What is a One Person Corporation (OPC) in the Philippines?

In the Philippines, entrepreneurship has always been dominated by sole proprietorships because of their simplicity and affordability. However, one recurring concern of small business owners is unlimited liability—meaning the debts of the business automatically become the debts of the owner.

To address this, the Revised Corporation Code of the Philippines (Republic Act No. 11232) introduced a game-changing business model in 2019: the One Person Corporation (OPC). This allows a single individual to form a corporation, combining the flexibility of sole proprietorship with the limited liability protections of a corporation.

Legal Definition of an OPC

Under Section 10 of RA 11232, a One Person Corporation is a corporation with a single stockholder, who may be a natural person, trust, or estate. The stockholder is both the sole incorporator and sole director, making management simple yet formalized under corporate law.

The Securities and Exchange Commission (SEC), through Memorandum Circular No. 7, Series of 2019, issued the implementing guidelines for OPC registration.

Key Features of an OPC

Single Stockholder
- Only one person is needed to form an OPC, unlike a traditional corporation that requires at least two to fifteen incorporators.
- The single stockholder acts as the President and sole Director.
Limited Liability
- The personal assets of the owner are separate from the OPC.
- Creditors can only claim against the corporate assets, not the owner’s personal property—unless there is fraud, bad faith, or commingling of assets.
No Minimum Capital Requirement
- Section 12, RA 11232, provides that no minimum capital stock is required, except if a special law mandates one (e.g., banking or insurance).
Perpetual Existence
- By default, OPCs have perpetual existence unless otherwise stated in the Articles of Incorporation.
Simplified Governance
- No board of directors, corporate secretary, or treasurer-in-trust is needed. Instead, the sole stockholder appoints a nominee and alternate nominee to take over in case of death or incapacity.

This comparison shows that OPCs provide more legal protection and continuity, while sole proprietorships remain attractive for micro-businesses with minimal compliance budgets.

Qualifications and Restrictions

Who can form an OPC?
- Any Filipino citizen of legal age.
- A trust or estate.
Who cannot form an OPC?
- Banks, quasi-banks, pre-need, trust, insurance, public and publicly listed companies, and non-chartered government-owned corporations. (Sec. 10, RA 11232)
Foreigners may form OPCs subject to ownership restrictions under the Foreign Investments Act (RA 7042) and the Foreign Investment Negative List.

OPC Registration with the SEC

The registration process is similar to traditional corporations but simplified:

Reserve a Company Name – through the SEC’s CRS (Company Registration System).
Prepare Articles of Incorporation – signed by the single incorporator, indicating nominee and alternate nominee.
Submit Documentary Requirements:
- Articles of Incorporation (with cover sheet)
- Written consent of the nominee and alternate nominee
- Treasurer’s affidavit (if applicable)
- Proof of paid-up capital (if required by industry law)
Pay SEC Fees – computed based on authorized capital stock.
Issuance of Certificate of Incorporation – proof that the OPC is legally registered.

Reference: SEC Memorandum Circular No. 7, Series of 2019

Taxation of OPCs

OPCs are taxed like domestic corporations under the National Internal Revenue Code (NIRC):

Corporate Income Tax:
- 25% (for corporations with net taxable income above ₱5 million or total assets above ₱100 million).
- 20% (for corporations with net taxable income not exceeding ₱5 million and total assets not exceeding ₱100 million).
- Rates are under the CREATE Law (RA 11534).
Minimum Corporate Income Tax (MCIT): 1% of gross income (until June 30, 2023, then back to 2%).
Withholding Taxes: OPCs must withhold taxes on compensation, suppliers, and other payees.
Value Added Tax (VAT) or Percentage Tax: Depending on gross annual sales/receipts (₱3 million threshold).

Compliance Obligations

Although simpler than traditional corporations, OPCs must comply with the following:

Annual Financial Statements (AFS) – audited if gross sales exceed ₱600,000.
General Information Sheet (GIS) – filed within 30 days of incorporation and annually thereafter.
BIR Compliance – registration with BIR, issuance of official receipts/invoices, filing of monthly/quarterly/annual tax returns.
Local Business Permits – Barangay clearance and Mayor’s permit.

Failure to comply may result in SEC penalties, suspension, or even revocation of corporate registration.

Advantages of OPC

Limited liability protection
Perpetual succession
Easier access to corporate financing (banks prefer dealing with corporations)
Professionalized image compared to sole proprietorships
Ownership transfer through share assignment

Disadvantages of OPC

Higher compliance costs (SEC filings, audited FS, taxes) compared to sole proprietorships
Limited to certain industries (exemptions under Sec. 10, RA 11232)
Greater regulatory oversight from SEC and BIR

Conclusion

The One Person Corporation (OPC) offers Filipino entrepreneurs a unique opportunity to enjoy the benefits of corporate structure without the need for multiple incorporators. With its limited liability, perpetual succession, and professional credibility, the OPC has become a preferred vehicle for professionals, consultants, freelancers, and small business owners looking to expand while protecting their personal assets.

However, while OPCs provide stronger legal protection, they also entail stricter compliance and tax obligations. Entrepreneurs should weigh the benefits and costs, and ideally consult both an accountant and a lawyer to determine if OPC is the best structure for their business.

📌 Legal References:

Republic Act No. 11232 – Revised Corporation Code of the Philippines
SEC Memorandum Circular No. 7, Series of 2019 – Guidelines on OPC
Republic Act No. 11534 – Corporate Recovery and Tax Incentives for Enterprises (CREATE) Law
National Internal Revenue Code (NIRC) of 1997, as amended

Navigating the business landscape in the Philippines can be both rewarding and intricate. Whether you’re embarking on a new venture or scaling up, ensuring that your corporate endeavors are in line with local regulations is paramount.

At CBOS Business Solutions Inc., we pride ourselves on simplifying these processes for our clients. As a seasoned professional services company, we offer comprehensive assistance with SEC Registration, Visa processing, and a myriad of other essential business requirements. Our team of experts is dedicated to ensuring that your business is compliant, well-established, and ready to thrive in the Philippine market.

Why venture into the complexities of business registration and compliance alone? Allow our team to guide you every step of the way. After all, your success is our commitment.

Get in touch today and let us be your partner in achieving your business goals in the Philippines.

Email Address: gerald.bernardo@cbos.com.ph

Mobile No.: +639270032851

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