Dear PAO,

My sister started a small business and registered it as a One Person Corporation, or OPC. My sister said she appointed me as the nominee of her corporation, but I didn’t sign any documents related thereto, and in fact, I only found out about it now. I want to know if she can legally do that.

Louise

Dear Louise,

Please be informed that Section 124 of Republic Act (RA) 11232, otherwise known as the “Revised Corporation Code of the Philippines,” provides that:

“Section 124. Nominee and Alternate Nominee. – The single stockholder shall designate a nominee and an alternate nominee who shall, in the event of the single stockholder’s death or incapacity, take the place of the single stockholder as director and shall manage the corporation’s affairs.

“The articles of incorporation shall state the names, residence addresses and contact details of the nominee and alternate nominee, as well as the extent and limitations of their authority in managing the affairs of the One Person Corporation until the stockholder, by self-determination, regains the capacity to assume such duties.

“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.

“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.” (Emphasis supplied)

Relatedly, the Securities and Exchange Commission (SEC) issued Memorandum Circular 7, Series of 2019, which provides that:

“IV. Designation of Nominee and Alternate Nominee

“The single stockholder is required to designate a nominee and an alternate nominee named in the Articles of Incorporation in the event of death and incapacity. The written consent of both the nominee and alternate nominee shall be attached to the application for incorporation.” (Emphasis supplied)

Pursuant to the aforementioned provision of the law, the single stockholder of a One Person Corporation (OPC) is tasked to designate a nominee and an alternate nominee who shall take his/her place as director and manage the corporation’s affairs in case of his/her death or incapacity. The rule for the designation of a nominee and an alternate nominee was clearly indicated in the above-quoted Memorandum, which requires the written consent of both the nominee and the alternate nominee for their designation.

In your case, you cannot be appointed by your sister or anyone else as a nominee for an OPC if you do not signify your consent thereto in writing. It was likewise provided under the SEC Memorandum that your sister should have included your written consent pertinent to your designation as an alternate nominee in her OPC application. Considering that such a requirement is lacking in your case, your appointment as the nominee for your sister’s OPC is void.

We hope that we were able to answer your queries. This advice is based solely on the facts you have narrated and our appreciation of the same. Our opinion may vary when other facts are changed or elaborated on.