business registration

Pros and Cons of Starting Foreign Companies in the Philippines

Infographic summarizing the Pros and Cons for foreign companies in the Philippines

Like it or not, today’s business landscape is incredibly competitive and will continue to be so. It’s no wonder that companies scramble to build, maintain, and expand their edge over competitors. To get that proverbial edge, the savviest of entrepreneurs are exploring strategies that they have never pursued before.

Among these strategies is establishing businesses overseas. After all, one can make money anywhere in the world. In recent years, the Philippines has become a favored destination for aspiring moguls and tycoons. Opening foreign companies in the Philippines allows them to be successful even outside of their home countries.

Any businessman worth his salt would do his research before investing his hard-earned money in another country. After all, doing business in the Philippines is not for the faint-hearted. If you have ever thought of branching out abroad, you must be aware of the benefits and risks of doing so. To guide you, here is a short list of the pros and cons of starting your own business in the Philippines as a foreigner:

Pros:

Cons:

Pros of Starting Foreign Companies in the Philippines

A Large Market

With a population of over 100 million, the Philippines offers numerous opportunities for any enterprising businessman to sell his products and services. Filipinos have an affinity for Western culture and are famously consumer-driven. Foreigners would have an easier time adjusting here compared to other Southeast Asian countries like Thailand and Indonesia.

Despite the great income disparity between population sectors, a smart entrepreneur can profit by honing in on and marketing to specific segments. In addition, locating your business in the Philippines allows you to take advantage of the greater ASEAN and Asia-Pacific markets.

Low-Cost, Talented Labor

Naturally hardworking, Filipinos are the dream employees of every company. Each year, the country’s universities and colleges add thousands of graduates to an already large labor pool. This has been – and still is – a boon to the business process outsourcing (BPO) sector, with the average Filipino’s good command of the English language and excellent communication skills.

Salaries in the country are also much lower compared to North America and European countries. With the exchange rate hovering at around PhP 50 to USD 1, foreign companies in the Philippines definitely get more bang for their (payroll) buck.

Good-Enough Infrastructure

Despite being an archipelagic country, the main islands of the Philippines are surprisingly well-connected to each other and the outside world. Large cargo shipments mostly utilize the seaports, while smaller ones go through the various airports dotting the major cities.

Within the greater metropolitan Manila area, the key business hubs are Makati City, Bonifacio Global City (BGC), and Ortigas Center. Rivaling the likes of Hong Kong and Singapore, these places boast of state-of-the-art, eco-friendly communities that bring residents and businesses together.

While there remains a lot to be done to improve the country’s infrastructure, President Rodrigo Duterte has recently initiated the “Build, Build, Build” program to fast track major infrastructure projects that would benefit both local and foreign companies in the Philippines.

Incentives from the Government

The Philippine government, through the Board of Investments (BOI) and Philippine Economic Zone Authority (PEZA), provides several incentives to attract foreign investments, especially into priority areas and industries marked for development.

Fiscal incentives include income tax holidays, tax exemptions and deductions, and preferential rates on the final tax of gross income (for PEZA-registered companies). Among the non-tax incentives are simplification of customs procedures for imported products, issuance of resident visas to foreign investors and their families, and the privilege to operate a bonded trading or manufacturing warehouse.

If it’s your first time to open an foreign-owned company in the Philippines, don’t forget to avail of these goodies!

Cons of Starting Foreign Companies in the Philippines

More Holidays in the Philippines

The Philippines has 18 official non-working holidays. Many of these are of great cultural significance, such as Christmas, New Year, the Christian Holy Week, and All Souls’ Day.

On the other hand, these holidays provide a ready-made, annually-occurring boon to consumer-oriented businesses. Marketing your products and services could not become any easier, with the extended Christmas season in the Philippines that unofficially starts in September and ends in February.

The Law Favors the Laborer

Most of the labor laws in the Philippines are geared to favor employees over management. For example, companies cannot simply fire underperforming employees at will. Before fully terminating someone, the employer has to prove first that the staff member concerned was at fault or failed to pass the standards of his/her probationary period. Companies are also mandated by Philippine law to provide severance pay and 13th-month pay.

These conditions may seem unfair to some, but overall such laws have contributed to higher morale and a lower turnover rate among Filipino employees compared to their foreign counterparts. That is something any smart businessman would appreciate.

Heavy Traffic

Sad to say, the Philippines lacks any kind of efficient mass transportation system. According to the Asian Development Bank, Metro Manila tops the list of 278 most congested cities in developing Asia. The sheer volume of public utility buses, jeepneys, and private vehicles on its roads during work hours leads to slow-moving traffic at best and outright gridlock at worst.

The good news is that various skyways and expressways, as well as a new train line in the northern part of Metro Manila, are being built to ease the traffic situation. It may take some time, but things are bound to get better.

Despite the government-provided incentives mentioned above, some foreign businessmen still hesitate to shortlist the Philippines as an investment destination because of the restriction on foreign ownership of land. They may, however, own 40 percent of a corporation that owns land. Most businesses are allowed to be 100% foreign-owned. The Foreign Investment Negative List contains the limitations of foreign ownership mandated by the constitution and specific laws.

It must be noted that 100% foreign ownership of a company catering to the Philippine local market is allowed, subject to having a minimum paid-in capital of USD 200,000.00. An exemption may be obtained for foreign companies in the Philippines that employ a minimum of 50 direct employees or use advanced technology, for a minimum paid-in capital of USD 100,000.00.

Need Help with Starting Your New Business?

You may be discouraged by some of the cons we enumerated, but don’t be. The Philippines has been one of the fastest-growing economies in Asia, and it will continue to expand in the coming years. With its friendly people and climate, you have even more incentives to build your dream business here.

If you don’t know where (and how) to start, we at DAYANAN Business Consultancy are here to help. 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.

Startup Founders Business Registration Questions Part 2

founders vesting share holders agreementShould startup founders sign a shareholders agreement (SHA)?

Yes, startup founders should sign a shareholders agreement which should include most of the following items. The shareholders agreement should be written in clear language, definitions of words should be included to avoid ambiguities and disagreements among the founders, during the life of the company.

 

  1. Capital – this section states the authorized, subscribed and paid-in capital, par-value and founder share allocations.
  2. Non-compete – during and for a period of time following termination of employment in the company, the resigned/terminated founder will not engage in any way with any business that provides services or products similar/competitive being produced or under development by the company.
  3. Vesting – Shares in startups are usually allocated upfront to founders at incorporation for a nominal value. Vesting prevents a co-founder who decides to leave or did not contribute what was expected of him from leaving a startup at an early stage with a large block of shares. When a co-founder leaves the startup for whatever reason, the startup buys back the unvested shares for a nominal value as agreed upon in the SHA.

Most founder’s shares vest over a 4 year period with a one year cliff. The SHA may also include milestones where shares may also vest.

Single or double triggers clauses may also be included for accelerated vesting of part or all of unvested shares.  A single trigger could be the acquisition or a change of control of the company.

A one year cliff means, no shares vest until the founder has been with the startup for a year after which shares vest monthly.

  1. Intellectual Property – assignment of IP (existing IP) & Invention Assignment Agreement (for IP developed while working for the company), can be in a separate agreement.
  2. Funding by founders – how will the funds be treated, loan, capital etc….
  3. Founder Roles – description of each founders main tasks and responsibilities in the company.
  4. Dispute Resolution – how will disputes be resolved, arbitration, governing law.
  5. Company Management – management of the business and affairs of the company.
  6. Limitations of Transferability Rights of Shares

a. Pre-emptive: when a corporation issues new shares of stock, every shareholder has the right to purchase a portion of the issue, in proportion to their respective shareholdings in the corporation, unless the articles of incorporation provide otherwise.

b. Tag-along: when the majority shareholders sell their holdings to a third party Tag-along rights allow the minority shareholders to sell if they so desire their shares at the same price, terms, and conditions as the majority shareholders to the third party.

c. Drag-along: this is a clause that forces the minority shareholders to sell their shares to a third party should the majority shareholders sell their holdings at the same price, terms and conditions.

d. First-refusal: gives the other shareholders or the company the right but not the obligation to purchase shares that an existing shareholder proposes to sell to a third party at the same terms and conditions.

Drag-along and Tag-along rights generally terminate on public offering.

Some of the clauses of the SHA must also be included in the articles of incorporation and by-laws.

Corporation Code of the Philippines:

Section 98. Validity of restrictions on transfer of shares. – Restrictions on the right to transfer shares must appear in the articles of incorporation and in the by-laws as well as in the certificate of stock; otherwise, the same shall not be binding on any purchaser thereof in good faith. Said restrictions shall not be more onerous than granting the existing stockholders or the corporation the option to purchase the shares of the transferring stockholder with such reasonable terms, conditions or period stated therein. If upon the expiration of said period, the existing stockholders or the corporation fails to exercise the option to purchase, the transferring stockholder may sell his shares to any third person.

Section 100. Agreements by stockholders. –

  1. Agreements by and among stockholders executed before the formation and organization of a close corporation, signed by all stockholders, shall survive the incorporation of such corporation and shall continue to be valid and binding between and among such stockholders, if such be their intent, to the extent that such agreements are not inconsistent with the articles of incorporation, irrespective of where the provisions of such agreements are contained, except those required by this Title to be embodied in said articles of incorporation. (extract)

This is an overview of shareholder agreements between startup founders before business registration with the Philippines SEC, many other items may be included in a SHA that will allow a startup to grow while minimizing disputes between founders.

Dayanan Philippines Business Consultants answers startup founders business registration questions. Contact us now for a consultation.

Startup Founders Business Registration Questions Part 1

Philippines Startup Corporation Share Certificate
Startup Corporation Share Certificate

The most common questions from startup founders before business registration with the Philippines SEC are:

  1. How do I keep control of my company, while still issuing shares to investors?
  2. How many shares should my company have?

Example Incorporation

A corporation was registered with an authorized capital of PHP One Hundred Thousand (100,000) divided into Ten Million (10,000,000) shares with a par value of One Centavo (PHP0.01) each.

For those of you, who think that the above is written in a foreign language, at the bottom of this article are the definitions of some financial terms that a startup CEO must know.

Philippine law (The Corporation Code of the Philippines) requires at incorporation that at least twenty five percent (25%) of the authorized capital stock of the corporation has been subscribed and at least twenty five (25%) of the subscribed has been paid.

Stockholders who only paid-in the 25% of 25% of their subscription will owe the corporation the remaining 75%. Best to have the all subscribed shares fully paid before selling unissued shares to investors.

How many shares to Founders?

Founders may allocate to themselves from 50% to 70% of the authorized capital leaving the remaining capital stock for investors and employee stock options.

E.g. Founders will subscribe to 5,000,000 shares with par value of PHP0.01 each or PHP50,000.00. This equals 50% of the authorized capital and 100% of the outstanding capital stock.

The Startup takes an Investor

Now what happens, when the company sells shares to an investor?

Let’s say an angel investor wants to invest PHP5,000,000 for 5% of the company.

We find ourselves with:

  1. Founders owning 95% of the company with 5,000,000 shares who invested PHP50,000
  2. Angel Investor owning 5 % of the company with 263,157 shares who invested PHP5,000,000.

The Pre-Money Valuation was PHP50,000 and  we now  have a Post-Money Valuation of PHP5,050,000 with 5,263,157 outstanding shares.

The shares issued to the angel investor are from the unissued capital stock, the investment will form part of the corporation’s capital.

The corporation now has a valuation of PHP5,050,000 or PHP0.96 per share, quite an increase from the PHP0.01.

Did the par-value increase?

No, the par-value per share has not changed. The par-value only changes if amended in the corporation’s Articles of Incorporation.

The corporation now has a paid-up capital of PHP5,050,000 composed of 5,263,157 shares with a par-value of PHP0.01 each. The increase in the valuation represents additional paid-up capital.

The startup still has 4,736,843 shares to offer future investors.

Documentary Stamp Tax (DST) must be paid to the BIR on all shares of stock issued by the corporation. The DST is calculated on the par-value of the shares and not on the price paid by the investors.

Definitions of terms to understand a corporation’s articles of incorporation:

  1. Par Value
    The par value of a share of stock is the minimum value that a corporation may sell a share of its stock.
  2. Authorized Capital
    The authorized capital is the maximum number of shares of stock that a company can issue with a specified par value. The authorized capital may be increased with the approval of at least two thirds of the shareholders.
  3. Subscribed Capital

The subscribed capital are the shares of stock that people or legal entities have promised to purchase from a corporation.

  1. Paid-in Capital

The paid-in capital (paid-up capital) is the actual amount of money stockholders have paid on the shares of capital stock for which they have subscribed.

  1. Outstanding Capital
    The outstanding capital means the total shares of stock issued under binding subscription agreements to subscribers or stockholders, whether or not fully or partially paid, except treasury shares.

Other terms:

Pre-Money: The pre-money valuation refers to the company’s valuation before the investment.

Post-Money: Post-money valuation is the value of a company after an investment has been made. This value is equal to the sum of the pre-money valuation and the amount of new equity.

Do you have questions about Startup Founders Business Registration? Post them on our face book page and we will answer them in part 2 of this article. Dayanan Business Consultancy Facebook

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.

 

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.

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

Notarization:

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

Doing Business in the Philippines

Philippines Business Registration
Ayala Avenue Makati City Central Business District

Dayanan Business Consultancy assists individuals and foreign companies of all sizes in setting up their business operations in the Philippines. Doing business in the Philippines has many advantages as well as a large amount red tape.

Once we know your goals and the kind of business you want to launch in the Philippines,  DBC will recommend the best structure for your KPO, Call Center, IT or Web Development Outsourcing, Back Office Operation or Import and Export. DBC will advise you how to register your investment with PEZA or BOI to obtain tax incentives.

Get the Leading Business Process Outsourcing in the Philippines

We will also ensure that you will get the best Business Process Outsourcing in the Philippines. BPO is a cost-saving measure which is a method of subcontracting business-operations to a third party. One category of BPO is outsourcing of back office services, and Dayanan can help you starting from your business registration in the country.

DBC’s knowledge of the Philippine’s business environment and government agencies allows DBC’s clients to reach their objectives quickly. Personalized service is our commitment, whether your intention is to establish a:

Once the SEC has issued your License to Transact or Certificate of Incorporation, DBC will still be there to help get local business permits and licenses and register with other government agencies when necessary.

Other services DBC provides Business Development and Marketing, Business Plans, Visa Processing, Bookkeeping and Payroll.

Your Business Registration in the Philippines will be done quickly and professionally through Dayanan Business Consulting services.

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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
– 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
– 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

Mining
– 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

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