SEC tightens rules on OPCs

The Securities and Exchange Commission (SEC) has issued Memorandum Circular 10, Series of 2026, prescribing the “Guidelines on the Compliance of One Person Corporations (OPCs).

At first glance, the issuance appears procedural. A closer reading, however, reveals a more deliberate objective: to impose structure, discipline and accountability on a corporate vehicle originally designed for simplicity and flexibility.

The One Person Corporation, introduced under the Revised Corporation Code (RCC), was intended to encourage entrepreneurship. It allows a single individual to enjoy the benefits of corporate personality without the need for partners or co-stockholders. In many respects, it democratized access to incorporation.

But simplicity carries risks.

Recognizing this, the SEC’s new Circular underscores a fundamental principle: ease of doing business does not mean ease of compliance.

The Circular establishes a more systematic framework for monitoring OPCs, focusing on three critical areas — corporate officers, reportorial requirements and financial disclosures. An OPC may have a single stockholder, but it cannot operate without a governance structure.

Under the RCC and the new guidelines, an OPC must designate a president, treasurer and corporate secretary. By operation of law, the sole stockholder assumes the role of President and may likewise serve as Treasurer.

However, the law draws a clear line: the corporate secretary must be someone other than the single stockholder. This is not a mere technicality. It is a safeguard against the risks inherent in concentrated control.

The corporate secretary plays a critical role in maintaining records, certifying corporate acts and ensuring compliance with regulatory requirements.

In addition, the designation of a nominee and alternate nominee ensures continuity in the event of the stockholder’s death or incapacity. These roles are not ceremonial — they are essential to preserving the corporation’s existence.

The SEC likewise strengthens reporting obligations through the mandatory submission of a Form for Appointment of Officers (FAO).

Newly registered OPCs must submit the FAO within 20 days from the issuance of the Certificate of Incorporation. Failure to comply carries a one-time penalty of P10,000, signaling that compliance begins at inception.

More importantly, the obligation is continuing. Any change in corporate officers must be reported within five days from appointment.

Non-compliance may result in escalating penalties, reflecting the SEC’s intent to promote timely and accurate reporting. In short, corporate information must not only be correct — it must also be current.

The Circular also reinforces the obligation to submit Annual Financial Statements (AFS) within 120 days from the end of the fiscal year.

More significantly, it highlights the need to disclose self-dealing and related-party transactions. Given that an OPC is owned by a single stockholder, the risk of transactions that are not conducted at arm’s length is ever-present.

To address this, OPCs are required to disclose transactions between the stockholder and the corporation, ensure proper documentation and maintain transparency in financial reporting.

These requirements reflect fundamental principles of corporate governance — protecting creditors, safeguarding third parties and preventing abuse of the corporate form.

The message of the SEC is clear. The OPC was created to make incorporation easier — but not to dilute corporate responsibility. While ownership may be singular, accountability is not.

In the end, the OPC remains what it was always meant to be: a convenient vehicle for business, but one that must operate within the discipline of corporate law.

For more of Dean Nilo Divina’s legal tidbits, please visit www.divinalaw.com. For comments and questions, please send an email to cad@divinalaw.com.