Philippine Legal and Compliance Guide

I. Introduction

A Statement of Management Responsibility, often abbreviated as SMR, is a formal written declaration attached to a company’s financial statements. It states that management is responsible for the preparation, presentation, accuracy, and completeness of the financial statements, and that such statements were prepared in accordance with applicable accounting standards and legal requirements.

For a One Person Corporation, or OPC, the SMR is particularly important because the corporation has only one stockholder. In an ordinary corporation, responsibility may be shared among directors and officers. In an OPC, however, the single stockholder often also acts as president, treasurer, and principal decision-maker. This makes the SMR a key accountability document for both BIR and SEC filing purposes.

In the Philippine context, an OPC may need to submit financial statements to the Bureau of Internal Revenue, the Securities and Exchange Commission, or both. The SMR is commonly included in audited financial statements or annual financial reports, depending on the nature, size, and reporting requirements applicable to the OPC.

II. What Is a One Person Corporation?

A One Person Corporation is a corporation with a single stockholder. It was introduced under the Revised Corporation Code of the Philippines to allow one person to enjoy the benefits of a corporation without needing incorporators or shareholders merely for compliance purposes.

An OPC has a juridical personality separate from its single stockholder. This means that the OPC can:

Own property;
Enter into contracts;
Sue and be sued;
Hire employees;
Register with the BIR;
Obtain permits and licenses;
File tax returns;
Submit financial reports;
Continue as a corporate entity separate from the owner.

However, the separate juridical personality of an OPC comes with legal responsibilities. One of these is the proper preparation and filing of financial statements and related certifications, including the Statement of Management Responsibility where required.

III. What Is the Statement of Management Responsibility?

The Statement of Management Responsibility for Financial Statements is a signed declaration that normally appears before or within the audited financial statements. It states that management is responsible for:

Preparing the financial statements;
Ensuring that the financial statements fairly present the financial position and results of operations of the corporation;
Maintaining adequate accounting records;
Designing and implementing internal controls;
Selecting and applying appropriate accounting policies;
Making reasonable accounting estimates;
Complying with applicable financial reporting standards;
Ensuring that the financial statements are free from material misstatement, whether caused by fraud or error.

In simpler terms, the SMR tells regulators, creditors, investors, and other users of the financial statements that management accepts responsibility for the numbers and disclosures presented in the financial statements.

IV. Why the SMR Matters for an OPC

The SMR is important for an OPC because it prevents the single stockholder from treating the corporation as a casual extension of personal finances.

Although an OPC has only one owner, it is still a corporation. It must maintain separate books, separate accounts, separate filings, and separate financial statements. The SMR reinforces that:

The OPC’s records must be complete;
The financial statements must be accurate;
Business transactions must be separated from personal transactions;
Management remains accountable even if ownership and control are concentrated in one person;
The single stockholder cannot simply blame the accountant or auditor for inaccurate financial statements.

For small OPCs, the SMR may seem like a formality. In practice, it is not. It is a legal and compliance document that may have consequences in tax audits, SEC compliance reviews, loan applications, due diligence, and disputes involving creditors or investors.

V. SMR for BIR Filing

A. Role of the SMR in BIR compliance

The BIR is primarily concerned with taxation. For the BIR, financial statements support the corporation’s tax returns and help determine whether income, deductions, assets, liabilities, and expenses were properly reported.

The SMR is relevant because it confirms that management accepts responsibility for the financial statements used in tax filings.

An OPC may be required to submit financial statements with its annual income tax return, especially if it meets thresholds requiring audited financial statements or other formal reporting.

B. When financial statements are submitted to the BIR

An OPC generally files an annual income tax return and attaches required supporting documents. Depending on the circumstances, these may include:

Audited financial statements;
Statement of Management Responsibility;
Independent auditor’s report;
Statement of financial position;
Statement of comprehensive income or income statement;
Statement of changes in equity;
Statement of cash flows, if applicable;
Notes to financial statements;
Tax schedules and attachments;
Reconciliation schedules, where required.

The SMR is usually included in the audited financial statements package.

C. Who signs the SMR for BIR purposes?

For an OPC, the SMR is usually signed by the responsible corporate officer or officers. Since an OPC has a single stockholder, common signatories may include:

The single stockholder acting as president;
The treasurer;
The chief financial officer, if any;
Other authorized officer responsible for financial reporting.

In many OPCs, the same individual may be both single stockholder and president, and may also perform financial management functions. However, the specific signatory arrangement should be consistent with the corporation’s records, appointments, and authority documents.

D. SMR and tax accountability

The SMR does not replace the tax return. It also does not by itself prove that taxes are correct. However, it strengthens management’s accountability for the financial statements on which the tax return is based.

If the BIR later finds underdeclaration of income, improper deductions, unsupported expenses, or false entries, the existence of an SMR may be relevant because management formally represented that the statements were properly prepared.

VI. SMR for SEC Filing

A. Role of the SMR in SEC compliance

The SEC regulates corporations, including OPCs. It requires corporations to submit annual reports and financial statements to monitor corporate compliance, transparency, and continuing existence.

For the SEC, the SMR supports the integrity of financial reporting. It confirms that management, not merely the external auditor, is responsible for the financial statements.

B. Annual financial statements and the SEC

An OPC may be required to file annual financial statements with the SEC, subject to applicable rules, thresholds, and classifications.

Depending on the OPC’s circumstances, SEC submissions may include:

General Information Sheet, if applicable to the reporting structure;
Audited financial statements or other required financial reports;
Statement of Management Responsibility;
Auditor’s report, if audited financial statements are required;
Notes to financial statements;
Required schedules;
Other SEC-mandated attachments.

C. Importance of the SMR in SEC filings

The SEC relies on submitted financial statements to determine whether the corporation is operating, whether it has continuing compliance, and whether it is properly maintaining corporate existence.

The SMR helps show that:

The financial statements were reviewed and approved by management;
The corporation acknowledges responsibility for its accounts;
The auditor’s role is independent and does not replace management’s duty;
The OPC is complying with corporate reporting obligations.

Failure to submit complete or proper financial statements may result in penalties, notices of deficiency, or compliance issues.

VII. Difference Between Management Responsibility and Auditor Responsibility

A common misunderstanding is that once an external auditor signs the audited financial statements, management is no longer responsible. This is incorrect.

A. Management’s responsibility

Management is responsible for:

Recording transactions;
Keeping books of accounts;
Preparing financial statements;
Selecting accounting policies;
Maintaining internal controls;
Preventing and detecting fraud;
Providing complete records to the auditor;
Ensuring that the financial statements fairly present the company’s financial condition.

B. Auditor’s responsibility

The external auditor is responsible for:

Auditing the financial statements;
Obtaining reasonable assurance that they are free from material misstatement;
Performing audit procedures;
Evaluating evidence;
Issuing an audit opinion.

The auditor does not create management’s records from nothing. The auditor reviews, tests, and opines on the financial statements prepared by management.

C. Why this distinction matters

The SMR exists because financial statements are management’s statements, not the auditor’s statements. The auditor’s report is an independent opinion. The SMR is management’s formal acceptance of responsibility.

For an OPC, this distinction is especially important because the owner may rely heavily on an accountant or auditor. Even then, the OPC’s management remains responsible for the contents of the financial statements.

VIII. Typical Contents of an SMR

A typical Statement of Management Responsibility includes the following points:

Management is responsible for the preparation and fair presentation of the financial statements.
The financial statements were prepared in accordance with the applicable financial reporting framework.
Management is responsible for designing and implementing internal controls.
Management selected appropriate accounting policies and applied them consistently.
Management made accounting estimates that are reasonable in the circumstances.
Management is responsible for safeguarding corporate assets.
Management is responsible for preventing and detecting fraud and errors.
The financial statements were reviewed and approved by authorized officers.
The external auditor is responsible for expressing an opinion on the financial statements.

The exact wording may vary depending on the auditor’s template, SEC requirements, BIR practice, accounting standards, and the company’s circumstances.

IX. Sample Statement of Management Responsibility for an OPC

Below is a general sample for educational drafting purposes. Actual wording should be reviewed by the OPC’s accountant, auditor, or legal adviser.

STATEMENT OF MANAGEMENT’S RESPONSIBILITY FOR FINANCIAL STATEMENTS

The management of [Name of OPC] is responsible for the preparation and fair presentation of the financial statements, including the schedules attached therein, for the year ended [date], in accordance with the applicable financial reporting framework in the Philippines.

This responsibility includes designing, implementing, and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Management is also responsible for safeguarding the assets of the corporation and for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Board or authorized management of the corporation has reviewed and approved the financial statements and submits the same to the stockholder and appropriate regulatory agencies.

[Name of External Auditor or Audit Firm], the independent auditor appointed by the corporation, has audited the financial statements in accordance with Philippine Standards on Auditing and has expressed an opinion thereon in the attached Independent Auditor’s Report.

Signed this [date] at [place], Philippines.

[Name of Single Stockholder / President] President / Single Stockholder TIN: [TIN]

[Name of Treasurer / Authorized Financial Officer] Treasurer / Authorized Officer TIN: [TIN]

X. Who Should Sign the SMR in an OPC?

The signatories should be the persons who have legal and practical responsibility for the OPC’s financial statements.

In an OPC, possible signatories include:

The single stockholder;
The president;
The treasurer;
The corporate secretary, if applicable;
The nominee or alternate nominee only in special circumstances;
A duly authorized financial officer, if appointed.

In many OPCs, the single stockholder is also the president. If the OPC has a separate treasurer or financial officer, that person may also sign.

The safest approach is to ensure that the signatories match the corporation’s internal records, SEC registration data, and corporate appointments.

XI. Can the Single Stockholder Sign Alone?

The answer depends on the company’s structure, the auditor’s requirements, and the applicable filing practice.

Since an OPC is controlled by one stockholder, the single stockholder may often be the principal management signatory. However, if the OPC has appointed a treasurer or other officer responsible for financial reporting, that person may also be required or expected to sign.

Where a template requires signatures of both the president and treasurer, the OPC should not casually omit one signature unless the auditor or filing adviser confirms that the signatory format is acceptable.

If the same person holds multiple offices, the person may sign indicating both capacities, such as:

Juan Dela Cruz President and Treasurer Single Stockholder

The designation should be truthful and consistent with official records.

XII. Notarization of the SMR

Some filings or templates may require the SMR to be notarized. Others may not, depending on the regulator’s current practice, the nature of submission, and the form used.

Notarization gives the document a formal character and converts it into a public document. A notarized SMR may be more useful where regulators require sworn statements or where the financial statements are submitted in formal proceedings.

If notarization is required, the signatory must personally appear before a notary public and present competent evidence of identity.

XIII. Relationship Between SMR and Audited Financial Statements

The SMR is usually attached to audited financial statements. The typical arrangement is:

Statement of Management Responsibility;
Independent Auditor’s Report;
Statement of Financial Position;
Statement of Comprehensive Income;
Statement of Changes in Equity;
Statement of Cash Flows, if applicable;
Notes to Financial Statements;
Supplementary schedules.

The SMR appears before the auditor’s report because the financial statements are management’s responsibility before they become the subject of audit.

XIV. Is an OPC Always Required to Submit Audited Financial Statements?

Not all corporations are treated the same way for all reporting purposes. Whether an OPC needs audited financial statements may depend on factors such as:

Gross sales or receipts;
Total assets;
Paid-up capital;
Regulatory classification;
Whether it is covered by special laws;
Whether it is a stock or non-stock entity;
Whether it is subject to SEC special reporting rules;
Whether it is required by the BIR because of tax rules;
Whether lenders, investors, or counterparties require audited statements.

Even when audited financial statements are not strictly required, an OPC may still need to prepare financial statements for tax, accounting, and corporate purposes.

If audited financial statements are required, an SMR is usually part of the audit package.

XV. OPC Financial Statements and the Single Stockholder’s Liability

One reason OPCs are attractive is limited liability. However, limited liability is not absolute.

The single stockholder may face personal exposure if:

Corporate funds and personal funds are mixed;
The OPC is used to commit fraud;
Corporate records are not maintained;
The OPC is undercapitalized for fraudulent purposes;
The corporation is used as a mere alter ego;
Financial statements are false or misleading;
Taxes are evaded;
Corporate formalities are ignored.

The SMR is relevant because it is an express representation by management. If the financial statements are false, misleading, or unsupported, the signatory may be questioned by regulators, creditors, or courts.

XVI. Common Mistakes in SMRs for OPCs

1. Using an ordinary corporation template without modification

Some templates refer to “Board of Directors” even though an OPC has no traditional board composed of multiple directors. The wording should be adapted to the OPC structure.

2. Wrong officer designations

The SMR may identify signatories as chairman, director, or corporate officers who do not exist in the OPC’s records.

3. Inconsistent names

The company name must match the SEC-registered corporate name, including “OPC” if part of the registered name.

4. Missing TINs

Some templates require TINs of signatories. These should be accurate.

5. Unsigned or improperly signed SMR

An unsigned SMR can result in filing issues or rejection.

6. Financial statements not approved by management

The SMR should not be signed blindly. Management should review the statements before signing.

7. Auditor prepares everything and management does not understand the contents

Even if an accountant or auditor assisted, management remains responsible.

8. Personal transactions included as corporate expenses

This is common in small OPCs and may create tax and accounting problems.

9. No supporting records

The SMR becomes risky when the OPC has no invoices, receipts, contracts, ledgers, bank statements, or proper books to support the financial statements.

10. Wrong reporting framework

The financial statements should use the proper applicable accounting framework.

XVII. Practical Checklist Before Signing the SMR

Before an OPC owner or officer signs the SMR, the following should be reviewed:

Is the company name correct?
Is the reporting period correct?
Are all financial statements complete?
Are the accounting records updated?
Are bank balances reconciled?
Are receivables and payables accurate?
Are loans documented?
Are related-party transactions disclosed, if required?
Are personal expenses excluded from corporate expenses?
Are tax liabilities properly recorded?
Are revenue figures consistent with tax returns?
Are expenses supported by receipts or invoices?
Are fixed assets properly recorded?
Are inventory balances reasonable, if applicable?
Are notes to financial statements complete?
Are signatories properly authorized?
Are names, titles, and TINs correct?
Is notarization required?
Are BIR and SEC filing deadlines being observed?

XVIII. The SMR and Internal Controls in an OPC

Internal control may sound unnecessary for a one-person company, but it remains important.

For an OPC, internal controls may include:

Separate corporate bank account;
Separate accounting records;
Regular bookkeeping;
Official receipts and invoices;
Documented approvals for expenses;
Inventory records;
Bank reconciliation;
Password protection for accounting systems;
Proper payroll records;
Tax filing calendar;
Document retention policy;
Segregation between personal and corporate funds.

The SMR usually states that management is responsible for internal control. This means the OPC should have at least basic systems to ensure financial reliability.

XIX. Relationship Between SMR and BIR Tax Audit

During a BIR tax audit, examiners may compare the OPC’s tax returns, books, invoices, bank deposits, and audited financial statements.

The SMR may become relevant because management represented that the financial statements were properly prepared.

Issues that may arise include:

Underdeclared sales;
Unsupported expenses;
Unrecorded bank deposits;
Improper withholding tax compliance;
VAT or percentage tax inconsistencies;
Misclassified expenses;
Personal expenses claimed as business deductions;
Failure to issue invoices;
Incorrect depreciation;
Unreported related-party transactions;
Discrepancies between BIR returns and audited statements.

If the financial statements are materially inaccurate, the SMR may expose management to further questioning.

XX. Relationship Between SMR and SEC Penalties

The SEC may impose penalties for late, incomplete, or non-compliant submissions. An SMR that is missing, unsigned, improperly worded, or inconsistent with the financial statements may contribute to compliance problems.

Possible SEC-related consequences may include:

Filing rejection;
Compliance notices;
Monetary penalties;
Delinquency status;
Issues in securing certificates or clearances;
Problems in corporate amendments;
Problems in future transactions requiring good standing.

For an OPC, SEC compliance is important because continued corporate existence and good standing depend on proper filings.

XXI. Relationship Between SMR and Loans, Permits, and Business Transactions

Banks, investors, lessors, suppliers, and government agencies may request financial statements. The SMR helps establish that management stands behind those statements.

The SMR may be relevant when applying for:

Business loans;
Credit lines;
Supplier accreditation;
Government procurement eligibility;
Franchise arrangements;
Lease agreements;
Immigration or visa-related business documentation;
Investor due diligence;
Business permits;
Regulatory permits.

A false or careless SMR may affect credibility and expose the OPC to contractual or legal consequences.

XXII. SMR and Related-Party Transactions

In an OPC, related-party transactions are common because the single stockholder may:

Advance funds to the corporation;
Borrow from the corporation;
Lease property to the corporation;
Use personal assets in the business;
Pay company expenses personally;
Receive reimbursement;
Enter into service contracts with the OPC;
Transfer assets to or from the OPC.

These transactions should be properly documented and accounted for. The SMR may indirectly cover these because management is responsible for proper financial reporting and disclosure.

Poor documentation of related-party transactions can lead to tax, audit, and corporate issues.

XXIII. SMR and Separation of Personal and Corporate Finances

The OPC’s separate personality must be respected. For financial reporting, this means:

The OPC should have its own bank account;
Sales should be deposited to the OPC account;
Expenses should be paid from OPC funds;
Owner withdrawals should be recorded properly;
Advances should be documented;
Personal expenses should not be casually booked as corporate expenses;
Corporate assets should not be treated as personal assets.

The SMR becomes problematic if the single stockholder signs it while the OPC’s books are actually a mixture of personal and business transactions.

XXIV. Is the SMR a Mere Formality?

No. Although many businesses treat the SMR as a routine attachment, it is not merely ceremonial.

By signing the SMR, management confirms legal and accounting responsibility. The document may be relied upon by:

BIR;
SEC;
External auditors;
Banks;
Creditors;
Investors;
Courts;
Counterparties;
Government agencies.

The signature should therefore be made only after meaningful review.

XXV. Possible Liability for False SMR

A false or misleading SMR may create consequences depending on the facts. These may include:

Tax assessments;
Administrative penalties;
SEC compliance penalties;
Civil liability to persons who relied on the statements;
Criminal exposure if fraud, falsification, or tax evasion is involved;
Auditor qualification or withdrawal;
Reputational harm;
Loss of lender or investor confidence.

The seriousness depends on whether the error was innocent, negligent, reckless, or fraudulent.

XXVI. The Role of the Accountant

The accountant or bookkeeper assists in recording transactions and preparing financial reports. For an OPC, the accountant may:

Maintain books;
Prepare trial balances;
Reconcile accounts;
Prepare tax returns;
Assist in financial statement preparation;
Coordinate with the auditor;
Help prepare schedules;
Ensure consistency between tax returns and financial statements.

However, the accountant does not replace management’s responsibility. Management must still provide complete records and review the results.

XXVII. The Role of the External Auditor

The external auditor independently audits the financial statements. The auditor may request:

Books of accounts;
Bank statements;
Official receipts and invoices;
Contracts;
Tax returns;
Payroll records;
Inventory records;
Loan agreements;
Confirmations;
Board or management approvals;
Related-party documentation.

The auditor may refuse to issue an unqualified opinion if records are incomplete, unreliable, or materially misstated.

The SMR supports the audit because it confirms that management acknowledges responsibility for the financial statements.

XXVIII. Recommended OPC SMR Wording Adjustments

Because an OPC differs from an ordinary corporation, the SMR may need wording adjustments.

Instead of saying:

“The Board of Directors is responsible…”

An OPC version may say:

“Management is responsible…”

or:

“The single stockholder and management of the corporation are responsible…”

or:

“The President/Treasurer, acting for management of the One Person Corporation, is responsible…”

The key is accuracy. The SMR should not falsely suggest that the OPC has a multi-member board if it does not.

XXIX. Filing Coordination Between BIR and SEC

The OPC should ensure consistency between BIR and SEC submissions.

Important items should match:

Company name;
Tax Identification Number;
Registered address;
Reporting period;
Gross sales or revenues;
Net income or loss;
Total assets;
Total liabilities;
Equity;
Notes and schedules;
Officer names and titles;
Auditor details, if applicable.

Inconsistencies may trigger questions from regulators or auditors.

XXX. Recordkeeping Period and Document Retention

The OPC should retain financial documents and SMRs as part of its corporate and tax records.

Records to keep include:

Signed SMR;
Audited financial statements;
Auditor’s report;
Tax returns;
SEC submission confirmation;
BIR filing confirmation;
Books of accounts;
Receipts and invoices;
Bank statements;
Contracts;
Payroll records;
Schedules and reconciliations;
Working papers provided by management.

Good document retention helps in audits, disputes, loan applications, and corporate transactions.

XXXI. Electronic Filing Issues

Both BIR and SEC processes increasingly involve electronic filing or online submission systems. The OPC should ensure that:

The scanned SMR is complete and readable;
Signatures appear clearly;
Notarial details are visible, if notarized;
File names follow portal requirements;
The correct reporting year is selected;
The correct company profile is used;
Submission confirmations are saved;
Any validation errors are corrected promptly.

A properly signed SMR is still important even when filing is electronic.

XXXII. Frequently Asked Questions

1. Does an OPC need an SMR?

If the OPC is submitting audited financial statements or financial statements requiring management certification, an SMR is generally included. Whether it is required in every case depends on the applicable filing requirements and the type of financial statement being submitted.

2. Can the owner sign the SMR?

Yes, if the owner is the single stockholder and authorized officer responsible for management. The title used should match corporate records.

3. Can the accountant sign the SMR?

The accountant normally does not sign as management unless the accountant is also an authorized officer of the OPC. The SMR is management’s responsibility, not merely the accountant’s certification.

4. Can the auditor prepare the SMR?

Auditors often provide the template, but management must review and sign it. The auditor’s role is separate from management’s responsibility.

5. Is notarization required?

It depends on the applicable requirement, template, and filing practice. If the SMR is required to be sworn or notarized, the signatory must appear before a notary.

6. What happens if the SMR is missing?

The filing may be considered incomplete or may be rejected, depending on the filing system and applicable rules.

7. What if the OPC had no operations?

Even if there were no operations, the OPC may still have reporting obligations. A no-operation company may still need financial statements reflecting its status.

8. What if the OPC is newly registered?

A newly registered OPC should confirm its first reporting period and applicable filing deadlines. If it has not yet started operations, it should still maintain proper records from registration onward.

9. Can one person sign as both president and treasurer?

If the person is properly holding both roles and this is consistent with the OPC’s records, the person may sign in both capacities.

10. Is the SMR submitted separately?

Usually, it is part of the financial statements package rather than a standalone filing, but this depends on the submission requirement.

XXXIII. Best Practices for OPC Owners

An OPC owner should observe the following best practices:

Maintain a separate business bank account.
Keep corporate and personal funds separate.
Record all sales and expenses promptly.
Issue proper invoices or receipts.
Preserve all supporting documents.
Reconcile bank accounts monthly.
Avoid unsupported cash withdrawals.
Document owner advances and reimbursements.
Review financial statements before signing.
Coordinate early with the accountant and auditor.
Ensure BIR and SEC figures are consistent.
Use an OPC-appropriate SMR template.
Save proof of all filings.
Monitor annual filing deadlines.
Seek professional advice for unusual transactions.

XXXIV. Practical Compliance Workflow for OPC SMR Filing

A practical annual workflow may look like this:

Step 1: Close the books

The OPC finalizes sales, expenses, assets, liabilities, payroll, taxes, and owner transactions for the year.

Step 2: Reconcile accounts

Bank balances, receivables, payables, tax accounts, loans, and equity accounts are reconciled.

Step 3: Prepare draft financial statements

The accountant prepares the financial statements and notes.

Step 4: Management review

The single stockholder, president, treasurer, or authorized officer reviews the draft for completeness and accuracy.

Step 5: Audit, if required

The external auditor examines the records and issues an opinion.

Step 6: Prepare SMR

The SMR is prepared using wording appropriate for an OPC.

Step 7: Sign and notarize, if required

Authorized signatories execute the SMR.

Step 8: File with BIR

The annual income tax return and required attachments are filed.

Step 9: File with SEC

The required financial statements and corporate reports are submitted.

Step 10: Retain records

The OPC keeps complete copies of submissions, receipts, and supporting documents.

XXXV. Conclusion

The Statement of Management Responsibility is a central document in the financial reporting life of a Philippine One Person Corporation. It is not merely a template attached to financial statements. It is a formal declaration that management accepts responsibility for the preparation, accuracy, fairness, and completeness of the corporation’s financial reports.

For BIR purposes, the SMR supports the financial statements used in tax compliance and may become relevant in tax audits or assessments. For SEC purposes, it supports corporate transparency, continuing compliance, and proper annual reporting.

Because an OPC has only one stockholder, the SMR carries special importance. It reinforces the separation between the corporation and the owner, confirms accountability for the books and financial statements, and reminds the single stockholder that limited liability comes with corporate compliance duties.

An OPC should therefore treat the SMR seriously: use the correct template, ensure proper signatories, review the financial statements before signing, maintain adequate records, and coordinate carefully with accountants, auditors, and filing advisers. A properly prepared SMR helps protect the corporation’s compliance status, supports regulatory filings, and strengthens the credibility of the OPC’s financial reports.