One Person Corporation - Frequently Asked Questions

Frequently Asked Questions About One Person Corporation (Part 2)

Corporation or Sole Proprietorship, An Entrepreneur’s Dilemma

One of the primary reasons why a corporation is often preferred over a sole proprietorship is the limited liability which the business owners or investors assume. As a rule, the stockholder of a corporation is liable only for the liabilities of the corporation to the extent of his/her investment. His/her assets outside of his/her investment are not answerable for corporate debts and obligations.

In contrast, in a sole proprietorship, the business owner is personally and solidarily liable with the sole proprietorship. This personal liability extends to his/her assets outside of his/her investment. As such, the creditors may hold the separate properties of the proprietor answerable for the liabilities of the business.

What turns off many entrepreneurs from forming a corporation, however, is that they are constrained to invest and share management of the business with others. Under the Corporation Code (BP 68), a corporation shall be formed by at least five (5) but not more than fifteen (15) natural persons, known as the incorporators.

They may not be comfortable in forming and running a business with other persons, whom they may not totally trust. Besides, they may also repulse the idea of having to go through corporate bureaucracy every time a decision is to be made. Moreover, corporate politics may also hamper the realization of the goals and purposes for they intend to form the corporation in the first place.

One Person Corporation, A Dream Come True

The One Person Corporation (OPC), under the Revised Corporation Code (RA 11232), assimilates the best of both worlds. While there is only one stockholder who owns the entire capital stock of the OPC, the single stockholder also enjoys the limited liability of a stockholder in an ordinary corporation.

Frequently Asked Questions

Our previous article addressed some of the frequently asked questions regarding One Person Corporation. This article deals with some more questions.

What happens in case of death or incapacity of the single stockholder?

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

 The written consent of the nominee and alternate nominee shall be attached to the application for incorporation.

What is the extent and/or duration of the authority of the Nominee?

It depends on the state of the single stockholder, that is, whether the single stockholder is dead, permanently incapacitated, or temporarily incapacitated.

Death or Permanent Incapacity of the Single Stockholder

In case of death or permanent incapacity of the single stockholder, the nominee shall sit as director and manage the affairs of the One Person Corporation 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 One Person Corporation.

Temporary Incapacity of the Single Stockholder

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

What is the role of the Alternate Nominee?

The alternate nominee shall sit as director and manage the One Person Corporation 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.

May the Nominee and the Alternate Nominee be replaced?


The single stockholder may, at any time, change its nominee and alternate nominee by submitting to the Commission the names of the new nominees and their corresponding written consent. For this purpose, the articles of incorporation need not be amended.

To be continued…