By: Rob Avenida
One Person Corporation is essentially a corporation with a single stockholder. However, unlike an ordinary corporation, an incorporator in an OPC is limited to natural persons, trust, or estate only. Here are the important details you need to know:
- Capitalization and Name. An OPC does not require a minimum capital stock, save for instances otherwise provided by law. Also, unlike an ordinary corporation, an OPC is only required to file its Articles of Incorporation without the need to submit and file corporate bylaws. The OPC is likewise required to indicate the letters “OPC” either below or at the end of its corporate name.
- Officers of OPC. The single stockholder in an OPC is regarded as its sole director and president. Although said single stockholder may not be appointed as the OPC’s corporate secretary, he may still appoint himself as the treasurer of the OPC, provided that he shall post a bond with the Securities and Exchange Commission, the amount of which is correlative to the OPC’s authorized capital stock.
- Nominee and Alternate Nominee. A nominee and an alternate nominee, who will take the place of the single stockholder as director and manage the OPC’s affairs in case of the single stockholder’s death or incapacity, shall also be designated by the single stockholder in its Articles of Incorporation. The written consent of said nominee and alternate nominee must be attached to the application for incorporation and such consent may be withdrawn in writing any time before the death or incapacity of the single stockholder.
In case the single stockholder be temporarily incapacitated, the nominee shall assume the responsibilities of the director until the stockholder, by self-determination, regains capacity to assume such duties. However, in case of death or permanent incapacity of the stockholder, the nominee shall sit as director and manage the OPC’s affairs until the legal heirs of the stockholder have been lawfully determined, and the heirs designate either one of them or the estate as the single stockholder of the OPC, should the heirs decide to carry on with the existence of the OPC.
The alternate nominee shall assume the responsibilities of the director in the event of the nominee’s inability, incapacity, death, or refusal to discharge the same functions. In such a case, the alternate nominee shall be subject to the same terms and conditions as applicable to the nominee. And, the single stockholder may change his nominee and alternate nominee any time by imply submitting to the SEC the names of the replacements and their written consent, without the need to amend the OPC’s Articles of Incorporation.
- Conversion from OPC to ordinary corporation. The law also allows the conversion from an OPC to an ordinary corporation, or vice-versa, subject to the submission of the required documents to the SEC. In case of conversion, the succeeding corporation shall be legally responsible for the outstanding liabilities of the former corporation.
- Doctrine of separate juridical personality, not presumed. Much like an ordinary corporation, an OPC possesses juridical personality separate and distinct from the personality of the single stockholder. However, the single stockholder has the burden of proof to affirmatively show that the property of the OPC is independent from that of his own personal property. Failure to do so will render the single stockholder jointly and severally liable for the liabilities of the OPC.
- Death of Single Stockholder. In case of death of the single stockholder of an OPC, the nominee or alternate nominee will transfer the shares of the OPC to the duly designated legal heirs, who shall have the option to continue with the existence of the OPC and appoint either one legal heir or the estate as the single stockholder, wind up and dissolve the OPC, or convert it into an ordinary stock corporation.
OPC vs. Single Proprietorship
Noting all these similarities and differences from an ordinary corporation, one may properly ask whether an OPC is just a glorified version of a single proprietorship. To answer the same, we must view both as a stockholder on the one hand, and the public who will deal with the entity on the other hand.
As a stockholder, it is evident that an OPC is more favorable than that of a single proprietorship considering that in an OPC, a stockholder has the chance to properly prove that his personal property is separate and independent from that of the OPC’s property. Thus, an OPC’s liability will not automatically affect the stockholder’s personal property. Whereas in a single proprietorship, a sole proprietor would never be able to escape personal liability considering that a single proprietorship has no separate juridical personality. Thus, the liability of a single proprietorship is essentially the sole proprietor’s own liability.
In the perspective of potential creditors and clients, an OPC also offers more guarantee in that creditors and clients would be more assured when dealing with an OPC than a single proprietorship considering that an OPC is regulated by the SEC, and a single proprietorship is not.
Needless to say, the One Person Corporation is a valuable and long overdue addition to the newly amended Corporation Code. Now, with this, the real question arises: is a sole proprietorship still relevant given the existence of an OPC? But that is for another topic.
As appeared in Gavel & Robe Vol. 2 Issue 9 (September 2019)