Do you want to register your business in the Philippines? Below are the common types of business formation to consider when doing business registration in the Philippines.
- 100% Foreign Owned Domestic corporation
- 100% Philippine Local Corporation (100% Filipino owned)
- 60/40 Owned Domestic Corporation (60% Filipino owned and 40% Foreign Owned)
- Foreign Branch
- Regional Headquarters
- Regional Operating Area Headquarters
- Representative Office
- Sole Proprietorship
Foreign investors usually start and register their business in the Philippines through a Domestic corporation or a Branch. Using either entity has its advantages and disadvantages. Corporations are more favorable in terms of administrative regulation. Branches, which may be more advantageous taxwise, cannot be used if the activities to be undertaken are included in the Foreign Investment Negative list . Corporations on the other hand, can accommodate the necessary Philippine ownership.
To register a corporation in the Philippines requires a minimum of 5 incorporators, each of whom must be actual persons and hold at least a single share in the company. Majority of the incorporators must be Filipino. A Corporation must have between 5 and 15 directors (or trustees if a non-stock corporation), each of whom must have at least one share of stock. A majority of the directors (or trustees) must be Philippine residents. All Domestic Corporations (those incorporated in the Philippines) must obtain their license and be registered with the Securities and Exchange Commission. The SEC will require a prospective Corporation to reserve and register a name, submit proposed Articles of Incorporation and By-Laws which are complaint with the requirements of the Corporation Code of the Philippines, and prove that it has the minimum capitalization requirements pertaining to the industry where the corporation is engaged in. Under the Foreign Investment Act , the minimum paid-up capital requirement for a corporation considered a Domestic Market Enterprise (DME) or one where the foreign equity exceeds 40% is US$200,000, which must be remitted into the Philippines. The registration requirements of business in the Philippines do not apply to DMEs that are export-oriented or involve advance technology and will employ at least 50 employees.
A Branch of a Foreign Corporation doing business in the Philippines must obtain a license from the SEC and other government agencies before the commencement of it business operation. The foreign corporation head office must prove its legal existence in its country of origin, its financial soundness, and its authorization to set up a branch in the Philippines. In addition, the Branch will need to appoint a resident agent in the Philippines who will be in charge of receiving summons and legal processes. This allows the SEC and other entities to obtain jurisdiction over the foreign company.
Registration and setting up a branch normally involves remitting the amount of US$200,000 as capital investment and requirements when doing a registration of business with the Philippine Securities and Exchange Commission (SEC). Branches engaged in activities involving advance technology, or that employ at least 50 direct employees, are required to inwardly remit a reduced amount of US$100,000 as assigned capital. Export-oriented branches are not subject to minimum assigned capitalization requirements. Special rules apply for certain types of branch operations. It is advisable for companies to register their remittance with Central Bank of the Philippines or Bangko Sentral ng Pilipinas and obtain a BSRD .
The failure of a foreign corporation to register and obtain a license to do business will prevent the entity from filing suit in the Philippine courts. The issuance of a certificate of incorporation from the SEC signifies the commencement of corporate existence and juridical personality for a company.
Before commencing operations in the Philippines, businesses must also register with the Bureau of Internal Revenue (BIR), the Social Security System (SSS), the Home Development Mutual Fund (HDMF), the Philippine Health Insurance Corporation (Phil-Health) , and the local government unit where its principal office will be located. Corporations who qualify may avail of tax incentives after proper registration of their business with the Board of Investment (BOI) or Philippine Economic Zone Authority (PEZA).
Following are basic requirements when doing a registration or incorporating a business with the Philippine Securities and Exchange Commission(SEC).
1)Name Verification Slip (secure online or from SEC Name Verification Unit )
2)Articles of Incorporation and By-laws
4)Affidavit of incorporator or director undertaking to change corporate name (not required if Articles of Incorporation has provision on this commitment )
Registration and Incorporation of Business in the Philippines
Our Firm (Pellas & Associates Co.) can assist foreign and local company in the preparation of requirements for business registration requirements in the Philippines in the following aspect:
- Determine company (Foreign Branch, Foreign or 60/40 Domestic Corporation etc..)
- Determine Capital Requirement
- Open local bank account
- Register and secure company name with SEC or DTI
- Identify Shareholders, Directors, Nominees and Incorporators
- Draft Articles of Incorporation and By-Laws
- Process documents with SEC, BOI, PEZA, BIR, SSS, etc
- Process Mayor Permit and Business Permit
If you need assistance to register your business in the Philippines, please email or call us and our associates will be glad to assist you for any clarifications.