Steps in Securing Your Corporation’s Business Permit at the City Hall

Philippines Business PermitOnce you’ve obtained your Securities and Exchange Commission (SEC) certificate of incorporation and your barangay permit, the next step in registering your Philippine-based corporation is to get a business permit – also called the mayor’s permit – from city hall.

The process of business permit application tends to vary among localities. In some places, the actual processing time can be as short as one hour, but the queues can be long, especially in January, when all businesses flock to the city hall for their annual permit renewal.

And then, there are localities where the process is more convoluted – but still navigable.


The basic documents necessary for business permit application are your

• SEC registration;
• barangay clearance;
• your community tax certificate, which you can get at the city hall; and
• your office lease contract.

Now depending on where your company office is located, you may also be required to present your homeowner’s clearance, business insurance, etc. The city hall will inform you of these additional requirements.


1. Get an application form at the city hall’s Business Permits and Licensing Office, and fill it out.

2. Submit your application form for the computation of your basic fees and the encoding of your data. The fees are based on your stated business capitalization and size of your office.

Now you will pay the fees, or you may be instructed to visit other offices first and get your required clearances.

Be sure to have your application printout photocopied. If you’ve already paid for something, photocopy the official receipt as well before going to the next step.

3. Make the rounds to secure other necessary clearances. You’ll need to visit

• the engineering office for your certificate of occupancy or building permit,
• the city planning and development council for your location clearance,
• the health center for your sanitary permit, and
• the fire department for your fire safety clearance.

Some of these offices may require additional fees and inspections. They may also issue you a temporary clearance, pending on-site investigation, just so you can finish your registration at the city hall. If that is the case, you will need to secure the actual clearances within 90 days after registration.

5. Submit your papers (clearances, receipts, and application printout) back at the city hall. You will be informed when to return to claim your permit. This could be within the day, but in some cases, it will be after a few days or even a few weeks. Make sure to get a contact number so you can call ahead and confirm that your permit is indeed ready before you return to claim it.

With your business permit (or at least, your official receipt) on hand, you may now proceed to the Bureau of Internal Revenue (BIR) for the last step in your business registration process.

Avoid the hassle of multiple visits and long lines at city hall. Hire Dayanan Business Consultancy to obtain your permits from city hall for you.

Steps in Registering Your Corporation in the Philippines: A Brief Overview

Philippines Business RegistrationOnce you have decided that the Philippines is a good place for setting up business, it’s time to begin the process of registering your corporation.

Here are the steps to registering a corporation in the Philippines:

1. Register your company name with the Philippine Securities and Exchange Commission (SEC) . This is the government agency under whose jurisdiction falls all corporations, associations, and partnerships established in the country.

SEC registration involves at least 5 steps, which begin with the online verification and reservation of the company’s proposed name, and ends with your claiming your SEC license/certificate in person at the SEC office.

2. Get clearance from the barangay hall. A barangay is a Filipino local government unit usually composed of several villages. Several barangays make up a municipality.

To get barangay clearance, go to the barangay hall of the area where you intend to put up your main office. Submit your SEC certificate, site map of your company’s intended location, your approved articles of incorporation and bylaws, and your application form. Then, pay the application fee, and receive your signed barangay certificate that very same day or next day.

3. Secure your municipal permit. Municipal permit application can be complex for two reasons: (1) municipalities vary widely in their requirements, and (2) before you can get your municipal permit, you will need to get supporting certificates from other government agencies outside the municipal hall, like the Bureau of Fire Protection, the municipal health center, etc.

Once you have secured all of your required certificates, bring them back to the municipal hall, pay the fees stated in your application form, then wait a week or two (or more) for your certificates to be ready.

4. Register with the Bureau of Internal Revenue (BIR). The BIR is the last stop in your business registration process. Armed with all the papers and certificates you have so far secured from the SEC, barangay hall, and municipal hall, plus all the other requirements you submitted to be able to secure those permits, go to the BIR revenue district office (RDO) in charge of the area where your business is located.

You may or may not need all the paper you bring with you. Like the municipal halls, RDOs can vary slightly in their requirements for registration.

At the RDO, fill out BIR forms 1903 (Application for Registration for Corporations) and 0605 (payment form for the registration fee).

Submit your application form and all required supporting documents, pay the registration fee and documentary stamps, and you’re done for the day. The BIR will tell you when you should call back to confirm whether your certificate of registration (COR) is ready.

Once your COR has been issued, you have 30 days to have your official receipts and sales invoices printed.

6. Register with the Social Security System (SSS), Home Development Mutual Fund (HDMF), Philippine Health Insurance Company (Philhealth), and the Philippine Department of Labor and Employment (DOLE). Registration with the DOLE becomes mandatory when you have 5 or more employees in your payroll. On the other hand, companies with even just one employee are required to register as employer with the SSS, HDMF, and Philhealth, so that their employee/s may enjoy the benefits of these agencies.

At present, the Philippine government is revising SOPs and putting up infrastructure and to speed up and simplify the system of business registration in the country.

Frustration among registrants is usually caused by the lack of communication from the involved government offices. For instance, it is not uncommon for registrants to discover that the requirements for business permit that are published in a municipality’s website are not complete, and the registrant ends up having to go back and forth to complete the required documents. Many a registrant has also experienced falling in line at a certain window, following instructions indicated by a flowchart posted on the wall, only to find out half an hour later that the flowchart is inaccurate and they are in the wrong queue.

Dayanan Business Consultancy is well versed in the ins and outs of the Philippine business registration process. We’ll be happy to guide you in every step of your company registration in the Philippines. Call us now to learn more about our services.

Understanding the Philippines Local Government Unit System for Foreign Businesses Operators

The Barangay

So you want to do business in the Philippines, but you don’t know how to get a business license in the Philippines or deal with the government.

Any foreigner wanting to do business in the Philippines needs to understand the legal process and national and municipal requirements particular to the country. There are reams of information available online and on Philippine Government web sites. Moreover, hiring a local business consultant will help you navigate through the red tape.

There is one part of setting up a business in the Philippines that is not discussed too often in detail by Business Consultancies – and that is – the Barangay.

The barangay is the smallest administrative sub-division in the Philippines. It is the basic unit of government, and under the administrative supervision of cities and municipalities.

Makati Barangays
The 33 Makati Barangays

Consider the Barangay as a village within a city. Generally, small, with as little as 15 families and covering just a couple of city blocks, the largest barangay in the Philippines covers 524 hectares and has over 245,000 residents. As of 2014, there are 42,028 barangays in the Philippines.

Why Should I Care?

It is somewhat important to understand this part of Filipino life because after all is said and done getting a business established in the Philippines, the Barangay is where the business will be operating. You are essentially a guest in their house.


The Chief Executive of the village is The Punong Barangay, properly addressed as Kapitan, also known as the Barangay Captain or Barangay Chairman. Think of them as the chief of the village. It is a good idea to get to know them somewhat. Barangays are permitted to accept donations from businesses, so helping the Barangay to build a basketball court can be great for public relations.

The Sangguniang Barangay (the Barangay Council) has seven Councilors (Barangay Kagawad) and the chairman of Youth Council or Sangguniang Kabataan (SK), for eight Sangguniang Barangay Councilors.

Elections for the Barangay Captain and the councilors take place every three years. The non-partisan barangay elections tend to be taken quite seriously as the posts are highly coveted.

The Barangay Hall – Your Community Center

Barangay Hall
Barangay Hall


The barangay hall is seat of local government and is the center for many community activities. They usually have a basketball court or at least one somewhere nearby, as this is one of the favorite pastimes of the Filipinos, along with cockfighting. Depending on the size of the barangay, they have a number of unarmed police officers called Tanod that take care of law and order issues within the neighborhood.


Funding the Barangay

The Barangay is funded by revenues collected from local and external sources. Local sources include tax revenues from the Real Property Tax (RPT), taxes on businesses, and non-tax revenues from fees and charges. They also receive a share of taxes collected nationwide by the Bureau of Internal Revenue – The Internal Revenue Allotment (IRA).

Local Revenues

Real Property Tax

The barangays get a percentage of the RPT collected by the municipality where they are located. Real property includes all forms of land, buildings, improvements, and machinery. Exemptions exist for properties owned by government, charitable, institutions, churches, and cooperatives. Companies that supply water and electric power are also not subject to taxes as well as equipment used for pollution control and environmental protection.

Non-Tax Revenues

Barangays can collect fees for:

•    Barangay Clearance to start a business
•    Fines  for the violation of barangay ordinances (not to exceed P 1,000)
•    Use of barangay property or facilities
•    Commercial breeding of fighting cocks and on cockpits and cockfights
•    Places of recreation with admission fees
•    Outdoor advertisements such as billboards, signboards, neon signs and others

They may also collect fees for the use of any system funded and constructed by the barangay:

•    Public roads
•    Piers or wharfs
•    Waterways
•    Bridges
•    Ferry’s
•    Telecommunications  Systems

They may also obtain revenue from:

•    Operation of public utilities and barangay enterprises such as markets and slaughterhouses
•    Proceeds from the sale or lease of barangay property or from loans and grants secured by the barangay

Internal Revenue Allotment

The IRA is a 20% share of taxes collected 3 years earlier by the Bureau of Internal Revenue. The Internal Revenue Allotment (IRA) that each barangay receives is calculated by a formula of 60 percent (60%) population and 40 percent (40%) equal sharing. In 2014, they will share an IRA of P68.3 billion, a P7.8 billion increase from 2013s P60.5 billion IRA.

In addition to the IRA, the General Appropriations Act provides another source of revenue called the ALGU (Allocation to Local Governments). These are “special shares of local government units in the proceeds of national taxes” and include revenues such as:

•    Tobacco excise taxes
•    Proceeds from natural wealth such as mining sites and power sources
•    Gross income taxes paid by establishments within economic zones in their areas
•    Value-added taxes
•    Special privilege taxes
•    Share of budget of Metropolitan Manila Development Authority

Katarungang – Filipino for Justice

The Barangay has a Justice System or Katarungang Pambarangay. The barangay captain heads a committee called the “Lupon Tagapamayapa” (Justice of the peace) to mediate and settle disputes at the Barangay level. They do not have judicial powers as a court does, but rather attempt to resolve issues so the parties can avoid going to court.

If your company has a complaint against some other business or persons, such as for example – they are building a fence or other structure on what you consider your property, you may take it to the Justice of the Peace of the Barangay.

When the chairperson of the committee, usually the Kapitan, receives a complaint, Barangay law requires him to inform the parties and set a meeting for mediation the following day. If after 15 days there is no resolution, than a more formal hearing involving the pangkat or body, must be set. If there is still no end to the dispute in another 15 days, then the complainant may file the case in the regional trial court.

Obtaining Barangay Clearance

In order to set up any business in the Philippines, you will need Barangay Clearance from the Barangay where your business will be located.

Required documents to obtain Barangay Clearance:

1.    Application form
2.    SEC Certificate of Incorporation and approved articles of incorporation and bylaws
3.    Location plan/site map and contract of lease.

Fees will vary in each Barangay since they have the discretion to impose their own fees and charges as long as these fees are reasonable, and within the limits set by the Local Government Code and city ordinances.

If you are interested in starting a business in the Philippines and want help from professionals, contact the DBC Team now for a free consultation. We have extensive experience with dealing with barangays and going through the process of establishing businesses in the Philippines.

Philippines SEC Name Reservation

The first step in registering a business in the Philippines is to reserve a name by either visiting the SEC or through their online reservation system

First time of users of the system will need to signup as a new user. Once you have an account you will be able to verify and reserve proposed company names.

The 8 Steps to Philippines SEC Name Reservation

Step 1. Accept Terms and Conditions

click Accept

Step 2. Select Type of Company

The choices are:

SEC Name Reservation Philippines

  1. Stock Corporation
  2. Non-stock Corporation
  3. General Partnership
  4. Limited Partnership
  5. Professional Partnership
  6. Foreign Stock
  7. Foreign Non-Stock
  8. Foreign Partnership

Step 3. Select Type of Industry
This list displays the industries that require endorsement from other government agencies. Select the industry listed to classify your company. If your company’s classification does not fall under any of the listed industries, click Continue.

(for industries that do not require endorsement from other government agencies see below)

Select the type of industry listed to classify your company. If the list indicates that there is more than one page, click Next or Last to view the other industries. You may select the page number from the dropdown box and click Go To Page to view your selected industry page. You may enter a keyword in the Search Industry field below and click Search to look-up for industries to match your keyword.

(you may have to drill down the industry by clicking 5 or 6 times to get to the next step)

Step 4. Verify Company Name
Enter your Proposed Company Name at the field provided. Then select the appropriate Company Suffix of your Company Name by clicking on the drop-down box below. The Company Suffix you selected should not be included at the Proposed Company Name you entered. To verify Proposed Company Name, click Continue. To go back to the previous page, click Back.

For a domestic corporation you have the following choices: Inc., Incorporated, Corp., Corporation.

If the system accepts the name you will see the following:

– Checking your proposed name against:
>> Offensive words … PASSED
>> Internationally known foreign corporations … PASSED
>> Registered names … PASSED
>> Reserved names … PASSED
>> Company-owned words … PASSED
>> Restricted words in accordance to existing laws … PASSED

–    Proposed Company Name is Available!

Step 5. New User Profile

Provide information for the following Profile details. Click Continue to complete your other Profile details. To return to the previous page, click Back.

Step 6. Reserve Company Name

Select the duration of reservation and method of payment for your company name. Enter the name of the person who is reserving the current company name on the Reserved By field.

SEC Teller or UnionBank Teller payments should be in the form of Cash, Cashier Checks, Manager Checks or Certified Checks.

Funds Transfer payments require you to have a UnionBank account. If you do not have a UnionBank account, open one at the nearest UnionBank branch. To use the funds transfer facility, enroll first by clicking the UnionBank Funds Transfer Enrollment link below. If you are already enrolled, click Continue button to proceed.

A name can be reserved for a maximum of 90 days. Extensions are possible.
The cost is PHP40 per 30 days. It is best to pay the reservation fee at the SEC Teller as the bank API is not always able to update the SEC Name Reservation Database.

Step 7. Review Reservation Summary

Make sure that your Reservation Details are correct. Click Submit to finalize the reservation. If you want to make changes, click Back.

Step 8. Print Reservation Notice

It’s important to keep the original printout as you will have to present it to the SEC.


You may also reserve Doing Business As names as they will also need to be indicated in the Articles.

Foreign companies may be required to make three name reservations.

Ex: Head office; name Abcxyz Limited – Abcxyz Limited Manila Branch – Abcxyz Limited under the name Abcxyz Limited Manila Branch.

Business Registration Cost Philippines Corporation

Business Registration Cost Philippines

The cost for a business registering a corporation in the Philippines is based on the amount of authorized capital. Depending on the nature of the business and the percentage of foreign ownership there may be a minimum paid-in capital requirement.

Schedule of fees and charges for registration of a new corporation:N

Articles of Incorporation:

SEC fees for the registration of the articles of incorporation are calculated based on the amount of authorized capital. The minimum fees are based on an authorized capital of PHP 400,000.00.

1/5 of 1% of the authorized capital stock or the subscription price of the subscribed capital stock whichever is higher but not less than PHP 1,000.00 .

By-laws: PHP1,010.00

Legal Research Fee (LRF):

1% but not less than PHP10.00 on the Articles of Incorporation and By-laws fees

Application Under Foreign Investments Act (FIA):

PHP3,000.00 required for corporations which have more than 40% foreign ownership.

Stock and Transfer Book:

Purchase and registration PHP470.00


PHP 150.00 per document

Example Business Registration Cost Philippines:

A corporation with an authorized capital of PHP400,000 and more than 40% foreign ownership and one name reserved for 60 days.

Articles of IncorporationPHP 2,000.00
By-lawsPHP 1,010.00
Foreign Investment Act ApplicationPHP 3,000.00
Legal Research FeePHP 20.00
Stock & Transfer BookPHP 470.00
NotarialPHP 900.00
TotalPHP 7,400.00

Updated February 7, 2019

Software Development or Web Development Company Registration in the Philippines

software development company philippines

There are more than 500 software development companies in the Philippines according to the PSIA.  Their clients are from North America, Asia and Europe. These companies are expected to reach at least $1.16 billion in revenue by the end of 2013, which mainly comes from the outsourcing of software development, web development and IT operations.  Metro Manila and Cebu City are now in top ten list of outsourcing destinations.

To attract foreign companies to set up software development businesses, the Government of the Philippines has put in place fiscal, and non fiscal tax incentives. Companies can apply with the Board of Investments (BOI) or with the Philippine Economic Zone Authority (PEZA) to avail of tax holidays. To qualify for incentives certain capitalization or investments may be necessary.

Business Registration

When starting a business in the Philippines, you will need to look at the advantages and disadvantages of the various legal entities that can be registered with the SEC. We suggest one the following depending on your business model: Domestic Corporation, Branch Office, RHQ or ROHQ.

There are no restrictions on foreign ownership of outsourcing companies and BPOs as they fall under the category of export enterprises which must derive a minimum of 70% of their revenue from overseas and be paid in foreign currency.

Why Start a Software Development Company in the Philippines.

The main advantage of opening a software development company in the Philippines is the savings. The majority of the saving will be on labor costs. Salaries of developers in the Philippines can be as low as 25% of a similarly skilled programmer in Europe or North America. Another savings is the package given to your expat manager, the cost of living in the Philippines is one of the lowest in Asia.

DBC will assist you in choosing the legal entity which best suits your business model to register with the SEC, as well as advising you on compensation, payroll and bookkeeping.

Don’t want to setup your own company but still want to save on software development? Let us put you in touch with quality software development and web development companies.


Registration of Online Casino Gaming Gambling Sports Betting License Philippines

Philippines Online Casino License
Philippines Online Casino License

CEZA together with First Cagayan Leisure and Resort Corporation and North Cagayan Gaming & Amusement Corporation are no longer issuing licenses.


Foreign companies can obtain licenses in the Philippines to operate online gaming/e-gaming, online casino and sports betting businesses. A 100% foreign owned company can register and operate an online gaming business in the Philippines as a domestic corporation or by opening a branch office licensed by the SEC to transact business in the Philippines.

Officially, the only area where online gaming licenses are valid is the Cagayan Special Economic Zone (CEZA), but many operations are actually situated in Metro Manila due to the lack of the necessary infrastructure at the time the first licenses were awarded.

Incentives for CEZA Registered Enterprises:

•    4-6 years income tax holiday;
•    Special tax rate of 5% of gross income in lieu of all local and national taxes;
•    Tax credits for foreign corporations;
•    Tax and duty free importation of articles, raw materials, capital goods, equipment and consumer items;
•    Permanent resident status for foreign investors and immediate family (must maintain not less than USD150, 000 capital);
•    Other applicable incentives under Omnibus Investment Code of 1987:

o    Multiple entry visa, valid for a period of two years;
o    Tax treatment of merchandise in the Zone;
o    Tax credits;
o    Additional deduction for labor expense;
o    Exemption from local taxes and licenses;
o    Exemption from Contractor’s Tax;
o    Exemption from Wharfage Dues and any Export Tax, Duty, Impost and Fee on non-traditional export products

Full License (includes E-Casino and Sports Book)

New Application

The fees for a new application are USD40,000 (includes a non-refundable USD15,000 deposit payable upon submission of application) the balance of USD25,000 is to be paid upon issuance of the provisional of official license.

Gaming Levy: 2% of Gross Win/month from e-casino operations (on top of the special  CEZA tax rate) (Gross Win = Turnover – Player wins – Merchant Discount)

USD48,000 /annum for Sports book operations payable upon the issuance of the provisional or official license.

Annual Renewal Fees:

USD40,000 of which USD15,000 may be offset against the gaming levy payable each year.

Gaming Levy: 2% of Gross Win/month from e-casino operations (on top of the special CEZA tax rate) (Gross Win = Turnover – Player wins – Merchant Discount)

USD60,000 / annum for Sports book operations payable upon the issuance of the provisional or official license.

Restrictive Interactive Gaming License (Sports Betting):

New Application

The fee for a new application is USD26,000 upon submission of the application, of which USD18,000 is refundable if the application is unsuccessful.

USD2, 700 – Probity Cost per application chargeable to the applicant.
USD48,000 /annum – Restrictive Interactive Gaming Tax payable upon the issuance of the provisional license or official license.

Annual Renewal Fees for Restrictive Interactive Gaming License (Sports Betting):

USD15,000 – Renewal fee for Restrictive Interactive Gaming License payable upon submission of the documentary requirements necessary for renewal

USD60,000 /-annum – Restrictive Interactive Gaming Tax payable upon the renewal of the license.
Note: The fee for each additional Sporting Event is USD2,000 (per year)

Contact Dayanan Philippines Business Consultants for assistance with your application for registration of an online casino license.

Paid Up Capital Requirements for Philippines Business Registration

Business Registration Paid-up Capital Requirements

The amount of authorized capital, paid-in capital or inward remittance is determined either by the Corporation Code of the Philippines, the Foreign Investment Negative List, DTI, BSP or SEC regulations.

Depending on the nature of the business, and the amount of paid-up capital you may be required to open a Treasurer-in-Trust Fund (TITF) account to deposit the capital and obtain a bank certificate to certify that the funds are on deposit with a bank.

List of required minimum paid-up capital (not taking into account nature of business)

Majority Filipino Owned

Sole Proprietorship Filipino owned PHP 5,000 (TITF not required)
Partnership 60% Filipino owned PHP 100,000 *
Domestic Corporation 60% Filipino owned PHP 100,000 *

40% or More Foreign Owned

Sole Proprietorship Foreign owned USD 200,000 **
Partnership with more than 40% Foreign Ownership USD 200,000 **
Domestic Corporation with more than 40% Foreign Ownership USD 200,000 **
Representative Office USD 30,000
Branch Office USD 200,000 **
Regional Headquarters USD 50,000 annually
Regional Operating Headquarters USD 200,000

* Our recommendation
** Required of more than 40%  to 100% foreign owned business catering to the Philippines domestic market. Can be lowered to USD 100,000 under certain conditions:
1. Hiring a minimum of 50 employees
2. The use of new technology approved by the Department of Science and Technology.

Export enterprises and other businesses whose income is derived from overseas such as but not limited to BPOs and call centers can file for an exemption which will allow a minimum of PHP 100,000 paid-up capital.

Treasurer-in-Trust Fund 

Most banks will not allow the conversion of the Treasurer-in-Trust Fund to a corporate account until a license to transact business or a certificate of incorporation has been issued by the SEC.

To open a Treasurer-in-Trust Fund the bank will require depending on the entity being set up: the proposed articles of incorporation, partnership papers, sole proprietorship application and a board resolution for foreign companies.

The regulations always favor Filipino ownership. For 40% or more foreign ownership Foreigners are always required to maintain a higher paid-in capital.

Minimum Paid-up Capital Requirement

Based on industry:

Break Bulk Agent PHP 250,000
Cargo Consolidator PHP 400,000.00

Financing Company
– Metro Manila and other 1st class cities PHP 10,000,000
– Other classes of cities PHP 5,000,000
– Municipalities PHP 2,500,000.00

Freight Forwarders
– Domestic PHP 250,000
– International PHP 2,000,000.00

Health Maintenance Organization PHP 10,000,000.00

– Insurance Broker PHP 20,000,000
– Reinsurance Broker PHP 20,000,000
– Insurance Broker and Reinsurance Broker PHP 50,000,000
– Life Insurance Company PHP 1,000,000,000
– Non-Life Insurance Company PHP 1,000,000,000
– Reinsurance Company PHP 2,000,000,000

– Investment Adviser/Manager PHP 10,000,000.00
– Investment Company PHP 50,000,000
– Investment House PHP 300,000,000
Lending Investor PHP 1,000,000

Local Manpower Contracting and Subcontracting PHP 3,000,000

– Required Authorized Capital Stock (PHP 10,000,000.00 authorized) PHP 2,500,000 paid-up

Non-Vessel Operating Common Carrier PHP 4,000,000

Pawnshop PHP 100,000.00

Pre-Need Plan Issuer PHP 100,000,000

Pre-Need Plan Agent PHP 5,000,000

Real Estate Investment Trust ( REIT) PHP 300,000,000

 Recruitment – Domestic 
– Corporation PHP 1,000,000
– Partnership PHP 1,000,000

Recruitment for Overseas Employment PHP 5,000,000

Retail Trade with Foreign Equity US$ 2,500,000

School (for stock corporations)
– Pre-elementary/Elementary Education PHP 1,000,000
– Elementary & Secondary Education PHP 2,500,000
– Elementary, Secondary, Tertiary PHP 5,000,000
– Post/Graduate Education

Security Agency PHP 500,000

Securities Broker/Dealer
– (New/SRO-Member) PHP 100,000,000
– Securities Broker/Dealer
– (Existing/SRO-Member) PHP 30,000,000
– Securities Broker/Dealer in Proprietary Shares (Non-SRO-Member) PHP 5,000,000

Special Purpose Vehicle PHP 31,250,000

Special Purpose Vehicle Special Purpose Corporation PHP 5,000,000

Secondary Mortgage Institution (SMI) PHP  2,000,000,000

Servicer for special purpose corporation
*Required Authorized Capital Stock (PHP 10,000,000.00) 

Transfer Agent PHP 1,000,000

Back to Top

Setup Lending Investor

How to Open a Lending Investor in the Philippines

All you need to know on how to open, start and setup a lending investor in the Philippines (Lending Business or Loan Company)

Definition:  Lending Company shall refer to a corporation engaged in granting loans from its own capital funds or from funds sourced from not more than nineteen (19) persons. It shall not be deemed to include banking institutions, investment houses, savings and loan associations, financing companies, pawnshops, insurance companies, cooperatives and other credit institutions already regulated by law. The term shall be synonymous with lending investors.

Form of Organization

A lending company may only be established as a corporation. This excludes a sole proprietorship or a partnership from operating a lending business. No lending company shall conduct business unless granted an authority to operate by the SEC.

Corporate Name Requirement

The corporate name must include the words “Lending Company” or “Lending Investor” or any other word descriptive of its primary activity of granting loans to the public except words commonly used to identify financing companies shall always be included in the corporate and trade name.

Minimum Capital Requirement

The minimum required paid-in capital is One Million Pesos (PHP1,000,000.00) for the head office. Additional capital is required for each branch, extension, satellite office or unit established, the excess of the required minimum paid-up capital may be applied to the additional capital requirement as follows:

PHP300,000.00 : Metro Manila and other first class cities;

PHP150,000.00 : Second class and other cities;

PHP 75,000.00 : Municipalities.

Foreign Ownership of a Lending Investor

100% foreign ownership of a lending investor is allowed. No foreign national may be allowed to own stock unless the country of which he is a national accords reciprocal rights to Filipinos. More than 40% foreign ownership requires a minimum paid-in capital of US$ Two Hundred Thousand (USD200,000.00) .

Size of Loan and Interest

A lending 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 lending company shall furnish each debtor a disclosure statement, setting forth, to the extent applicable, the following information:

i. The principal amount of loan;
ii. Rate of interest of the loan;
iii. Service or processing fee, if any;
iv. Amortization schedule;
v. Any penalty charge for late amortization payment;

Requirements for Securing an Authority to Operate a Lending Investor from the SEC

i. Information Sheet;

ii. NBI clearance of Filipino directors/officers;

iii. Foreign directors/officers, shall submit a clearance from the Bureau of Immigration (BI), a photocopy of his passport showing a valid visa or stay in the Philippines, ACR i-card, and a work permit issued by the Department of Labor and Employment;

iv. President’s Sworn Statement and Undertaking that the corporation will not accept or solicit investments, other than loans, from more than 19 persons without SEC approval, and upon presentation of valid claims, it shall immediately indemnify or return the investments of persons from said unauthorized public solicitation of funds; Moreover, the sworn statement shall likewise contain an undertaking that the country or state of the foreign applicant allows Filipino citizens and corporations to do lending business therein.

v. Business plan including method of marketing its product and sources of the funds and maturities of credit; and

vi.Statement of its compliance with Rule 17.1(2)(A)(i) and (ii) of the Amended Implementing Rules and Regulations of the Securities Regulation Code.

Branches, Extension or Satellites Offices or Units

i. Loan transactions shall be booked in the authorized offices of the lending company;

ii. No lending company shall establish or operate a branch, extension office or unit or satellite office without prior approval by the SEC. The following documents shall be submitted for the opening of a branch office:

1) Information Sheet on the proposed branch;

2) NBI clearance of the manager, cashier and administrative officer of the proposed branch;

iii. The Certificate of Authority to operate a branch, extension office, unit or satellite office shall be coterminous with that of the Head Office.

SEC Licensing Fees (for secondary license):

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

1) Head Office –

A fee of 1/10 of 1% of the paid-up capital of the lending company shall be paid for the issuance of a Certificate of Authority to Operate as a Lending Company.

2) Branch, extension office, unit or satellite office

A fee of 1/10 of 1% of the assigned capital of the branch, extension office, unit or satellite office shall likewise be paid for the issuance of an original Certificate of Authority.

ii. 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 – 1/8 of 1% of the required paid-up capital

2) Branch Office – 1/8 of 1% of the required paid-up capital

Commencement of Operations

A corporation/company that has been duly registered and granted a Certificate of Authority to Operate as a Lending 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.

Usage of Funds

Lending Companies shall use at least 51% of their funds for direct lending purposes.

The total investment of a lending 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%) percent of its net worth.

Maintenance of Books of Accounts and Records

(a) Every lending company shall maintain books of accounts and records as may be required by the SEC and prescribed by the Bureau of Internal Revenue and other government agencies. In case a lending company engages in other businesses, it shall maintain separate books of accounts for these businesses.

(b) The Manual of Accounts prescribed by the BSP for lending investors shall continue to be adopted by lending companies for uniform recording and reporting of their operations, until a new Manual of Accounts shall have been prescribed by the SEC.

Reportorial Requirements

General Information Sheet (GIS) – Within thirty (30) days from annual meeting, as stated in its SEC approved bylaws

Audited Financial Statements prepared by an external auditor accredited by the SEC – Within One Hundred Twenty (120) days from end of fiscal year, as stated in its SEC approved bylaws

Special Forms for Financial Statements in Electronic Format – Within thirty (30) days from the last day of submission of the annual Audited Financial Statements

Interim semi-annual financial statements (using Special Form) including the following:
• Balance Sheet;
• Income and Expense statement;
• Cash flow
• Statement of Changes in Equity
• Schedule of Liabilities
• List of Directors and Officers
• Aging of Receivables

– Within forty-five (45) calendar days from the end of the interim semi-annual period covered by the report.

Manual on Anti-Money Laundering
• If foreign participation in voting stocks is more than 40%; or
• If total assets is PHP10M or more


Republic Act No. 9474 “Lending Company Regulation Act of 2007”
Republic Act No. 10881 “An Act Amending Investment Restrictions In Specific Laws Governing Adjustment Companies, Lending Companies, Financing Companies And Investment Houses Cited In The Foreign Investment Negative List And For Other Purposes.”
SEC Reduced Requirements for Financing and Lending Companies

Implementing Rules and Regulations of Lending Company Regulation Act of 2007 (Republic Act of 2007)

SEC Memo No. 3, Series of 2013

Tax Identification Number for Foreign Investors

Tax Identification Number for Foreign InvestorsForeign corporations and individuals whether resident or non-resident, who have opened/invested in a domestic corporation, branch office, representative office or any other legal entity licensed to transact business in the Philippines are now required to obtain a Tax Identification Number (TIN) from the Bureau of Internal Revenue (BIR).

SEC Filings

All documents to be filed with the SEC by corporations and partnerships after their incorporation (i.e. General Information Sheets, application for amendments) will not be accepted by the SEC unless the TIN of all its foreign investors natural or judicial, resident or non resident are indicated therein no matter their percentage of foreign ownership.

Foreigners are not required to obtain a TIN for incorporation but must instead indicate their nationality, passport number and date of issue in the registration documents (i.e Articles of Incorporation, etc…).

These new rules are to be found in Memorandum Circular No. 1, Series of 2013, issued by the Securities and Exchange Commission (SEC) which requires the mandatory inclusion of the Tax Identification Number (TIN) of foreign investors in all forms, papers and documents filed with the SEC.

The above memo was issued to comply with Revenue Regulation 7-2012 dated April 2, 2012, known as the “Amended Consolidated Revenue Regulations on Primary Registration, Updates and Cancellation”, which provides –

“Section 4(I)(V)– Non-resident Aliens Not engaged in Trade or Business (NRANETB) or Non-Resident Foreign Corporations (NRFC) shall be issued TIN’s for purposes of whithholding Taxes on their income from sources in the Philippines. The withholding Agent shall apply for the TIN in behalf of the NRANETB or NRFC prior to or at the time of the filing of thier monthly withholding tax return”

and in relation to E.O. 98, Series of 1998 signed by President Joseph Ejercito Estrada directing all persons whether natural or juridical having dealings with any government agencies and instrumentalities, including Government owned and/or Controlled Corporations (GOCCS), and all Local Government Units (LGUs) to include their TIN in all forms, permits, licenses, clearances, official papers and documents which they secure from these government agencies, instrumentalities, including GOCCs and LGUs by corporations/partnerships with foreign investors.

This is part of the government campaign to enforce tax compliance of foreign investors in the Philippines.