Philippines

3 Chapter Establishment

    • Different Kinds of Organization in the Philippines

       Any person who wants to do business in the Philippines can opt for any of the following kinds of organization:

      Kind of Business Organization

      Advantage(s)

      Disadvantage(s)

      1.     Sole Proprietorship

      is a business structure owned by an individual who has full control/authority of its own and owns all the assets. It must apply for a Business Name and be registered with the Department of Trade and Industry (DTI).

       

      1. Ease of  Formation

      -No need to incorporate.

       After registration with the DTI, a sole proprietor can already proceed with the usual business registration at the Mayor’s Office, Bureau of Internal Revenue and other applicable agencies.

       

      2. Ease of compliance with requirements

      -Has less requirements than that of a corporation

       

      1.         Sole proprietor personally owes and answers all liabilities or suffers all losses but enjoys all the profits to the exclusion of others.

       

      2.     Partnership

      is a contract by which  two or more persons bind themselves to contribute money, property, industry or all of these, to a common fund, with the intention of dividing the profits among themselves.

      1. Separate Juridical Personality from the Partners

      - Unless the partners sign or act in their personal capacity, they will incur no liability

       

      2. There is no time limit for the existence of the partnership as this depends on the agreement of the parties.

      1. May be dissolved once a partner dies

       

      3.     Corporation

      is an artificial being created by operation of law, having the right of succession and the powers, attributes and properties expressly authorized by law or incident to its existence.  

      1. Separate Juridical Personality from Stockholders, Directors and Officers

      - Generally, the Stockholders, Directors and Officers incur only liability limited to the amount of their share capital.

       

      -Can acquire properties and assets under its name

       

      1.     Needs to comply with requirements for registration under the SEC

      2.     Needs to comply with minimum paid up capital requirements depending on industry or nature of business

       

      A foreign individual or a foreign corporation who wants to do business in the Philippines may do so using any of the following business organizations:

       

        1. Branch Office

      A branch office is a foreign corporation organized and existing under foreign laws that carries out business activities of the head office and derives income from the host country. It is required to put up a minimum paid up capital of US $200,000.00.

       

       2. Representative Office

      A representative office is foreign corporation organized and existing under foreign laws. It does not derive in come 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 an initial minimum inward remittance in the amount of US$30,000.00 to cover its operating expenses and must be registered with SEC.

       

      3.  Regional Headquarters (RHQs)

      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. It acts as an administrative branch of a multinational company engaged in international trade. 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. 

       Required capital: US$ 50,000.00 annually to cover operating expenses. 

       

      4. Regional Operating Headquarters (ROHQs)

      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 advisor 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

      • Derives income in the Philippines

       

      • Required capital: US$200,000.00 onetime remittance

       
       

    • The Securities and Exchange Commission (SEC)

       The Philippine Securities and Exchange Commission (SEC) was created on October 26, 1936 by the Philippine Congress through Commonwealth Act No. 83. The SEC implements Philippine laws on investment and corporations. As  the primary regulatory body that oversees business organizations in the Philippines it has the following core functions:
       
      1. Capital Market Development and Regulation
      - It is responsible for developing the registration criteria for all market participants and in ensuring compliance with registration requirements
       
      2. Company Registration
      - It is responsible for registration of domestic corporations and partnerships, as well as foreign entities doing business in the Philippines under the Foreign Investment Acts of 1991 and multinational companies establishing regional headquarters in the Philippines
       
      3. Enforcement
      - It is responsible for ensuring compliance of all market participants, issuers and individuals with Philippine regulations and governing legislation, and taking appropriate action against all violators of the Code and other relevant laws, rules and regulations implemented by the Commission
       
      4. Support Services
      - Administrative support functions for the SEC

    • Minimum Requirements and Procedure

       

      Kind of business organization

      Requirements

      Procedure

       

      1.               Sole Proprietorship

       

       

      A.    FOR FILIPINO CITIZEN

      1.     Must be a Filipino citizen who is at least 18 years old

       

      2.     Filipinos whose names are suggestive of alien nationality must submit proof of citizenship such as birth certificate, PRC ID, voter’s ID, passport

       

            If the applicant has a foreign sounding name, acquired Filipino citizenship by naturalization, election, or by other means provided by law, he must submit proof of his Filipino citizenship such as:

       

      ·         Naturalization certificate and Oath of Allegiance,

      ·         Affidavit of election or ID card issued by the Bureau of Immigration and Deportation, or

      ·         Valid ID card issued by the Integrated Bar of the Philippines (IBP) or Professional

      ·         Regulatory Commission (PRC)

      ·         Processing fee of P150.00 + P15.00 Documentary Stamp

       

      B.    FOR FOREIGN INVESTOR

       

      1.     Photocopy of Alien Certificate of Registration (ACR) updated the current year. Present original for comparison.

       

      2.     Accomplished DTI Form No.17 under R.A. 7042.

       

      3.     Current written appointment of Filipino Resident Agent.

       

      4.     Clearance from other involved agencies such as Department of Science and Technology (DOST), PNP etc.

       

      5.     In case of alien retailer, current year’s permit to engage in retail business per R.A. 1180.

       

      .

       

       

      You may apply directly with the DTI office where your business will be located or through the online facility, Web-Enabled Business Name Registration System (WEBNRS) – http://www.bnrs.dti.gov.ph.

       

       

      1. CHOOSE A BUSINESS NAME

      We suggest you think of at least three business names in case your first preference cannot be registered.

       

      If the name you have chosen is already similar or confusingly similar to a registered business name, your next preferred business name will be considered.

       

      2. SEARCH FOR A BUSINESS NAME

      An online search facility is provided in the WEBNRS for you to find registered business names in the Philippines. The search facility should not be used to determine the availability of a business name for registration.  This can only be determined at the time of lodgment of an application to register a business name.

       

      There are 2 search criteria available for the public, Begins With and Contains. You can conduct a search by typing the exact business name or a few words contained in a business name.

       

      3. REGISTER YOUR BUSINESS NAME

       

      Complete BTRCP Form No. 16. Information marked with an asterisk (*) is a required field to be filled out. Otherwise, you will receive an error message prompting you to fill them before the succeeding page is displayed.

       

      4. SUBMIT DOCUMENTARY REQUIREMENTS

      The list of documentary requirements to be submitted to the proper DTI Office where your business is located is indicated in the Transaction Reference Number (TRN) Acknowledgement found in the last page of the online application form.

       

      The TRN Acknowledgement form should be signed and submitted to DTI also.

       

       

      5. PAY YOUR APPLICATION

      Payment of application fee can be made at the DTI office indicated in your Transaction Reference Number (TRN) acknowledgment form.

       

      You have the option to pay through GCash.  (To avail of GCash services, you have to register with GLOBE).

       

      Business hours are Monday to Friday, 8:00 am to 5:00 pm.

       

      2.     Partnership

       

       

       

      1.     Name Verification Slip (online or at the Name Verification Unit, 2nd Floor, SEC Bldg.)

       

      2.     Articles of Partnership (For Limited Partnerships, this should be executed under oath* JURAT)

       

      3. Written Undertaking to Change Corporate Name by any Partner **

       

      4. Form F-105 for partnerships with Foreign Equity

       

      5. Proof of Inward Remittance by foreign partners

       

      ** Already incorporated in the available blank forms for applications

       

       

      1.              Verify/reserve proposed name (on-line or at the Name Verification Unit, 2nd floor, SEC Bldg.)

       

      2.                Draw up the Articles of Incorporation and By- Laws in accordance with the Corporation Code. (Blank forms are also available at SECCU, 3rd floor, SEC Bldg.)

       

      3.     If applicable, get endorsements from other government agencies.

       

      4.     In addition, the Company Registering and Monitoring Department (CRMD) obtains clearances from other SEC departments whenever these are deemed appropriate.

      4. Deposit paid-up capital / contribution (for foundations only) in the bank.

       

      5. Present six (6) sets of the accomplished forms and documents for pre-processing at the CRMD. Only complete application documents are accepted for processing. All documents executed outside the Philippines must be authenticated by the appropriate Philippine embassy or consulate in the area concerned.

       

      6. Pay the filing fees to Cashiers’ counter. (located at G/F SEC Bldg.)

       

      7. Claim the Certificate/License from the Releasing Unit, Records Division upon presentation of the official receipt issued for payment of filing fee.

       

      REMINDER: Applicants must buy and register their Stock & Transfer Book or Membership Book immediately after the issuance of the Certificate of incorporation or within 30 days upon issuance thereof.

       

      All registered corporations are required to submit a yearly General Information Sheet (GIS) and Audited Financial Statement (AFS) in the appropriate formats specified by the Commission.

       

      3. Corporation

       

       

      A.    STOCK CORPORATION

      1.            Name Verification Slip (online or at the Name Verification Unit, 2nd Floor, SEC Bldg.)

       

      2. Articles of Incorporation and By-Laws

       

      3. Treasurer's Affidavit

       

      4. Bank Certificate of Deposit (notarized in place where bank is located)

       

      5. Written Undertaking to Change Corporate Name by any Incorporator or Director **

       

      6. Clearance from other government agencies (if applicable)

       

      7. Foreign Investment Application Form F - 100 (for subsidiaries of foreign corporations)

       

      8. Proof of Inward Remittance by Non-Resident Aliens/ Subscribers

       

      B.NON-STOCK CORPORATION

       

      1.     Name Verification Slip (online or  

      at the Name Verification Unit, 2nd Floor, SEC Bldg.)

       

      2. Articles of Incorporation and By-Laws

       

      3. Bank Certificate of Deposit of at least P1 million, and a statement of willingness to allow the Commission to conduct an audit ( only if a Foundation is to be registered)

       

      4. Written Undertaking to Change Corporate Name by any Trustee **

       

      5. Copy of the Certificate of election or letter of appointment of a bishop, rabbi, presiding priest etc. (only for Corporation Sole)

       

      6. Master Deed duly entered under the primary entry of the concerned Register of Deeds and Certification that there is no existing similar corporation within the condominium (only for Condominium Corporations)

       

      7. Certification from the Housing and Land Use Regulatory Board (HLURB) that there is no other existing homeowners or similar associations in the community where the association is to be established (only for Neighborhood Associations)

       

      C. ADDITIONAL REQUIREMENTS FOR FOREIGN CORPORATIONS

       

      1. Foreign Investment Application Forms

      -              If 100%-owned by a foreigner, the minimum paid up is 200,000 USD unless the business activity is export-oriented. In such case, minimum paid-up is 5,000.

       

       

      ·                   Form F- 103 Branch Office

      ·                   Form F- 104 Representative Office

      ·                   Form F- 108 Branch/Representative Office of a Non-Stock Foreign Corporation

      ·                   Application Form for Regional Headquarters (RHQ)/ Regional Operating Headquarters (ROHQ)

       

      2. Proof of Inward Remittance by mother company (except for Branch/Representative Office of Non-Stock Foreign Corporations)

       

      3. Authenticated Board Resolution authorizing establishment of office in the Philippines designating Resident Agent or upon cessation of business in the Philippines, any summons may be served to SEC as if same is made upon corporation at its home office.

       

      4. Authenticated Financial Statement of Applicant certified by independent Certified Public Accountant (CPA) in home country

       

      5. Authenticated copies of Articles of Incorporation and By-laws of applicant

       

      6. Resident Agent's Acceptance of Appointment (if not signatory in application form)

       

      7. Affidavit that mother company is solvent and of sound financial condition (only for Representative Office)

       

      8. Authenticate Certification that it is engaged in international trade with affiliates, subsidiaries, or branch offices in the Asia-Pacific region and other areas (only for RHQ and ROHQ)

       

      9. Authenticated Certification from principal office of foreign entity that it was authorized by its Board of Directors or governing body to establish RHQ or ROHQ in the Philippines (only for RHQ or ROHQ)

       

       

      A.    DOMESTIC CORPORATION

       

      Same process as registration of Partnership

       

      B.    FOREIGN CORPORATION

       

       

      i.  BRANCH OFFICE

      1. Verify/reserve proposed name

      2. Get F-103 form from CRMD

      3. Present accomplished forms/docs for pre-processing at CRMD

      4. Pay filing fees to cashier

      5. Claim license from Records Division

       

      ii. REPRESENTATIVE OFFICE

      1. Verify/reserve proposed name

      2. Get F-104 form from CRMD

      3. Present accomplished forms/docs for pre-processing at CRMD

      4. Pay filing fees to cashier

      5. Claim license from Records Division

       

      iii. REGIONAL HEADQUARTERS/REGIONAL OPERATING HEADQUARTERS

      1. Verify/reserve proposed name

      2. Get application form from CRMD

      3. Get BOI endorsement

      4. Present accomplished forms/docs for pre-processing at CRMD

      5. Pay filing fees to cashier

      6. Claim license from Records Division

       

       

       

    • Minimum Paid-up Capital Requirements

       

      Break Bulk Agent

      P250,000

      Cargo Consolidator

      P400,000

      Financing Company

      ·         Metro Manila and other 1st class cities

      ·         Other classes of cities

      ·         Municipalities

       

      P10,000,000

       

      P5,000,000

      P2,500,000

      Freight Forwarders

      ·         Domestic

      ·         International

       

      P250,000

      P2,000,000

      Foundations (non-stock corporations)

      P1,000,000

      Health Maintenance Organizations

      P10,000,000

      Insurance

      ·         Insurance Broker/ Reinsurance Broker

      ·         Insurance Broker and Reinsurance Broker

       

      P20,000,000

       

      P50,000,000

       

      Life/ Non-Life Insurance Company

      P1,000,000,000

      Reinsurance Company

      P2,000,000,000

      Investment Adviser/Manager

      P10,000,000

      Investment Company

      P50,000,000

      Investment House

      P300,000,000

      Lending Investor

      P1,000,000

      Mining

      P2,500,000

      Non-Vessel Operating Common Carrier (NVOCC)

      P4,000,000

      Pawnshop

      P100,000

      Pre-Need Plan Issuer

      P100,000,000

      Pre-Need Plan Agent

      P5,000,000

      Recruitment for Local Employment

      ·         Corporation/Partnership

       

      P3,000,000

      Recruitment for Overseas Employment

      P2,000,000

      Retail Trade with Foreign Equity

      US $ 2,500,000

      School (for stock corporation)

      ·         Pre-Elementary, Elementary Education

      ·         Elementary and Secondary Education

      ·         Elementary, Secondary, Tertiary, Post-Graduate Education

       

      P1,000,000

       

      P2,500,000

       

      P5,000,000

      Security Agency

      P500,000

      Securities Broker/Dealer (New/SRO-Member)

      P100,000,000

      Securities Broker/Dealer (Existing/SRO-Member)

      P10,000,000

      Securities Broker/Dealer (Non SRO-Member)

      P5,000,000

      Special Purpose Vehicle

      P31,250,000

      Transfer Agent

      P1,000,000

      (Based on Foreign Equity)

      Corporation with more than 40% foreign equity

      ·         Domestic market enterprise

      ·         Export market enterprise

       

       

      US $200,000

      P5,000

      Foreign Branch Office

       

      ·         Domestic market enterprise

      ·         Export market enterprise

       

       

      US $200,000

      P5,000

      Partnership with foreign partner

       

      ·         Domestic market enterprise

      ·         Export market enterprise

       

       

      US $200,000

      P3,000

      Foreign Representative Office

      US $30,000

      Regional Area Headquarters (RHQ)

      US $50,000

      Regional Operating Headquarters (ROHQ)

      US $200,000

    • Minimum Reportorial Requirements

       Under the Securities and Regulations Code, the Corporation Code, and the Investment Houses Law requires the submission of reports to the SEC. Under the Securities and Regulations Code, the Corporation Code, and the Investment Houses Law requires the submission of reports to the SEC. Generally, these reports aree the: General Information Sheet, Audited Financial Statements, General and Special Financial Statements printed on A4-sized (8.27'' x 11.69'') bond paper under a standard cover page or sheet. The original and all conformed ages should use only one side of the paper.
       

      REPORT FOR ALL SEC-REGISTERED CORPORATIONS WITH PRIMARY LICENSE

      Document

      No. of copies

      Filer

      Filing Period

      General Information Sheet

      4

      Domestic Stock/ Non-stock Corporations

      Within 30 days from date of the annual stockholders’ or members meeting

      Branch Office and Representative Office of Foreign Corporations

      Within 30 days from the anniversary date of the issuance of the license

      Regional Operating Headquarters (ROHQs)

      Regional Headquarters(RHQs) of Multinational Companies

      Within 30 calendar days after the issuance of the certificate of registration and license, and then annually, within 30 calendar days after the anniversary date of the issuance of the certificate of registration.

      Audited Financial Statements (AFS) stamped "RECEIVED" by the BIR

      4

      Domestic Stock/ Non-stock Corporations

      Within 120 calendar days after the end of the fiscal year, as indicated in the Financial Statements

      Branch Office and Representative Office of Foreign Corporations

      Regional Operating Headquarters (ROHQs)

      Regional Headquarters(RHQs) of Multinational Companies