- Foreign Direct Investment in Philippine
- Doing business in Philippine,
- Company Formation process in Philippine is easier but need to follow some rules and laws of the country especially in case of foreign investor.
Foreign Company Registration in Philippine is possible (100% Foreign Investment, Joint Venture, Virtual/ Branch/ Liason Office, Foundation), let’s see how they are doing business in Philippine and generate revenue.
There is many opportunity of investment in different sectors. All government gives priority to foreign investment to start business in Philippine.
Company Registration/ Formation/ incorporation in Philippine, FDI in Philippine,
S & F Consulting Firm Limited, Email: firstname.lastname@example.org, Skype: forhadhossain79
Company Formation / Registration in Philippines
There are several types of registering businesses in the Philippines as provided below.
• 100% Foreign Owned Domestic corporation
• 100% Philippine Local Corporation (100% Filipino owned)
• 60/40 Owned Domestic Corporation (60% Filipino owned and 40% Foreign Owned)
• Foreign Branch
• Regional Headquarters
• Regional Operating Area Headquarters
• Representative Office
• Sole Proprietorship
Foreign investors usually start and do business in the Philippines through a Domestic corporation or a Branch. Using either entity has its advantages and disadvantages. Corporations are more favorable in terms of administrative regulation. Branches, which may be more advantageous tax, cannot be used if the activities to be undertaken are included in the Foreign Investment Negative list. Corporations on the other hand, can accommodate the necessary Philippine ownership.
Forming or registering a corporation requires a minimum of 5 incorporators, each of whom must be actual persons and hold at least a single share in the company. Majority of the incorporators must be Filipino. A Corporation must have between 5 and 15 directors (or trustees if a non-stock corporation), each of whom must have at least one share of stock. A majority of the directors (or trustees) must be Philippine residents. All Domestic Corporations (those incorporated in the Philippines) obtain their license from and are registered with the Securities and Exchange Commission. The SEC will require a prospective Corporation to reserve and register a name, submit proposed Articles of Incorporation and By-Laws which are complaint with the requirements of the Corporation Code of the Philippines, and prove that it has the minimum capitalization requirements pertaining to the industry or business the corporation is engaged in. Under the Foreign Investment Act , the minimum paid-up capital requirement for a corporation considered a Domestic Market Enterprise (DME) or one where the foreign equity exceeds 40% is US$200,000, which must be remitted into the Philippines. The registration requirements do not apply to DMEs that are export-oriented or involve advance technology and will employ at least 50 employees.
A Branch of a Foreign Corporation doing business in the Philippines must obtain a license to do so from the SEC upon registration. The foreign corporation’s head office must prove its legal existence in its country of origin, its financial soundness, and its authorization to set up a branch in the Philippines. The Branch will need to appoint a resident agent in the Philippines who will be in charge of receiving summons and legal processes. This allows the SEC and other entities to obtain jurisdiction over the foreign company.
Starting and setting up a branch normally involves remitting US$200,000 as capital investment when registering a company with the SEC in the Philippines. Branches engaged in activities involving advance technology, or that employ at least 50 direct employees, are required to inwardly remit a reduced amount of US$100,000 as assigned capital. Export-oriented branches are not subject to minimum assigned capitalization requirements. Special rules apply for certain types of branch operations. It is advisable for companies to register their remittance with Central Bank of the Philippines or Bangko Sentral ng Pilipinas and obtain a BSRD .
The failure of a foreign corporation to obtain a license to do business will prevent the entity from filing suit in the Philippine courts. The issuance of a certificate of incorporation from the SEC signifies the commencement of corporate existence and juridical personality for a company.
Before commencing operations in the Philippines, businesses must also register with the Bureau of Internal Revenue (BIR), the Social Security System (SSS), the Home Development Mutual Fund (HDMF), the Philippine Health Insurance Corporation (Phil-Health) , and the local government unit where its principal office will be located.
Branch Office registration in Philippines
When registering a Branch Office in the Philippines the foreign corporation’s head office must prove its legal existence in its country of origin, its financial soundness, and its authorization to set up a branch in the Philippines. The Branch will need to appoint a Resident Agent in the Philippines who will be in charge of receiving summons and legal processes. This allows the SEC and other entities to obtain jurisdiction over the foreign company.
Starting and setting up a branch office normally involves remitting US$200,000 as capital investment when registering a company with the SEC in the Philippines. Branches engaged in activities involving advance technology, or that employ at least 50 direct employees, are required to inwardly remit a reduced amount of US$100,000 as assigned capital. Export-oriented branches are not subject to minimum assigned capitalization requirements. Special rules apply for certain types of branch operations.
If the Branch office will be exporting physical goods or services or generating revenue from abroad amounting to more than 60% of its gross sales the branch office can be fully foreign owned, as it is considered an Export Enterprise under the Foreign Investments Act. You can register a branch office in the Philippines with as little as P5,000 paid up capital. However, most banks require P25,000 – P50,000 to open a corporate bank account.
Most BPOs, call centers, contact centers, web development and other companies involved in outsourcing operations in the Philippines generally either register a Branch Office or domestic corporation.
Branch Office Registration Requirements in Philippines
1. Form F-103 (Application for Establishment of a Branch Office)
2. Name verification slip (may be secured online)
3. Authenticated copy of the Board Resolution authorizing the establishment of a branch office in the Philippines; designating the resident agent to whom summons and other legal processes may be served to the foreign corporation; and stipulating that in the absence of such agent or upon cessation of its operations in the Philippines, any summons or legal processes may be served to the SEC as if the same is made upon the corporation at its home office.
4. Financial statements as of a date not exceeding one year immediately prior to the application, certified by an independent Certified Public Accountant of the home country and authenticated before the Philippine Consulate/Embassy.
5. Authenticated copies of the Articles of Incorporation
6. Proof of Inward Remittance such as a bank certificate
7. Registration Data Sheet
8. Resident Agent’s acceptance of appointment
A Representative Office is foreign corporation organized and existing under foreign laws. It does not derive income from the host country and is fully subsidized by its head office. It deals directly with clients of the parent company as it undertakes such activities as information dissemination, acts as a communication center and promotes company products, as well as quality control of products for export. It is required to have a minimum inward remittance in the amount of US$30,000.00 to cover its operating expenses and must be registered with SEC.
Regional Headquarters/ Regional Operating Headquarters
Under RA 8756, any multinational company may establish an RHQ or ROHQ as long as they are existing under laws other than the Philippines, with branches, affiliates and subsidiaries in the Asia Pacific Region and other foreign markets.
Regional Headquarters (RHQS)
1. An RHQ undertakes activities that shall be limited to acting as supervisory, communication and coordinating center for its subsidiaries, affiliates and branches in the Asia-Pacific region.
2. It acts as an administrative branch of a multinational company engaged in international trade.
3. It does not derive income from sources within the Philippines and does not participate in any manner in the management of any subsidiary or branch office it might have in the Philippines.
4. Required inward remittance of US$50,000.00 annually to cover operating expenses.
Regional Operating Headquarters (ROHQs)
1. An ROHQ performs the following qualifying services to its affiliates, subsidiaries, and branches in the Philippines.
– General administration and planning
– Business planning and coordination
– Sourcing/procurement of raw materials components
– Corporate finance advisory services
– Marketing Control and sales promotion
– Training and personnel management
– Logistic services
– Research and development services and product development
– Technical support and communications
– Business development
2. Derives income in the Philippines
3. Required capital: US$200,000.00 one-time remittance