FOREIGN OWNERSHIP of BUSINESS

In the PHILIPPINES
Foreign investors usually have the same rights as Filipino citizens and must register their
businesses with the Securities and Exchange Commission (SEC) (corporation, partnership, branch
office or representative office) or with the Department of Trade and Industrys Bureau of Trade
Regulation and Consumer Protection (sole proprietorship). Foreign ownership of corporations is
defined in the Corporation Code of the Philippines. The Foreign Investment Act (R.A. 7042, 1991,
amended by R.A. 8179, 1996) liberalized the entry of foreign investment into the Philippines.
Businesses with Foreign Investment Restrictions
Within the 1991 Foreign Investment Act (FIA) there are two negative lists also known as the
Foreign Investment Negative List which defines the foreign investments which are limited or
restricted by the constitution and specific laws Negative List A & Negative List B where foreign
ownership is limited for reasons of security, defense, risk to health and morals and protection of
small
and
medium
scale
enterprises.
Domestic Corporations (subsidiary)
A registered company with at least 60% Filipino ownership is considered as having Philippine
nationality; if more than 40% foreign-owned, it is considered a foreign owned domestic
corporation.
More than 40% and up to 100% foreign ownership of a Domestic Market Enterprise is allowed as
long as the paid-in capital is a minimum of USD 200,000.00. Employing a minimum of 50 direct
employees or using advanced technology may allow a paid-in capital of less than USD 100,000.00
(R.A. 7042 as amended by R.A. 8179).**
Retail Trade Enterprises
Under R.A. 8762 100% foreign ownership is allowed for Philippine retail trade enterprises:
Category A Enterprises with paid-up capital of the equivalent in Philippine Peso of the than Two
million five hundred thousand US dollars (US$2,500,000.00) shall be reserved exclusively for
Filipino citizens and corporations wholly owned by Filipino citizens.
Category B Enterprises with a minimum paid-up capital of the equivalent in Philippine Pesos of
two million five hundred thousand US dollar (US$2,500,000.00) but less than Seven million five
hundred thousand US dollars (US$7,500,000.00) may be wholly owned by foreigners except for the
first two (2) years after the effectivity of this Act wherein foreign participation shall be limited to not
more than sixty percent (60%) of total equity.
Category C Enterprises with a paid-up capital of the equivalent in Philippine Pesos of Seven
million five hundred thousand US dollars (US$7,500,000.00), or more may be wholly owned by
foreigners:
Provided, however, That in no case shall the investments for establishing a store in Categories B
and C be less than the equivalent in Philippine pesos of Eight hundred thirty thousand US dollars
(US$830,000.00).

Cityland III, V. A. Rufino St., Legaspi Village, Makati City 1227, Philippines
Tel. +63 2 5768476
www.DayananConsulting.com

Category D Enterprises specializing in high-end or luxury products with a paid-up capital of the
equivalent in Philippine Pesos of Two hundred fifty thousand US dollars (US$250,000.00) per store
may be wholly owned by foreigners.
Qualification of Foreign Retailers. - No foreign retailer shall be allowed to engage in retail trade in
the Philippine unless all the following qualifications are met:
(a) A minimum of Two hundred million US dollar (US$200,000,000.00) net worth in its parent
corporation for Categories B and C, and Fifty million US dollar (US$50,000,000.00) net worth in its
parent corporation for category
(b) Five (5) retailing branches or franchises in operation anywhere around the word unless such
retailer has at least one (1) store capitalized at a minimum of Twenty-five million US dollars
(US$25,000,000.00);
(c) Five (5)-year track record in retailing; and
(d) Only nationals from, or juridical entities formed or incorporated in Countries which allow the
entry of Filipino retailers shall be allowed to engage in retail trade in the Philippines.
Export Businesses
An export enterprise is defined as a business who exports at least 60% of its output.
Export Business Enterprises may be 100% fully foreign owned and may file with the SEC for an
exemption of the paid-up capital requirement of USD 200,000.00. KPO, BPO, Back Office, IT, Web
Development and call centers are all considered Philippines Export Enterprises.
** Unless otherwise indicated in the Philippine Foreign Investment Negative List
Foreign ownership of land in the Philippines

Cityland III, V. A. Rufino St., Legaspi Village, Makati City 1227, Philippines
Tel. +63 2 5768476
www.DayananConsulting.com