Business Incorporation in the Philipppines

Carpo Law lawyers will carefully assess your future business in the Philippines and determine the investment vehicle best for you and your company. We will assist with formation procedure, planning, and registration with the relevant government agencies such as the Philippines SEC, DTI, BIR and other Philippines government agencies . Incentives such as income tax holidays and special tax regimes are available to foreign investment in activities that significantly contribute to national industrialization and socio-economic development, and in export-oriented enterprises. Eligible businesses may then register their businesses with other Philippines government agencies such as PEZA and BOI .

Determine type of Company to Incorporate in the Philippines

100% fully foreign owned Branch Office
100% fully foreign owned Representative Office
100% fully foreign owned domestic corporation (subsidiary)
60/40 owned domestic corporation
Regional Headquarters
Regional Operating Headquarters

Carpo Law will perform the following for Foreign Companies

Determine company (Foreign Branch, Foreign or 60/40 Domestic Corporation)
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's Permit and Business Permit

SEC - Securities & Exchange Commission Incorporation

Foreign investors usually register and start a business in the Philippines through a Domestic corporation or a Branch Office . These are the most common types of companies incorporated for foreign businesses in the Philippines. 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.

If the company is exporting goods or services or generating revenue from abroad amounting to more than 60% of its gross sales it can be fully foreign owned, as it is considered an Export Enterprise under the Foreign Investments Act. Both branch and domestic corporation options can be incorporated with as little as P5,000 paid up capital. However, most banks require P25,000 - P50,000 to open a corporate bank account. The company would NOT have to remit the $200,000 to be fully foreign owned.

Domestic Corporation (Subsidiary) Incorporation in the Philippines

Incorporating a corporation 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) obtain their license from and are 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 or business 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 incorporation requirements do not apply to DMEs that are export-oriented or involve advance technology and will employ at least 50 employees.

Branch Office Registration in the Philippines

A Branch of a Foreign Corporation doing business in the Philippines must obtain a license to do so from the SEC upon registration. The foreign corporation's 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. 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.

Incorporating a branch normally involves remitting US$200,000 as capital investment when registering a company with the SEC in the Philippines. 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 of $200,000 or $100,000. 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 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.

Contact Our Lawyers and Consultants

21-B Rufino Pacific Tower,
6784 Ayala Avenue cor. Rufino St., Makati,
Metro-Manila

Philippines
Office: (+63)2-750-0631
Office: (+63)2-750-0634
Mobile: (+63)917-5935265
Mobile: (+63)917-5790394

United States
Office:(401)308-4023

Email: info@carpolaw.com