Business Registration in the Philippines
Whether you are a foreign company or an individual, you have multiple options depending on the nature of the business your company intends to operate.
To legally conduct business in the Philippines, your company should be registered with either the DTI or the SEC. Once registered with one of the latter, you will be required to obtain local company business permits.
Certain company structures are a better choice for individuals intending to open a small business. Philippines foreign investors generally may own and control any business within the limits of the Philippine foreign investment negative list.
Organized under Philippine Laws
Is a business structure which is owned by a single individual who owns all the assets and has unlimited personal liability for losses. There is no legal distinction between the owner and the business. A sole proprietorship must apply for a business name and be registered with the DTI.
Partnerships may either be general partnerships, where the partners have unlimited liability for the debts and obligation of the partnership, or limited partnerships, where one or more general partners have unlimited liability and the limited partners have liability only up to the amount of their capital contributions. It consists of two or more partners. The managing partner always has unlimited liability, must be a Filipino citizen and resident of the Philippines. A partnership with more than P3,000 capital must register with the Securities and Exchange Commission (SEC). Under the Civil Code of the Philippines, a partnership is treated as juridical person, having a separate legal personality from that of its members.
Must be registered with the SEC and have a minimum of 2 incorporators whom are usually the first directors. Every director must own at least one share of the corporation. The liability of the shareholders of a corporation is limited to the amount of their share capital. A corporation can either be stock or non-stock company regardless of nationality. A corporation, if 60% Filipino-40% foreign-owned, is considered a corporation of Filipino nationality; If more than 40% foreign-owned, it is considered a domestic foreign-owned corporation and of foreign nationality.
A one person corporation (OPC) is a corporation with a single stockholder, who can only be a natural person, trust or estate.
The incorporator of an OPC being a natural person must of be of legal age.
Organized under Foreign Laws
1. Branch Office – is a foreign corporation organized and existing under foreign laws that carries out business activities of the head office and derives income from the Philippines. It is required to remit to the Philippines a minimum of US$200,000 as paid-in capital (this can be reduced depending on the nature of the business) .Registration with the SEC is mandatory.
2. Representative Office – is a foreign corporation organized and existing under foreign laws. It may not derive income from the Philippines and is fully subsidized by its head office. It deals directly with clients of the parent company as it undertakes such activities as information dissemination, acts as a communication center, and promotes company products, as well as quality control of products for export. It is required to have an initial minimum inward remittance in the amount of US$30,000 to cover its operating expenses and must be registered with the SEC
3. Regional Headquarters (RHQs) – An RHQ undertakes activities that shall be limited to acting as supervisory, communication, and coordinating center for its subsidiaries, affiliates, and branches in the Asia-Pacific region. It acts as an administrative branch of a multinational company engaged in international trade. It does not derive income from sources within the Philippines and does not participate in any manner in the management of any subsidiary or branch office it might have in the Philippines. Annual required minimum inward remittance is US$50,000 to cover operating expenses.
4. Regional Operating Headquarters (ROHQs) – An ROHQ performs the following qualifying services to its affiliates, subsidiaries, and branches in the Philippines.
– General administration and planning
– Business planning and coordination
– Sourcing/procurement of raw materials components Corporate finance advisory services
– Marketing control and sales promotion
– Training and personnel management
– Logistic services
– Research and development (R&D) services and product development
– Technical support and communications
– Business development
– Derives income in the Philippines
– Required capital: US$200,000 – one time remittance
Once the entity you have chosen to setup has been licensed to transact business in the Philippines you may apply for work visas. It is necessary to have the appropriate visa to avoid being deported or placed on the immigration blacklist.