Growing a PH Business: financing, SEC and expansion

01

Sole proprietor, corporation or OPC?

In simple words

A sari-sari store run by you is like a lemonade stand: you and the stand are the same. A corporation is like giving the stand its own name card, so it can sign papers, own things and owe money on its own. Many owners think about this when they want partners, a bigger loan or to hire more people.

Key facts

	Sole proprietorship	Regular (stock) corporation	One Person Corporation (OPC)
Registered at	DTI (business name)	SEC	SEC
Owners	One person	Incorporators and stockholders	One stockholder
Separate "person" from the owner	No (the DTI registers a name, not a new person)	Yes	Yes, but see liability below

The Revised Corporation Code (RA 11232) says a corporation may have up to 15 incorporators. Natural-person incorporators must be of legal age, and each incorporator of a stock corporation must own or subscribe to at least one share (Section 10).
The Code says a corporation with a single stockholder is an OPC, and that only a natural person, a trust or an estate may form one (Section 116, as quoted in secondary sources and the SEC briefer). Banks, insurance and similar companies, and listed companies are excluded under the Code's list.
No minimum capital stock is required for a stock corporation unless a special law requires one (Section 12).
A corporation has perpetual existence unless its articles say otherwise (Section 11).
Liability warning for OPCs (Section 130): a sole shareholder who claims limited liability must show the OPC was adequately financed. If the owner cannot prove that the corporation's property is separate from the owner's own, the owner is jointly and severally liable for the corporation's debts. The usual "piercing the veil" ideas apply to OPCs as well.
Converting: an ordinary corporation can become an OPC when one person gets all the stock, and an OPC can become an ordinary corporation (Sections 131 and 132). The new company is liable for the old company's debts.
A corporation has more paperwork than a sole proprietorship. Lessons 2 and 3 show how much.

Example (practice case)

Lito sells frozen siomai as a DTI-registered sole proprietor and now wants to bring in his sister as a partner and apply for a larger loan. He lists three options: stay a sole proprietor, form a partnership or a two-person corporation, or form an OPC and keep full control. He writes down the cost in time (more reports), the benefit (a separate legal "person") and the risk (mixing personal and business money still puts him at risk). He then books an hour with a lawyer to decide.

Step by step

Write why you want to change: partners, a bigger loan, separating your risk, or a customer who asks for a company.
List who would own the business and how much each person puts in.
Fill in the table above for your own business with three columns: cost, control and paperwork.
Read the SEC briefer on the Revised Corporation Code (see Sources) and note every term you do not know.
Check whether your business type is excluded from the OPC (for example banks, insurance, listed companies).
Prepare three questions for a lawyer or accountant, including how the tax change affects you (Lesson 4).
Check: you can say in two sentences why a corporation fits you, or why you will wait.

Watch on YouTube

How To Register A One Person Corporation (OPC 2021)Pinoy Tank · YouTube · youtube.com

Videos by other creators on YouTube, for reference. They are not made by or affiliated with The Future Market.

LESSON 01Sole proprietor, corporation or OPC?

LESSON 01 / ANIMATED LESSON / AI VOICE00:00 / 01:00

Voice

Read the video script

[Host] "Your business is growing. Should it become a corporation?"
[Text on screen: DTI = business name, SEC = corporation] "A sole proprietor registers a name with the DTI. A corporation registers with the SEC."
[Text on screen: OPC = one stockholder] "A One Person Corporation has one stockholder, but it still needs a nominee and records."
[Text on screen: Keep money separate] "If you mix business and personal money, you may still be personally responsible."
[Host] "Compare the choices on paper, then ask a lawyer before you decide."

Try it now

Make a one-page comparison of your business as a sole proprietorship, a regular corporation and an OPC. Add one reason for and one reason against each. Write the three questions you would ask a lawyer.

ClaudeStuck? Copy a ready-made prompt for Claude

Copy this, open Claude, paste it, and Claude will walk you through the lesson step by step.

For a grown-up: Claude is for adults (18+). Copy this, paste it into Claude, and use the answer to explain the lesson to your child.

I'm learning "Growing a PH Business: financing, SEC and expansion" on The Future Market. Lesson 1: "Sole proprietor, corporation or OPC?".

What the lesson teaches:
- Sole proprietorship - Regular (stock) corporation - One Person Corporation (OPC)
- Registered at - DTI (business name) - SEC - SEC
- Owners - One person - Incorporators and stockholders - One stockholder
- Separate "person" from the owner - No (the DTI registers a name, not a new person) - Yes - Yes, but see liability below
- The Revised Corporation Code (RA 11232) says a corporation may have up to 15 incorporators. Natural-person incorporators must be of legal age, and each incorporator of a stock corporation must own or subscribe to at least one share (Section 10).
- The Code says a corporation with a single stockholder is an OPC, and that only a natural person, a trust or an estate may form one (Section 116, as quoted in secondary sources and the SEC briefer). Banks, insurance and similar companies, and listed companies are excluded under the Code's list.
- No minimum capital stock is required for a stock corporation unless a special law requires one (Section 12).

The exercise I'm working on:
Make a one-page comparison of your business as a sole proprietorship, a regular corporation and an OPC. Add one reason for and one reason against each. Write the three questions you would ask a lawyer.

I'm stuck. Please:
1. Explain the main idea in plain, simple words with one everyday example.
2. Walk me through the exercise one small step at a time. Ask me what I've done so far before giving the next step.
3. Don't just give me the final answer. Help me do it myself, and check my work when I share it.

I'm a parent helping my child (about 8 years old) with a lesson called "Sole proprietor, corporation or OPC?" from the course "Growing a PH Business: financing, SEC and expansion".

Here's what the lesson says:
A sari-sari store run by you is like a lemonade stand: you and the stand are the same. A corporation is like giving the stand its own name card, so it can sign papers, own things and owe money on its own. Many owners think about this when they want partners, a bigger loan or to hire more people.

The activity:
Make a one-page comparison of your business as a sole proprietorship, a regular corporation and an OPC. Add one reason for and one reason against each. Write the three questions you would ask a lawyer.

Please explain this so an 8-year-old understands: short sentences, a fun everyday example, and no hard words.
Then give me 3 simple questions I can ask my child to check they understood, and a way to do the activity together, one tiny step at a time.

Open Claude

Sources

Revised Corporation Code, RA 11232 (Sections 10, 11, 12, 116, 130 to 132): lawphil.net/statutes/repacts/ra2019/ra_11232_2019.html
SEC, Briefer on the Revised Corporation Code: www.sec.gov.ph/wp-content/uploads/2019/11/2019RCC_BrieferonRevisedCorp
DTI BNRS: bnrs.dti.gov.ph/

My notes

I learned this

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