In the previous article, we discussed the compliance obligations imposed on One Person Corporations (OPC) under SEC Memorandum Circular 10, Series of 2026, covering officer appointments, reportorial duties, and financial statements.

This time, we turn to what truly gives the Circular its teeth: enforcement. Beyond compliance lies accountability, and the SEC has made it clear that OPCs will no longer operate in a loosely supervised space.

At the heart of the Circular is a graduated penalty system designed to discipline non-compliance without being unduly punitive. The framework is straightforward: the bigger the corporation and the more frequent the violation, the higher the penalty.

For example, an OPC with retained earnings of up to P100,000 faces a P5,000 fine for the first offense. This increases progressively, reaching P9,000 by the fifth violation. Larger corporations, unsurprisingly, face significantly steeper penalties.

Another critical safeguard addresses a structural vulnerability unique to OPCs: the concentration of power in a single individual.

Where the sole stockholder also acts as Treasurer, the Circular requires the posting of a surety bond in favor of the SEC. This is not a mere formality. It is a protective mechanism for creditors and third parties who may otherwise be exposed to the risks of unchecked control over corporate funds.

The bond must be posted within 30 days from incorporation or within the period for submitting the Form for Appointment of Officers (FAO). Its amount is pegged to the authorized capital stock, starting at P1 million and increasing in tiers up to P5 million or more.

Failure to comply is not taken lightly. A base penalty of P10,000 is imposed, with additional monthly surcharges. Notably, even a fraction of a month counts as a full month — an unmistakable signal that delays, however slight, will not be tolerated.

The Circular also anticipates changes in corporate structure. If the OPC later appoints a Treasurer who is not the sole stockholder, it may apply for the release of the bond, subject to SEC approval and the submission of updated documents.

Equally important are the rules on claims against the bond. Third parties who suffer loss may file a claim with the SEC, which may then require the corporation to respond and refer the matter to the issuing insurance company. If the claim is found meritorious, the bond — or part of it — may be released to satisfy the claim.

On a lighter note, the Circular affirms that OPCs are not required to adopt by-laws, consistent with the Revised Corporation Code — a small but meaningful recognition of their simplified structure.

Finally, the SEC provides a transition window. Existing OPCs are given 30 days from the effectivity of the Circular to comply with the new requirements, including the submission of the FAO and posting of the surety bond. Non-compliance within this period triggers the corresponding penalties.

Taken together, the message is clear: the privilege of operating alone does not mean operating without oversight.

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.