We recommend either setting up and registering a branch office or a corporation rather than a partnership or a sole proprietorship. A corporation limits the liability of the shareholders and therefore offers more protection in case of litigation.
A branch office of a foreign corporation requires many documents from the home country which must be in English and authenticated by the Philippines Embassy in the country of origin. These documents must be submitted to the SEC with an application form for a license to transact business.
A sole proprietorship must be registered with the Department of Trade and Industry (DTI). It can only be foreign owned, if the business that it will operate is allowed to be 100% foreign owned as per the negative list A and B. Another requirement for foreign ownership is a minimum capitalization of USD200,000. The disadvantage is the full liability of its owner.
Reservation of Business Name
No matter what vehicle you will use to start your business in the Philippines the first step is the reservation of the business name with the SEC or DTI. Even though the SEC will issue a certificate of reservation for your chosen name you will still need to prepare an affidavit of undertaking to change name in the event that another entity has prior right to its use by registration with other government agencies.
Once the your desired name has been reserved the next step is to prepare the articles of incorporation or partnership and bylaws for domestic companies and for foreign owned companies you will need to obtain copies of all documents that show proof of existence in the host country as well as audited financial statements in English and authenticated by the Philippines embassy of the country of origin.
Proof of paid-in capital or inward remittance is needed. A treasurer in trust account or a non-resident account must be opened in a bank located in the Philippines who will issue a bank certificate certifying the amount of funds which have been deposited.
With all the above you are now ready to submit your application for a business license with the Philippines SEC.
Though the corporation code of the Philippines allows a minimal capitalization of PHP5,000 we highly recommend that you start with a at least PHP100,000 or higher. A low paid-in capital will hinder your applications for bank loans or obtaining credit from potential suppliers. Certain kinds of businesses may require a higher paid-in capital than others.
Contact DBC now for a free consultation on how to open your company in the Philippines and all other Philippines business registration requirements.