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Registration of a Domestic Corporation in the Philippines

Registering a corporation requires a minimum of 5 incorporators, each of whom


must be actual persons that must hold at least a single share in the company. Majority of
the incorporators must be Filipino residents. A Corporation may have between 5 and 15
directors (or trustees if a non-stock corporation), each of whom must hold at least one
qualifying share of stock. Majority of the directors (or trustees) must be Philippine
residents, but not necessarily citizens. All Domestic Corporations 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 (offline and online options), submit
proposed Articles of Incorporation and By-Laws which are compliant with the
requirements of the Corporation Code of the Philippines, and meet the minimum
capitalization requirements pertaining to the industry or business in which it is engaged.

Under the Foreign Investment Act, the minimum paid-up capital requirement for a
corporation considered Domestic Market Enterprise (DME) or one whose foreign equity
exceeds 40% is US$200,000, which amount must be remitted into the Philippines.
The registration requirements do not apply to export-oriented enterprise or involve
advance technology and will employ at least 50 employees.

Limited Liability for Corporations

Corporations in the Philippines have a separate and distinct juridical personality


from its shareholders, which results in limited liability for the latter. A corporation is an
artificial entity created by operation of law. It possesses the right of succession and such
powers, attributes, and properties expressly authorized by law or incident to its existence.
It has a personality separate and distinct from that of its stockholders and from that of other
corporations to which it may be connected. As a consequence of its status as a distinct legal
entity and as a result of a conscious policy decision to promote capital formation, a
corporation incurs its own liabilities and is legally responsible for payment of its
obligations. In other words, by virtue of the separate juridical personality of a corporation,
the corporate debt or credit is not the debt or credit of the stockholder. This protection from
liability for shareholders is the principle of limited liability. (Philippine National Bank vs.
Hydro Resources Contractors Corporation G.R. No. 167530 March 13, 2013 citing Good
Earth Emporium, Inc. v. Court of Appeals, G.R. No. 82797, February 27, 1991, 194 SCRA
544, 550).

The corporate fiction may be pierced however, in case of fraud, illegality, or to


defeat public convenience, justify wrong, protect fraud or defend crime. Clear and
convincing evidence of wrongdoing or fraud must be established before disregarding the
corporate entity. Mere ownership by a single stockholder of all or nearly all of the capital
stock of a corporation is not of itself sufficient ground for disregarding the separate
corporate personality. The same rule holds true even if the incorporators of two
corporations are substantially identical.

Stock Corporation
100% Filipino Equity
Documentary requirements
 Bank Certificate showing paid in capital
 Articles of Incorporation and By-laws
 Treasurer’s Affidavit
 Registration Data Sheet
 Endorsements / Clearances from other government agencies (if applicable)

60% Filipino, 40% Foreign Equity


Documentary Requirements
 Bank Certificate showing paid in capital
 Articles of Incorporation and By-laws
 Treasurer’s Affidavit
 Registration Data Sheet
 Endorsements/Clearances from other government agencies (if applicable)

More than 40% Foreign Equity


Documentary Requirements
 Form F-100
 Articles of Incorporation and By-laws
 Treasurer’s Affidavit
 Bank Certificate showing paid in capital
 Proof of Inward Remittance by non-resident aliens and foreign corporate
subscribers who would like to register their investment with the Central Bank of
the Philippines.

PERSONS REGISTERING UNDER E.O. 98 (securing a TIN to be able to transact


with any government office, e.g. LTO, NBI, DFA, etc.)
Tax Form

BIR Form 1904 - Application for Registration for One-Time Taxpayer and Persons
Registering under E.O. 98 (Securing a TIN to be able to transact with any Government
Office)

Documentary Requirements

› Individual
1) Any identification issued by an authorized government body (e.g.
Birth Certificate, passport, driver’s license, Community Tax
Certificate) that shows the name, address and birthdate of the
applicant;
2) Passport (in case of non-resident alien not engaged in trade or
business);
3) Marriage Contract, if the applicant is a married woman;

› Non-Individual
› Document to support transaction between a non-resident foreign
corporation and the withholding agent (e.g. bank certification, invoice,
contract, etc.).

Procedures
Accomplish BIR Form 1904 and submit the same together with the
documentary requirements to the RDO having jurisdiction over the
residence of the applicant.

Deadlines
› Application shall be accomplished and filed before transacting with
any government agencies or instrumentalities.

Company Registration in the Philippines


Our corporate and tax lawyers specialize in company registration for foreign companies
registering businesses in the Philippines. We will carefully assess your future business in
the Philippines and determine which company formation is best for you. We will assist
with formation procedure, planning, and registration with the relevant government
agencies such as the Philippines SEC, DTI, BIR, PEZA, BOI and other
Philippines government agencies.

Type of Company Registration 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 (RHQ)
 Regional Operating Headquarters (ROHQ)

Implementation of the following for Company Registration

 Determine investment vehicle


 Determine paid up capital
 Open local bank account
 Register and secure company name with SEC or DTI
 Draft Articles of Incorporation and By-Laws
 Process documents with SEC, BOI, PEZA, BIR, SSS, etc
 Process Mayor’s Permit and Business Permit

Domestic Corporation vs Branch Registration


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 registered
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 tax-wise, 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 registered with as little as P5,000 paid up
capital. However, most banks require roughly 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) Company Registration in the Philippines


Forming or registering 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
registration requirements do not apply to DMEs that are export-oriented or involve
advance technology and will employ at least 50 employees.

Branch Office Company 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.

Registering 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.