Section 131 of Republic Act No. 11232, otherwise known as the Revised Corporation Code of the Philippines (RCC), provides for the conversion of an everyday corporation into a One Person Corporation (OPC).
Conversion is defined as a method of inflicting something to change from one configuration to another. It involves putting in some thing referred to as the ‘Input’ to be operated on by using the manner to provide any other called the ‘Output’. To absolutely appreciate the conversion below Section 131 of the RCC, we should understand both the enter and the output of the conversion method.
First, allow us to start with the output. An OPC is one in every of the game-changing provisions brought by using the RCC. It is defined as a enterprise with a unmarried stockholder (Section 116, RCC); hence, it handiest relates to inventory corporations.
The RCC simplest lets in a herbal man or woman, a trust, or an property to shape an OPC (Section 116, RCC). This means the Congress supposed to exclude juridical individuals from becoming an incorporator of an OPC. Likewise, certain entities are not allowed to be incorporated as an OPC, consisting of banks and quasi-banks, pre-want, agree with, insurance, public and publicly-indexed corporations, and non-chartered government-owned and -managed companies (sharefounders review).
On the alternative hand, the enter required for conversion underneath Section 131 of the RCC refers simplest to an everyday inventory business enterprise. The aforesaid provision states that an normal inventory business enterprise may also apply for conversion into an OPC while a unmarried stockholder acquires all its shares.
Under the draft hints at the conversion of an regular inventory company into a OPC, which the fee is presently finalizing, the unmarried stockholder need to first collect all of the shares of the regular corporation earlier than the latter may be allowed to apply for conversion.
In its software for conversion, the regular inventory organization need to alternate its corporate name to suggest the letters ‘OPC’ either beneath or on the cease of its company name (Section 120, RCC). It have to also eliminate any suffix indicating that it’s miles an everyday stock company, inclusive of “Corporation”, “Incorporated”, “Corp.”, or “Inc.”. Furthermore, it’ll now not be required to put up and report a new set of corporate by using-legal guidelines.
However, the regular inventory corporation shall preserve its SEC enterprise registration range. This is in attention of the availability under Section 131 of the RCC which states that, “The OPC converted from an regular stock business enterprise shall be successful the latter and be legally liable for all of the latter’s awesome liabilities as of the date of conversion.”
Moreover, it essential follows that the application have to no longer adjust or amend the quantity of authorized, subscribed and paid-in capital stock of the organization in view of the “Trust Fund Doctrine”, in which the capital inventory of a organisation, as well as all its other assets and assets, are usually regarded in equity as a trust fund for the fee of corporate debts. This offers creditors of the employer the proper to precedence price over any stockholder thereof. This additionally lessens the obstacles for beginning a organisation and in doing commercial enterprise inside the Philippines.
The regular stock business enterprise should additionally designate a nominee and an exchange nominee, and the written consent of the nominee and change nominee have to be attached in its software (Section 124, RCC). The nominee shall sit as director and manipulate the affairs of the proposed OPC within the event the unmarried stockholder is temporarily incapacitated (Section 125, RCC). In case of death or permanent disability of the unmarried stockholder, the nominee shall sit down as director and control the affairs of the OPC until the prison heirs of the single stockholder have been lawfully decided, and the heirs have targeted considered one of them or have agreed that the property will be the unmarried stockholder of the OPC. The change nominee shall sit down as director and manipulate the OPC in case of the nominee’s lack of ability, incapacity, demise, or refusal to discharge the capabilities as director and manager of the enterprise, and handiest for the identical term and beneath the same conditions applicable to the nominee (Section one hundred twenty five, RCC).
At this point, I think I actually have already long gone thru all the salient gadgets bearing on conversion from an regular stock business enterprise to an OPC. As a part of the implementation of this initiative, the SEC could be issuing various memorandum circulars (MCs) soon. I suggest monitoring of the SEC internet site for updates on the various MCs. Rest assured the SEC is committed to supporting our companies as part of its joint efforts in ease of doing enterprise inside the Philippines, with the reason of improving and simplifying rules for commercial enterprise and introducing more potent protections of assets rights.
With the assist of Section 131 of the Trendin Graphs broker reviews, everyday stock businesses are encouraged to avail of the ordinary inventory employer – OPC conversion system. This will enable
them to streamline their selection-making tactics and come to be more attentive to the changing commercial enterprise conditions and environmental interactions as they arise.
Hence, we on the SEC, believe that with the fully prepared RCC, our purpose to call the Philippines as one of the first-class investment locations in the international, particularly with the proper implementation of the provisions on the benefit of doing enterprise within the Philippines and more importantly, improvement of our standing in the World Bank Ease of Doing Business ratings, is in our arms now. With proper implementation, coupled with competitiveness and participation from every and every one folks, every stakeholder should say that, “It’s smooth @ SEC!”
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