Incapacity of the Single Stockholder in One Person Corporation

One Person Corporation (OPC) is a stock corporation only.  It cannot be a nonstock corporation. Its regulatory governing body in the Philippines is the Securities and Exchange Commission (SEC).  Its owner is the sole shareholder who maybe a:

1.    Natural person

2.    Trust

3.    Estate

I repeat, only a natural person, a trust, or an estate maybe an OPC.  Note that in OPC, a corporation cannot be an incorporator.

If the sole incorporator is a natural person, he must be of legal age. 

Now, what about if an individual would like to form an OPC for the practice of his or her profession, would that be allowed under the law? The general rule is that professionals cannot form a corporation for the purpose of exercising their profession. This goes for both an ordinary corporation, that is, more than 2 incorporators, and an OPC.  That is the general rule. Professionals cannot form a corporation for the purpose of exercising their profession though this is subject to exceptions. 

Incapacity of Single Stockholder, Nominee and Alternate Nominee

The single stockholder shall designate a nominee and an alternate nominee who shall, in the event of the single stockholder’s death or incapacity, take the place of the single stockholder as director and shall manage the corporation’s affairs. 

When the incapacity of the single stockholder is temporary, the nominee shall sit as director and manage the affairs of the OPC until the stockholder, by self-determination, regains the capacity to assume such duties. 

What about if the incapacity is permanent?

In case of death or permanent incapacity of the single stockholder, the nominee shall sit as director and manage the affairs of the OPC until the legal heirs of the single stockholder have been lawfully determined, and the heirs have designated one of them or have agreed that the estate shall be the single stockholder of the OPC.

With regard to removal of the sole director arising from independent administrative actions for the removal, or as a sanction in the SEC’s proceedings, or imposition of sanctions on the sole director who, with knowledge of his disqualification, failed to be removed as the sole director, the rule is – the nominee shall take the place of the single stockholder as director and shall manage the corporation’s affairs, subject to the rights, obligations and responsibilities under the law, provided, that the nominee shall possess the qualifications and none of the disqualifications of a director. [Sec. 4, SEC MC No. 4, Series of 2022]

Now, what if, the nominee who is now assuming position becomes incapacitated?

The alternate nominee shall sit as director and manage the OPC in case of the nominee’s inability, incapacity, death, or refusal to discharge the functions as director and manager of the corporation, and only for the same term and under the same conditions applicable to the nominee. (Sec. 125 of Revised Corporation Code [RCC] and Sec. 12 of MC No. 7, S2019)

The single stockholder may, at any time, change its nominee and alternate nominee by submitting to the SEC the names of the new nominees and their corresponding written consent.  The Articles of Incorporation need not be amended. (Sec. 126 of RCC)

A One Person Corporation shall maintain a minutes book which shall contain all actions, decisions, and resolutions taken by the One Person Corporation. (Sec. 127 of RCC)

When action is needed on any matter, it shall be sufficient to prepare a written resolution, signed and dated by the single stockholder, and recorded in the minutes book of the One Person Corporation. The date of recording in the minutes book shall be deemed to be the date of the meeting for all purposes under the law. (Sec. 128 of RCC)

The above post is for general informational purposes only and is not a substitute professional legal advice. Likewise, the above post does not create a lawyer-client relationship between you and me. While I am a lawyer, I am not your lawyer. It is still best for you to engage the services of your lawyer to address your specific legal concerns, if there is any.

Also, the write ups stated above was written in accordance with the law, rules, and jurisprudence prevailing at the time of writing and posting, and do not include any future developments on the subject matter under discussion.

Thank you for dropping by. I hope we can spend time together here in my website during your coffee break.