Types of legal entities in the Philippines
Most commonly used legal entity types for foreign investors in the Philippines
Corporations offer limited liability, meaning that shareholders’ assets are protected from business liabilities. This entity can be a domestic corporation (with at least 60% Filipino ownership) or a foreign-owned domestic corporation (more than 40% foreign equity).
A branch office is an extension of a foreign company and not a separately incorporated entity. It’s suitable for foreign companies looking to expand their business in the Philippines without forming a separate corporation.
This entity is ideal for foreign companies aiming to establish a presence in the Philippines without engaging in direct business activities. Representative offices are often used for marketing, liaison work, and market research. They cannot generate revenue in the Philippines and must be fully funded by the foreign head office.
Key requirements for company registration in the Philippines
Domestic vs. foreign-owned corporation
- Lower requirements if at least 60% of the shares are owned by local shareholders
- Depending on the industry, a corporation can have up to 100% foreign ownership, subject to the restrictions of the Foreign Investment Negative List.
- A branch office operates as an extension of the foreign parent company, not as an independent legal entity.
- Branch offices do not require Filipino partners or shareholders, providing full operational control to the foreign parent company.
- While a branch office can freely remit its earnings to the parent company, it is subject to branch profit remittance tax.
- Representative offices allow foreign businesses to establish a non-revenue generating presence in the Philippines, ideal for marketing, promotion, and liaison activities.
- Since representative offices don’t earn income, they have a simpler regulatory and compliance environment compared to other business entities.
One-person corporation (OPC)
- An OPC allows for 100% ownership and control by a single individual, offering autonomy in decision-making and management.
- Without the need for a board of directors or multiple shareholders, the OPC structure simplifies corporate governance and reduces administrative burdens.
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