One Person Corporation Nominees:

Who They Are & Why They Matter

One Person Corporation Nominees: Your OPC's Crucial Backup Plan

As the sole owner of your One Person Corporation (OPC), you're the driving force behind your business. But have you ever considered: what happens if you're suddenly unable to manage your company due to unforeseen circumstances? That's where the often-overlooked yet vital roles of the nominee and alternate nominee come in. They are your OPC's crucial backup plan, ensuring continuity and a smooth transition when the unexpected happens.

The Legal Foundation: Section 139 of the Revised Corporation Code (RCC)

The requirement for a nominee and alternate nominee isn't just a formality; it's legally mandated by Section 139 of Republic Act No. 11232, the Revised Corporation Code of the Philippines (RCC). This law dictates that every OPC must designate these individuals to act in case of the single stockholder's death or temporary/permanent incapacity.

Who Can Be Your OPC's Safety Net?

Choosing the right nominee and alternate nominee is a significant decision. While they don't need to be related to you, they should ideally be:

  • Trustworthy: Someone you have complete confidence in to act in your best interests and the best interests of your company.

  • Capable: Individuals with the competence and sound judgment to manage the OPC's affairs effectively.

  • Willing: They must be aware of and consent to their designation (SEC Memorandum Circular No. 07, Series of 2019 emphasizes this written consent).

  • Practically Accessible: While not legally required, a resident of the Philippines will likely find it easier to fulfill the necessary duties.

The Primary Guardian: Responsibilities of the Nominee

When the single stockholder passes away or becomes temporarily or permanently incapacitated, the primary nominee steps in with critical responsibilities:

  1. Manage the OPC's Affairs: This means keeping the business operational – paying bills, overseeing daily activities, and making necessary decisions to maintain its viability.

  2. Assume the Role of Single Director: The nominee temporarily takes on all the powers and responsibilities of the sole director, as outlined in the RCC and your OPC's Articles of Incorporation.

  3. Facilitate Share Transfer: In the event of your death, the nominee is responsible for transferring your shares to your designated legal heirs or estate, ensuring the orderly continuation or settlement of your OPC.

The Secondary Safeguard: Responsibilities of the Alternate Nominee

The alternate nominee acts as a backup, stepping in only if the primary nominee is unable or unwilling to perform their duties. Their responsibilities mirror those of the primary nominee, providing an essential second layer of protection for your OPC's future.

Understanding the Stakes: Legal Ramifications

The roles of the nominee and alternate nominee carry significant responsibility, and mishandling them can have legal consequences:

  • Breach of Fiduciary Duty: Acting against the best interests of the OPC or engaging in self-dealing can lead to legal action.

  • Liability for Corporate Acts: While serving as the single director, the nominee can be held liable for corporate missteps, just like any other director.

  • Complications in Inheritance: Disputes over your estate can complicate the share transfer process, potentially requiring legal intervention for the nominee.

Protecting Your OPC: Practical Steps

To ensure a smooth transition and minimize legal risks, consider these steps:

  • Choose Wisely: Select nominees who are trustworthy, capable, and understand the nature of your business.

  • Secure Written Consent: Ensure both nominees provide their written consent, as required by the SEC.

  • Ensure Clear Succession Plans: Have a clear will or other legal document outlining your legal heirs.

  • Consider a Nominee Agreement: A separate agreement can detail the scope of their authority, responsibilities, and any compensation, providing clarity for all parties.

  • Stay Informed on SEC Guidance: The SEC periodically issues opinions and circulars (e.g., SEC MC No. 07-2019, SEC Opinion No. 2020-07 which discusses the stockholder as nominee, and SEC Opinion No. 2021-11 on nominee authority) that provide further clarity on OPC nominees.

Your OPC's Future Rests, in Part, on Your Nominee Choices

The nominee and alternate nominee are not mere afterthoughts in establishing your One Person Corporation. They are integral to its continuity and provide crucial security for your hard work and legacy. By carefully selecting capable and trustworthy individuals and ensuring clear documentation, you're proactively safeguarding the future of your OPC.

Need Guidance on Setting Up Your OPC

At Aboveboard, we understand the intricacies of the One Person Corporation structure in the Philippines. We can provide expert guidance in setting up your OPC and carefully considering the crucial roles of your nominee and alternate nominee. Contact us today to ensure a solid foundation for your business's future.

Disclaimer: This article provides general information and should not be considered legal advice. Consult with a legal professional for advice tailored to your specific situation and the latest legal pronouncements from the SEC (including but not limited to SEC MC No. 07-2019, SEC Opinion No. 2020-07, and SEC Opinion No. 2021-11) and other relevant authorities, as well as the Revised Corporation Code of the Philippines.