How to Apply for FDA LTO (License to Operate) in the Philippines

FDA LTO Application FDA Consulting in Makati

Interested in FDA LTO application (License to Operate from the Philippine Food and Drug Administration) but don’t know where to start? This new guide gives you a complete step-by-step process on how to apply for an FDA LTO in 2020.

While there are quite a few articles online on FDA LTO application, they are mostly outdated. One major change to the process is that it is now done online via https://eportal.fda.gov.ph (the integrated application form may be found here). Once processed and approved, the LTO will be mailed to you; no need to pick it up from regional FDA centers.

Click the links below to go directly to that part of this article:

  1. What is an LTO? Why would you need one?
  2. How to Apply for FDA eLTO User Account
  3. License to Operate Requirements
  4. Steps for FDA LTO Application
  5. Tips to make application easier and faster
 

What is an LTO or License to Operate? Why would you need one?

An LTO allows you to legally import, distribute, sell wholesale, and/or manufacture food, drugs, cosmetics, and medical devices. It is also a requirement before you can obtain a Certificate of Product Registration (CPR), a seal of approval which indicates that your product complies with health, safety, and technical standards set by the FDA in the Philippines.

Operating without a license can spell disaster for your business. If caught, your LTO may be suspended, revoked, canceled, or disapproved upon renewal. Likewise, existing licenses that were not renewed after one-hundred twenty (120) days from the date of expiration will be automatically canceled by the FDA. Not only that, but the company will automatically be delisted from the FDA’s list of licensed establishments, so be sure to renew on time.

Important Reminder: Only residents of the Philippines (either Filipino citizens or alien holders of resident visas) and majority Filipino-owned companies may apply for LTO.

All guidelines and penalties may be found on the FDA website: http://www.fda.gov.ph

 

How to Apply for FDA eLTO User Account

Per FDA Circular 2016-004 (Procedures on the Use of the New Application Form for License to Operate through the FDA Electronic Portal), the application process has been moved online. With the goal of increasing transparency, accessibility, and efficiency of the process, this decision has been especially beneficial for businesses based outside Metro Manila.

Before you can access the E-portal, you must first create a User Account, the application for which is not as straightforward as what you may be used to. Instead of a simple sign-up button, it instead involves sending a few emails. Here’s how to create a new User Account for the FDA E-Portal System:

  • First, accomplish an authorization letter for the eLTO User Account Application. This will designate a specific individual as eLTO account holder.
  • Next, send an email to request for a User Account to the FDA’s Public Assistance, Information and Receiving (PAIR) unit via pair@fda.gov.ph with the following format:
SUBJECT: Request for eLTO User Account

BODY:

a. E-mail address (preferably company email address)
b. Name of the authorized company representative (preferably permanently employed and not merely a consultant)
c. Position in the company
d. Contact Number
e. Company Name
  • Don’t forget to attach a scanned Authorization Letter in PDF format. Be sure that it is completed (signed and notarized) and virus-free.

Below is a sample email provided by the FDA:

From: https://ww2.fda.gov.ph/attachments/article/330042/FDA%20Circular%20No.%202016-004.pdf

Please take note that the User Account details will be sent to the company email address provided in the body of the email, not to the original sender’s email address. User Accounts are usually issued within two (2) days upon receipt of the completed request by the FDA in the Philippines. Requests received after 5:00 pm on regular working days, holidays, Saturdays, and Sundays shall be processed on the next working day.

Each User Account is unique to one company and is valid for one (1) year. Requests for replacing the authorized company representative as well as account reactivation must be sent to pair@fda.gov.ph at least three (3) months before the expiration of the User Account.

Once you have a valid User Account in hand, the E-Portal can now be accessed. Filling up the forms and uploading the documents can now be done via the portal. The E-Portal accepts new, renewal, and variation applications.

The accomplishment of the eLTO may be done via http://www.fda.gov.ph.

License to Operate Requirements

The following are the License to Operate requirements for initial and renewal applications. Ensure that all documents are secured before applying to avoid processing delays.

FDA LTO Initial Requirements:

  • Completed Application Form with Declaration and Undertaking
  • Proof of Business Name Registration
  • Risk Management Plan
  • Site Master File (for manufacturers of drugs, devices and cosmetics)
  • Fees payment

FDA LTO Renewal Requirements:

  • Completed Application Form with Declaration and Undertaking
  • Payment of fees

Now that you have all the requirements, the application for the actual license can now follow.

Steps for FDA LTO Application

Applying for an initial FDA LTO consists of the following steps: filing, evaluation, and inspection. An application is considered filed only if all necessary requirements are met, including payment of fees. After filing, the FDA will evaluate all LTO applications to determine whether to grant the license or not. Lastly, a pre-opening inspection shall be conducted for manufacturers. In addition, all establishments covered under the FDA may be inspected anytime by the agency to ensure proper compliance with its set rules and regulations.

  • Log-in to the e-Portal using the User Account provided by FDA at http://www.fda.gov.ph.
  • Click “New Case” on the upper left-hand side and select “License to Operate v2.0” which can be found under Electronic Licensing.
  • Make sure you’ve read and fully understood the “Declaration and Undertaking” and click the “I Agree” button before proceeding.
  • Under the General Information tab, select the appropriate Product Type, Primary Activity, and Type of Application from their respective drop-down menus.
  • (Each primary activity has its applicable sub-options. Accomplish the General Information appropriately).
  • Under Establishment Information, provide the complete establishment name, TIN, address, and contact details. Use the Show Map Tool and move the arrow to the exact address of the establishment and click the “Submit” button.
  • Provide needed information under “Details of the Authorized Officer” and “Details of the Applicant.”Upload the required documents (depending on LTO type). Make sure documents are in PDF format.
  • Double-check the total amount to be paid by looking at the Order of Payment section, which can be downloaded if needed.
  • Payment can be made using existing FDA mechanisms.
  • Please note: Under the “Assign Task” section, please click the “Continue” button in order for the application to be processed by the FDA.

Here are some tips to make application easier and faster:

Tip 1: Follow documentary requirements listed in Administrative Order (AO) 2016-0003 (“Guidelines on Unified Licensing Requirements and Procedures of the Food and Drug Administration”):

  • Submit files in PDF format and ensure that there are no bugs, viruses, or anything that can jeopardize the system of the FDA.
  • All documents must be scanned and compiled with 100-150 dots-per-inch (dpi).
  • All document file names must be less than 40 characters, should not contain the following characters: \ ? / : * ” > <

Tip 2: Make sure to submit all forms completely. Do not forget to attach files to emails before sending them.

Tip 3: Get assistance from DAYANAN Business Consultancy! With our FDA Consulting services, you would no longer have to stress and fret over the LTO application process.

After you’re done applying, expect your FDA License to Operate (LTO) in the mail! We hope these tips answer your queries on how to apply for an FDA LTO. If you would like to avail of our FDA consulting services, you may contact us here.

The Complete FAQ Guide on How to Renew Your Business Permit in the Philippines for 2020

Having a business registered in the Philippines requires you to renew its business permits annually.

It doesn’t matter if the company is a Single Proprietorship, a One Person Corporation, a Partnership, a Corporation, a Branch Office, or a Regional Headquarter (ROHQ). All business establishments, per Philippine law, must renew their permits or face possible closure of their operations as well as a loss of face to their clients. 

To help you avoid long lines and heavy monetary penalties, we give you our complete FAQ guide on how to renew your business permit in the Philippines for 2020. 

Frequently Asked Questions (FAQs):

 

What permits do I need to renew? When is the deadline for each? 

Business permit renewal season involves coordinating with three different government entities: the barangay, the city or municipality, and the Bureau of Internal Revenue (BIR). 

1. Barangay Permit or Clearance (Deadline: January 20)

A barangay permit certifies that a business establishment is compliant with the requirements set by its local government unit (LGU) of operation. It is also a requirement when securing the Mayor’s Permit. 

2. Mayor’s Permit or Business License (Deadline: January 20)

Each city or municipality has its own rules to comply with. The Mayor’s Permit certifies that a company is compliant with the ordinances of the city or municipal it operates in. 

3. BIR Renewal of Registration (Deadline: January 31)

The BIR issues a Certificate of Registration (COR) to a company when it is first established. To ensure its validity from year to year, a business establishment must pay a renewal fee of PhP 500.00 every January 31.

 

What are the penalties for non-renewal or late renewal of business permits? 

City or Municipality

If filing is not accomplished by January 20 of each year, the LGU concerned will impose a 25 percent surcharge on top of the unpaid taxes, charges, and fees assessed. Also, a negligent company will incur a 2 percent monthly interest on all unsettled fees, including the surcharge, until everything is paid off.

Extremely delinquent businesses, on the other hand, run the risk of closure and/or seizure of its properties and assets.

All these penalties are imposed by the Local Government Code of 1991.

BIR

A company that did not comply to the January 31 deadline will be fined an amount ranging from PhP 5,000.00 to PhP 20,000.00. Its officers also face the risk of imprisonment, with the term ranging from six months to a maximum of two years. 

 

What requirements do you need for business permit renewal with each government office?

Barangay

1. 2019 Barangay Permit (original and photocopy)

2. Official Receipt from last year (original and photocopy)

3. Accomplished application form (2 copies)

4. Renewal fee (varies per barangay)

City / Municipality

1. 2020 Barangay Permit (to be availed first for the current year)

2. 2019 Mayor’s Permit (original copy)

3. 2019 Official Receipt (original copy)

4. 2019 Audited Financial Statement

5. Lease Contract (if changing address)

6. Community Tax Certificate (CTC) or Cedula (to be secured first from City or Municipal Hall)

7. Comprehensive General Liability Policy (CGLP) insurance for 2020

8. Official receipt of CGLP availed

9. Renewal fee (varies per city or municipality)

Depending on the LGU concerned, you may also be asked to provide the following documents:

1. Fire and Safety Inspection Certificate (original copy) 

2. Sanitary Permit (original copy)

BIR

1. BIR Payment Form 0605 (Click this link to download from the BIR website)

2. PhP 500.00 annual business registration fee

 

What are the steps for renewing business permits? How long will the process take? 

Barangay

Estimated Time Needed: 1 day

1. Visit the barangay hall in whose district your company operates in. Secure a renewal application form.

2. After filling out the form, submit it along with the original copies of your 2019 Barangay Permit and Official Receipt.

3. The barangay’s permit division will then assess your renewal application and documentary requirements. If everything is in order, you may then pay the necessary renewal fee.

4. You will be given the Official Receipt for your Barangay Permit. You may then claim your new Barangay Permit on the date indicated in the Official Receipt.

City / Municipality

Estimated Time Needed: 1 to 2 weeks

1. Secure a renewal application form from the Business Permits and Licensing Office (BPLO) of the LGU that your company operates in.

2. Fill out the form then submit along with the documentary requirements for evaluation.

3. Based on the submitted documents, the BPLO will issue an assessment notice containing the amount of local business tax, real property tax, and other fees that your company needs to pay for 2020. You can choose to pay the entire annual fee in full or in quarterly installments. You may also contest the amount and request a lower assessment. 

4. Bring the assessment notice and pay the required fees at the City Treasurer’s Office. They will provide you the Official Receipt to be presented when you claim the Mayor’s Permit certificate.

5. If your documents are in order, pay the Mayor’s Permit renewal fee at the City Treasurer’s Office. You will be given a receiving copy of your documents.

6. It will take some time for the certificate to be released. In the meantime, the Official Receipt will serve as proof that you renewed your Mayor’s Permit on time if asked. 

7. You may then claim your new Business License from the City Treasurer’s Office on the date indicated in the Official Receipt.

BIR

Estimated Time Needed: 1 day

1. Fill up BIR Payment Form 0605 with details of your business establishment.

2. Bring the BIR Payment Form 0605 to your RDO’s Authorized Agent Bank (AAB) and pay the PhP 500.00 annual business registration fee there.

 

What other tips should I know about business permit renewal?

1. Don’t procrastinate. Preparing the documents required by your LGU at the last minute will land you in long waiting lines and possible payment of penalties. Use the whole month of December if necessary. Remember: the deadline for the whole process of business permit renewal is January 20.

2. Be OC (obsessive-compulsive). Paying attention to small details can save you a lot of time. Organize your documents as soon as you receive or print them. Triple-check what is written in your application form and its attachments. Bring enough cash before you head to the battle lines. 

3. Patience is a virtue. No matter how early you start preparing, you will probably still face lines at your barangay hall, city hall, and BIR RDO. Make sure you’re ready to play the waiting game. Bring a fan, towel, bottled water, and even a good book if you’re so inclined.

4. Copies can save you. You never know how many copies of a particular document will be asked of you at the counter. Bring extra copies of your required documents so you don’t have to run out to the nearest photocopier (and lose your spot in the lines).

5. Avoid fixers. Do everything aboveboard. Don’t listen to individuals who promise shortcuts and discounts in the business permit renewal process. Their quick fixes may also quickly land you in hot water for tax evasion.

 

The best partner for renewing your business permit is someone who tells you the fees and steps needed exactly as it is. At DAYANAN Business Consultancy, we do exactly just that. Having helped over a hundred companies through the process, we know exactly how to save you time and effort. This allows you to focus on your core business functions better.

Let us take care of filling out forms and going to government offices for you. Contact us today!

A Quick Guide to the One Person Corporation (OPC) in the Philippines

Republic Act No. 11232 or the Revised Corporation Code of the Philippines now allows for the registration of a simplified version of a corporation.

Currently, the majority of corporations registered in the Philippines use nominee incorporators and directors. The new legal entity called One Person Corporation (OPC) will now allow for a sole shareholder, thus eliminating the need for nominees.

Many of the larger corporations in the Philippines will not do business with a Sole Proprietorship. The OPC erases this disadvantage while also including the benefit of limited legal liability.

Who Can Register an OPC

Only a natural person, trust, or an estate may form a One Person Corporation.

Who Cannot Register an OPC

Banks and quasi-banks, pre-need, trust, insurance, public and publicly-listed companies, and non-chartered government-owned and -controlled corporations may not incorporate as One Person Corporations. A natural person who is licensed to exercise a profession may not organize as a One Person Corporation for the purpose of exercising such profession except as otherwise provided under special laws.

Registration Requirements

Cover Sheet, Articles of Incorporation, written consent documents from Nominee and Alternate Nominee

By-laws are not required.

Corporate Officers

The single stockholder shall be the sole director and president of the One Person Corporation.
A treasurer and corporate secretary are also needed. In the case that the president also acts as treasurer, s/he shall give a surety bond to the SEC.

The president may not assume the role of corporate secretary. Both the treasurer and corporate secretary must be residents of the Philippines. The corporate secretary shall be a Filipino citizen.

Roles Played by Nominee and Alternate Nominee

The single stockholder shall designate a nominee and an alternate nominee who shall, in the event of the single stockholder’s death or incapacity, take the place of the single stockholder as director and shall manage the corporation’s affairs.

In case of death of the single stockholder, the nominee will manage the corporation only until the heirs designate his replacement.

Corporate Name

A One Person Corporation shall indicate the letters “OPC” either below or at the end of its corporate name.

OPC Conversion

An Ordinary Corporation may be converted to an OPC, and vice-versa.

One Person Corporation

The Revised Corporation Code 2019 of the Philippines or Republic Act No. 11232

Does a One Person Corporation (OPC) only need one individual to register?
Read below to find out the requirements to register an OPC.

 

One Person Corporation

1. Incorporators

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.

2. Corporate Name

The suffix “OPC” should be indicated by the one person corporation either be-low or at the end of its corporate name.

3. Single Stockholder as Director and Officer

The single stockholder shall be the sole director and president of the OPC.

4. Designation of Nominee and Alternate Nominee

The single stockholder is required to designate a nominee and an alternate nominee named in the Articles of Incorporation who shall replace the single stockholder in the event of the latter’s death and/or incapacity. The written consent of both the nominee and alternate nominee shall be attached to the application for
incorporation.

5. Only Articles of Incorporation Needed

The OPC shall file its Articles of Incorporation (AI) in accordance with the requirements of Section 14 of the Revised Corporation Code of the Philippines. The AI must set forth its primary purpose, principal office address, term of existence, names and details of the single stockholder, the nominee and alternate nominee and the authorized, subscribed and paid-up capital and such other matters consistent with law and which may be deemed necessary and convenient.

6. Bylaws

The OPC is not required to submit and file its Bylaws.

7. Minimum Capital Stock Not Required

The OPC is not required to have a minimum authorized capital stock except as otherwise provided by special law.

Further, unless otherwise required by applicable laws or regulation, no portion of the authorized capital is required to be paid-up at the time of the incorporation.

8. Officers

Within fifteen (15) days from the issuance of its Certificate of Incorporation, the OPC shall appoint a Treasurer, Corporate Secretary, and other officers, and notify the SEC thereof within five (5) days from appointment, using the Appointment Form as may be prescribed by the SEC.

The single stockholder shall not be appointed as Corporate Secretary but may assume the role of a Treasurer.

9. Bond Requirement for the Self-Appointed Treasurer

The single stockholder who assumes the position of the Treasurer shall post a surety bond to be computed based on the authorized capital stock (ACS) for the OPC as shown in the Table below:

ACSSurety Bond Coverage*
1.00 to 1,000,000.001,000,000.00
1,000,001 to 2,000,000.002,000,000.00
2,000,001 to 3,000,000.003,000,000.00
3,000,001 to 4,000,000.004,000,000.00
4,000,001 to 5,000,000.005,000,000.00
P 5,000,001.00 and above = Amount of surety bond coverage shall be equal to the OPC’s ACS.

* Subject to renewal every two (2) years or as may be required, upon review of the annual submission of the Audited Financial Statements/Financial Statements certified under oath by the company’s President and Treasurer.

** The bond is a continuing requirement for so long as the single stockholder is the self-appointed Treasurer of the OPC.

*** The bond may be cancelled upon proof of appointment of another person as the Treasurer and Filing of the Amended Form for the Appointment of Officers.

10. Change of Nominee or Alternate Nominee

The single stockholder may, at any time, change its nominee and alternate nominee by submitting to the Commission the names of the nominees and their corresponding written consent. The Articles of Incorporation need not be amended.

11. Incapacity or Death of the Single Stockholder

In case the single stockholder becomes incapacitated, the nominee can take over the management of the OPC as director and president. At the end of the incapacity, the single stockholder can resume the management of the OPC.

In case of death or permanent incapacity of the single stockholder, the nominee will take over the management of the OPC until the legal heirs of the single stockholder have been lawfully determined and the heirs have agreed among themselves who will take the place of the deceased.

12. Who are Not Allowed to Form OPC’s

Banks, non-bank financial institutions, quasi-banks, pre-need, trust, insur-ance, public and publicly companies, non-chartered government-owned and controlled corporations (GOCCs) cannot incorporate as OPC.

A natural person who is licensed to exercise a profession may not organize as an OPC for the purpose of exercising such profession except as otherwise provided under special laws.

13. Foreign National

A foreign natural person may put up an OPC, subject to the applicable capital
requirement and constitutional and statutory restrictions on foreign participa-tion in certain invest areas or activities.

• Minimum required paid-in capital for a corporation with more than 40% foreign ownership catering to the Philippines domestic market USD200,000.00.

• Export Enterprises; minimum recommended paid-in capital PHP250,000.00.

• Export enterprises located in Philippine Economic Zone Authority approved IT Buildings are required to have a paid-in capital equivalent to 25% of the total project cost.

Required documents/information:

  • Company Name
  • Nature of Business
  • Filipino Director: Name and Address, 2 x Government IDs, Tax Identification Number (TIN).
  • Foreign Director: Name and Address, copy of passport
  • Office Address
  • Name and Address of Treasurer in Trust

TAX ID

Every shareholder, director and officer of the company is required to obtain a Philippines Tax Identification Number (TIN). A Special Power of Attorney is required, authorizing Dayanan to file the TIN application.

All documents signed overseas must be authenticated by a Philippine Embassy/Consulate or with an apostille affixed thereto.

FDA Consulting

The Food and Drug Administration (FDA) is the Philippine government agency charged with ensuring the quality and safety of the following products:

  • Processed food and drinks
  • Drugs and other pharmaceutical products
  • Dietary/herbal supplements
  • Medical devices
  • Cosmetics
  • Toys and child care articles
  • Household pesticides/cleaning agents
  • Veterinary products
  • Animal Feeds

In line with its mandate under the Department of Health (DOH), the FDA regulates the production, importation, and distribution of these products in the country.

A company that wishes to engage in such business activities must first obtain a License To Operate (LTO) from the FDA either as an importer or a manufacturer. Once done, the company must then apply for a Certificate of Product Registration (CPR) to ensure that its products comply with FDA technical standards.

DAYANAN can serve as primary liaison between your company and the FDA. Our familiarity with the regulatory framework and proactive approach will help ensure faster turnaround on your application. We will also link your company to laboratories recognized by the FDA to perform various required analytical tests on your products.

How to Register Your Business in Makati City, Philippines

Makati City business registration

Makati City has long been the country’s leading business and financial hub, serving as home to 40 percent of the country’s top 1000 multinational and local corporations. The city boasts of a highly-developed transport and communications infrastructure, quality shopping centers, state-of-the-art hospitals, and premiere residential areas. All these advantages have made Makati the location of choice for new businesses.

We have previously covered the steps on registering your Philippine-based corporation with national- and municipal-level agencies. In this article, we will highlight the specific, up-to-date requirements and steps for business registration in Makati City.

Makati City Business Registration / Mayors’ Permit

BASIC REQUIREMENTS:

1) Locational Clearance for Business

– to determine if the business activity you are applying for is allowed in the area

– will be issued by the Zoning Administration Division after five (5) working days if an inspection is needed

2) Proof of Business Address

a. Contract of Lease (if the place of business is rented)

b. Transfer Certificate of Title / Tax Declaration / Real Property Tax Receipt (if the place of business is owned)

3) Proof of Business Name and Activity / Line of Business

a. Business Name Certificate from the Department of Trade and Industry (DTI) (if sole proprietorship)

b. Articles of Incorporation or Partnership from the Securities and Exchange Commission (SEC) (if corporation
or partnership)

4) Barangay Clearance for Business

5) Comprehensive General Liability Insurance (CGLI)

– protects an enterprise from liability claims arising in the course of business

ADDITIONAL REQUIREMENTS BASED ON NATURE OF BUSINESS BEING APPLIED:

1) Residence Certificate A and B for Single Proprietorship, C and C1 for Corporation

2) Contractor’s License issued by the Philippine Contractors Accreditation Board (PCAB) for General/Specialty
Engineering Contractors

3) National Food Authority (NFA) License for Dealers of Rice/Corn and Wheat

4) Food and Drug Administration (FDA) Certification for Bakeries and Drugstores

5) Authority from Bangko Sentral ng Pilipinas (BSP) for Banking Institutions

6) Accreditation Certificate issued by DTI for Auto Repair Shop, Electronics, Radio, and other Electrical Equipment Businesses

7) Customs Broker’s Accreditation granted by the Bureau of Customs (BOC) for Customs Brokerage Businesses

8) Real Estate Broker’s License issued by the Professional Regulation Commission (PRC) for Real Estate Brokers

9) License issued by the Department of Labor and Employment (DOLE) for Local Manpower/Recruitment Agencies

10) License issued by the Philippine Overseas and Employment Agency (POEA) for Manning and Crewing Services

11) Pest Control License issued by Fertilizers and Pesticide Authority for Pest Control Services

12) License issued by the Optimal Media Board (OMB) for Video Rental Services

13) Occupancy Permit for Real Estate Lessors

14) License to Operate from the Philippine National Police (PNP) for Private Security Agencies

15) Clearance issued by the Department of Environmental and Natural Resources (DENR) for Mining Companies

16) Franchise granted by the Land Transportation Franchising and Regulatory Board (LTFRB) for Rent-A-Car and Transportation Services

17) License to Own and Possess Firearms issued by PNP

18) Accreditation issued by the Department of Information and Communications Technology (DICT) for Messengerial or Courier Services

19) License issued by the Department of Energy (DOE) for Dealers of Liquefied Petroleum Gas (LPG)

20) License issued by the National Telecommunication Commission (NTC) for Telecommunications Companies

21) Certificate of Accreditation issued by Philippine Shippers’ Bureau for Seafreight Forwarders

22) Accreditation issued by the Technical Education and Skills Development Authority (TESDA) for Training Centers

23) Accreditation Certificate issued by the Department of Education (DepEd) for Educational Institutions

24) Certificate of Authority to Operate issued by SEC for Financial Lending Institutions

3EASY STEPS FOR GETTING YOUR MAYOR’S / BUSINESS PERMIT

   STEP 1:

   Location: Business Permits Office (BPO), Ground Floor, New Makati City Hall Building II

   Estimated Time Frame: 30 minutes

a. Secure application form from receiving or processing clerks. Be informed of the requirements and processes.

         Note: If your business is considered “Subject for Inspection,” you will have to proceed to the Inspection Division.

b. Have the BPO check your requirements and accept your application. Officials will evaluate and assess taxes, fees, and charges. The BPO Chief will then sign the billing statement and application form to indicate approval.

   STEP 2:

   Location: Business Tax Division / Treasury Department, Ground Floor, New Makati City Hall Building II

   Estimated Time Frame: 5 minutes

a. With your approved application form and billing statement at hand, pay the corresponding fees and tax at designated windows.

   STEP 3:

   Location: BPO

   Estimated Time Frame: 15 minutes

a. Claim your Business Permit, Sanitary Permit, and Fire Safety Inspection Notice.

Note: Inspections will be conducted after release of Business Permit by the Bureau of Fire Protection (BFP), Health Department, and Engineering Office.

TOTAL TIME: 50 minutes

 

Want to save even more time? Let the experts at DAYANAN Business Consultancy do the work for you! We’ll be happy to guide you through the ins and outs of the Philippine business registration process!

 

Source: Makati City BPO

Makati City skyline image taken from www.makati.gov.ph

Financing Company Information & Documentary Requirements

Financing Company Information & Documentary Requirements Philippines


A corporation in the Philippines requires at least 5 incorporators and 5 directors. An incorporator is a founding shareholder. The incorporators and directors can be the same persons. Every director must own at least one share of the corporation. All the directors must be residents of the Philippines. The corporate secretary must be a Filipino citizen and resident of the Philippines. The treasurer must be a Filipino citizen and resident of the Philippines. No person can be the President and the Corporate Secretary at the same time or the President and Corporate Treasurer at the same time.

Definition:  Financing companies’ hereinafter called companies, are corporations, except banks, investments houses, savings and loan associations, insurance companies, cooperatives, and other financial institutions organized or operating under other special laws, which are primarily organized for the purpose of extending credit facilities to consumers and to industrial, commercial, or agricultural enterprises, by direct lending or by discounting or factoring commercial papers or accounts receivable, or by buying and selling contracts, leases, chattel mortgages, or other evidences of indebtedness, or by financial leasing of movable as well as immovable property.

Rights and Power – Financing companies shall have the following powers:

  1. Engage in quasi-banking and money market operations with the prior approval of the Bangko Sentral ng Pilipinas;
  2. Engage in trust operations subject to the provisions of the General Banking Act upon the prior approval of the Bangko Sentral ng Pilipinas;
  3. Issue bonds and other capital instruments subject to the pertinent laws, rules and regulations;
  4. Rediscount their paper with government financial institutions subject to relevant laws, rules and regulation;
  5. Participate in special loan or credit programs sponsored by or made available through government financial institutions;
  6. Provide foreign currency loans and leases to enterprises that earn foreign currency by exports or other means, subject to existing laws and regulations promulgated by the Bangko Sentral ng Pilipinas.

The SEC shall allow the inclusion of the foregoing rights and powers in the Articles of Incorporation of a financing company after submission by the applicant financing company of the appropriate license/authority issued by the government agency involved.

Foreign Ownership of a Financing Company
100% foreign ownership of a financing company is allowed Republic Act No. 10881, lapsed into law on July 17, 2016. No foreign national may be allowed to own stock unless the country of which he is a national accords reciprocal rights to Filipinos. In the case of corporations owning shares in a lending company, the citizenship of the individual owners of voting stock in such corporations shall be the basis in the computation of the percentage. More than 40% foreign ownership requires a minimum paid-in capital of US$ Two Hundred Thousand (USD200,000.00).

Minimum Capital Requirement
The minimum required paid-in capital is:

  1. Ten Million Pesos (PHP10,000,000.00) for the head office in Metro Manila and other first class cities.
  2. Five Million Pesos (PHP5,000,000.00) in other classes of cities
  3. Two Million Five Hundred Thousand Pesos (PHP2,500,000.00) in Municipalities

Additional Capital Requirement – A financing company shall be required to put up minimum additional capital for each branch, agency, extension office or unit as follows:

  1. One Million Pesos (PHP1,000,000.00) : Metro Manila and other first class cities;
  2. Five Hundred Thousand (PHP500,000.00)    : Second class and other cities;
  3. Two Hundred Fifty Thousand (PHP 250,000.00)   : Municipalities.

Evaluation Guideposts – The number of branches, agencies, extension offices or units to be established shall depend upon the capacity of the company to conduct expanded operations and/or upon the capacity of the area wherein the proposed branch, extension office, agency or unit will be established to absorb new entities engaged in financing, as may be determined by the SEC.

For a financing company granted with special rights and powers mentioned in Rights and Powers hereof additional capital required shall be based on letter (c) above or on the capitalization requirement under the rules and regulations promulgated by the appropriate government agency, whichever is higher.

Corporate Name
The corporate name of financing companies shall contain the term”Finance Company,” “Financing Company,” Finance and Leasing Company” and “Leasing Company”.

Size of Loan and Interest
A financing company may give loans in such amounts and reasonable interest rates and charges as may be agreed upon between the lending company and the debtor: Provided, That the agreement shall be in compliance with the provisions of Republic Act No. 3765, otherwise known as the “Truth in Lending Act” and Republic Act 7394, otherwise known as the “Consumer Act of the Philippines”. As of August 19, 2013 there are no usury laws which limit the interest rate a lending investor my charge loan recipients. The Supreme Court has reduced the interest rate, in some cases as being excessive, iniquitous, unconscionable and exorbitant, hence, contrary to morals (“contra bonos mores”), if not against the law.
In accordance with the Truth in Lending Act and prior to the consummation of the transaction, a financing company shall furnish each debtor a disclosure statement, setting forth, to the extent applicable, the following information:

  1. The principal amount of loan;
  2. Rate of interest of the loan;

iii. Service or processing fee, if any;

  1. Amortization schedule;
  2. Any penalty charge for late amortization payment;

REPUBLIC ACT NO. 8556
Sec. 5. Limitation on purchase discounts, lease rentals, fees, service and other charges. — The Monetary Board of the Bangko Sentral ng Pilipinas is hereby empowered to prescribe, in consultation with financing companies and the Securities and Exchange Commission, the maximum rate or rates of purchase discounts, lease rentals, fees, service and other charges of financing companies, and to change, eliminate or grant exemptions from or suspend the effectivity of such rules whenever warranted by prevailing economic and social conditions.”

Requirements for Securing an Authority to Operate a Financing Company from the SEC (Secondary License)

  1. Cover Sheet
  2. Application Form
  3. Information Sheet
  4. Personal Information Sheet of Directors and Officers
  5. Valid NBI Clearance of each FILIPINO Director and Officer
  6. Foreign Directors and Officers:
    a.   Photocopy of
    ● Alien Certificate of Registration, or
    ● Immigration Certificate of Registration
    b.   Photocopy of Passport
    ● Showing valid visa or stay in the Philippines
    C.  Clearance from Bureau of Immigration
    * All photocopies shall be verified against the original
  7. Clearance from Bangko Sentral ng Pilipinas
    ● If applicant is a subsidiary or affiliate of a bank and/or non-bank financial
    institution with quasi banking license
  8. Manual on Corporate Governance
    ● If foreign participation in voting stock is more than 40%; or
    ● If total assets is PHP50M or more; or
    ● If commercial paper issuer, either exempt or registered
  9. Manual on Anti-Money Laundering
    ● If foreign participation in voting stock is more than 40%; or
    ● If total assets is PHP10M or more; or
  10. Board Resolution on the Adoption of the Manuals
    ● Certified by the Corporate Secretary
  11. Format of disclosure Statement on Loan/Credit Transactions
    ● Indicating the name of the company
  12. Notarized Bank Certificate of Deposit of the Paid Up Capital
  13. All documents required for incorporation

SEC Licensing Fees (for secondary license):

  1. Initial Application Fees shall be paid to SEC at the time of filing of application

1) Head Office –
A fee of 1/8 of 1% of the paid-up capital of the financing company + LRF of 1% (minimum of P10.00) shall be paid for the issuance of a Certificate of Authority to Operate as a Financing Company.
2) Branch, extension office, unit or satellite office
A fee of 1/8 of 1% of the minimum assigned capital + LRF of 1% (minimum of P10.00) of the branch, extension office, unit or satellite office shall likewise be paid for the issuance of an original Certificate of Authority.

  1. Annual fee –

An annual fee shall be paid not later than forty five (45) days before the anniversary date of the CA.

  1. Head Office – Annual Information Statement Filing fee of P10,000 + 1% LRF

Annual fee of 1/8 of 1% of the paid-up capital of the financing company + LRF of 1% (minimum of P10.00)

  1. Branch Office – Annual Information Statement Filing fee of P10,000 + 1% LRF

Annual fee of 1/8 of 1% of the minimum assigned capital of the financing company + LRF of 1% (minimum of P10.00)

Commencement of Operations
A corporation/company that has been duly registered and granted a Certificate of Authority to Operate as a Financing Company shall commence operations within one hundred twenty (120) days from date of grant of such authority. Failure to commence operations within said period shall be a ground for the suspension of its CA.

REPUBLIC ACT NO. 8556
Section 9 – Loans and Investments
Unless otherwise authorized by the Commission:

  1. The total investment of a financing company in real estate and in shares of stock in a real estate development corporation and other real estate based projects shall not at any time exceed twenty-five (25%) of its net worth.
  1. More than fifty (50%) percent of the funds of a financing company shall be used or invested in financing company activities; Provided, that in the computation of the amount of funds used or invested in financing company activities, investments in government securities with maturity of not more than one (1) year and special savings deposits shall be taken into consideration;

Reportorial Requirements

  1. General Information Sheet (GIS) – Within thirty (30) days from annual stockholders meeting, as stated in its SEC approved bylaws.
  2. Audited Financial Statements prepared by an external auditor accredited by the SEC
    for fiscal year ending December 31: on or before April 15. After April 15, based on advisory to be issued by SEC, for fiscal year other than December 31: within One Hundred Twenty (120) days from end of fiscal year, as stated in its SEC approved by-laws.
  3. Special Form of Financial Statements – 30 days from the due date of Audited Financial Statements
  4. Annual Information Statement – Every 30th day of January for Commercial Paper Issuer
  5. Semi-Annual Financial Statements
    –    1st Semester:  45 days from cut-off (Cut off: June 30)
  • 2nd Semester: 45 days from cut-off (Cut off: December 31)
  1. AMLA Compliance Form – if authorized to issue Securities

The above stated information is gathered from the SEC and other laws enforce at the time of compilation, it is not legal advice, is not to be acted on as such, may not be current and is subject to change without notice.

SEC Reduced Requirements for Financing and Lending Companies

Securities and Exchange Commission
Philippines

COMPANY REGISTRATION AND MONITORING DEPARTMENT

N O T I C E

SEC Reduced Requirements for Financing and Lending Companies

Notice is hereby given that pursuant to SEC Resolution No. 544, series of 2016, the Commission En Banc has resolved to approve the Company Registration and Monitoring Department’s [CRMD] rationalization of documentary requirements for application for Certificate of Authority to Operate as a Financing Company / Lending Company.

The CRMD has modified the Application Form, Company’s Information Sheet and Personal Information Sheet to consolidate some of the documents. Further, the following are no longer required for registration of financing and lending companies: (1) local police clearance; (2) certificate of good moral character; (3) work permit from the Department of Labor and Employment for foreign directors and officers; and (4) location map and copy of the lease contract or title of the building / unit where the company is located.

Copies of the Checklist of Requirements and the revised Forms are available at the CRMD – Licensing Unit (LU) at the 3rd Floor, SEC Building, EDSA, Mandaluyong City and maybe downloaded at the SEC website. For inquiries, please call 584 – 7187 and look for the LU Officer of the day.

Starting a Philippine Business as a Foreigner

Philippines Business Registration
Philippines Business Registration

It doesn’t not matter whether you’re a foreigner or a Filipino, it really is difficult to start a business in the Philippines.

Tips for foreigners who want to register a company in the Philippines

Do your homework! There are many restrictions on foreign equity ownership of businesses in the Philippines. The percentage of foreign ownership will also dictate the allowed number of foreign directors and officers of the company.

There are exceptions; up to forty percent Foreign ownership of educational institutions is allowed as stated in the 1987 Constitution and in the Foreign Invest Negative List; but Presidential Decree No. 176 issued in 1973 disallows any foreigner from being a director or officer of an educational institution.

The Philippines Foreign Investment List (which is revised every few years) states the restrictions on foreign ownership but does not provide any information on other restrictions which may apply to your business, such as the number of allowed foreign directors, officers, residency obligations, secondary licenses or the minimum paid-in capital requirements for certain industries.

Obtaining the necessary and correct information to register and run a business in the Philippines is a difficult task and entails inquiring with multiple government agencies with some giving outdated facts.

Anti Dummy Law

To avoid foreign ownership regulations many people try to find schemes to circumvent the Philippines Foreign Investment Act. All these schemes using nominee shareholders (anti-dummy law) or misstating the primary purpose of the business in the articles of incorporation are illegal.

Registering a Business on Your Own – Unless you’re a frequent visitor to Philippine government agencies, there is no way to be sure that the forms you downloaded from their website are current and that application processes and fees haven’t changed. The multiple visits to the SEC and frustrations will make you regret not having hired a Philippine business consultant to guide you and process your documents.

Local Business Permits

Once a business has been licensed to transact business in the Philippines by the SEC, the company must still register with the local municipality where its principal office is located (Mayors’ Permit), BIR, SSS, HDMF and PhilHealth.
The new Unified Registration Record (URR) touted by the SEC as incorporation made easier and faster does not simplify registration with any government entity as a business will still need to go each and every government office to register and process application forms. Only the government will benefit from the URR as they will use it to insure compliance in filings and payments of fees and taxes.

All businesses registered in the Philippines must comply with BIR (Bureau of Internal Revenue) regulations and file monthly, quarterly and annual reports as well as an audited financial statement. Bookkeeping may only be computerized by submitting a special request with the BIR.

Payroll is quite complicated in the Philippines and it’s essential to have an extensive knowledge of taxation and labor laws to correctly compute it.

Starting a Philippine business, contact Dayanan now, to discover how we can remove the annoyances and exasperation of doing business in the Philippines.

Steps in Registering Your Corporation with the BIR

BIR RegistrationThe Bureau of Internal Revenue (BIR) is the Philippines’ primary taxation agency. It is authorized to assess and collect taxes from all income-generating entities in the country.

Before any business can commence operations, they are required to register with the BIR or be penalized in accordance with Philippine law.

Here are the steps to registering your corporation with the BIR:

1. Fill out the required application forms, specifically,

• BIR Form 1903, or the Application for Registration for Corporations/Partnerships;
• BIR Form 0605, i.e., the Payment Form, for tax type RF (i.e., registration fee); and
• BIR Form 2000, for documentary stamp tax.

2. Submit the required documents at the revenue district office (RDO) in charge of the area where your office is located. These documents include

• your filled-out BIR Form 1903;
• your SEC certificate;
• your business/mayor’s permit; and
• your contract of lease.

You may also be asked for a sketch of your head office location.

Note that in some RDOs, you will need to bring your original business permit plus a photocopy of the same, while in others, even just the official receipts (OR) of the payments you made for your business permit application will suffice.

You may also be asked for a sketch of your head office location.
Note that in some RDOs, you will need to bring your original business permit plus a photocopy of the same, while in others, even just the official receipts (OR) of the payments you made for your business permit application will suffice.

3. Pay the annual registration fee. This is a fixed cost of ₱500 every year.

You will also need to pay for documentary stamps; the BIR will advise you on the exact amount you will need to pay for that.

In some places, RDOs will accept these payments onsite; in others, you will be asked to make the payments at the nearest authorized agent bank (AAB).

Each RDO has a list of its own AABs – but not all AABs actually do accept BIR payments.

4. Attend the BIR seminar. Some days after you submit your application requirements, your Certificate of Registration (COR) will be ready for pickup. Before the RDO will release this certificate, you or your authorized representative will need to attend a 1–2 hour seminar about your tax duties, the different kinds of taxes you need to file and pay, and the various tax deadlines. CORs will be given out after the seminar.

5. Register your accounting system. With your COR on hand, you are practically done registering your business.

The next step is to register your accounting system using the BIR Form 1900 (Application for Authority to Use Computerized Accounting System or Components thereof/Loose-Leaf Books of Accounts).

Or if you will be using manual books of accounts fill out BIR Form 1905.

6. Get your receipts and invoices printed. This involves another application process, and it should be done promptly because you need to begin issuing ORs and sales invoices (SI) within 30 calendar days from the date of registration indicated in your COR.

To get BIR-authorized ORs and SIs, you need to apply for an Authority to Print receipts using the BIR Form 1906. Submit this to your RDO along with a clear sample of the receipts you intend to get printed.

ORs and SIs must be printed by BIR-authorized printers only. These receipts will be valid for a period  five years from the date of printing, after which any unused ones will need to be destroyed and you will need to obtain a new authority to print.

The BIR registration is the last step in legalizing your corporation’s business presence in the Philippines. Your next steps – registrations with the Department of Labor and Employment, etc. – will come when you are hiring your first employees.