The bond is a continuous requirement as long as the single stockholder is the Treasurer and it is subject to renewal every 2 years.

Regular or special meetings are not needed if your business is registered as an OPC. An OPC shall also maintain a minutes book wherein it contains all actions, decisions, and resolutions taken by the One Person Corporation. Whenever an action is needed on any matter, a written resolution is enough prepared by the single stockholder. It should be signed and dated as well. 

Frequently asked questions

Over to You

Local and foreign individuals seeking to set up a company in the Philippines can take advantage of the OPC as the incorporator has full control and authority to their business. OPC has an ideal setup for those wanting to run their own corporation without associated risks of incurring personal liabilities, having business partners, and having less control over their business.

It also provides greater traceability and transparency. Since your business will be seen as a legitimate business, customers are more inclined to transact with you and you can also leverage your status to land more contracts, projects, or untapped markets in the future.

The OPC also empowers and enlivens the start-up and entrepreneur ecosystem as it now provides a simple and straightforward online process. The e-commerce and business sector is taking the lead in the current climate of the industry amidst the pandemic. With the creation of legal identity in the Philippines made more accessible and seamless through their online platform, aspiring entrepreneurs can easily register their business which can provide greater consumer protection and confidence in the long run-both beneficial for the business and the economy of the Philippines.