Overview of the Corporate structure in the Philippines

Learn about key roles in a corporation in the Philippines.

There are several key positions required in all companies in the Philippines. In light of this, it is important to familiarize yourself with the corporate structure in the Philippines.

In this article, we will discuss the requirements to hold key roles in a company. We will also touch on the responsibilities of a company’s directors and corporate officers.

Table of contents

    Corporate structure in the Philippines

    There are two types of corporations in the Philippines, domestic corporations and one person corporations. Regardless of the type, the corporate structure consists of the following:

    • Shareholder(s)
    • Director(s)
    • Corporate Officers
      • President
      • Treasurer
      • Corporate Secretary

    An individual may hold more than one of the above roles in a company. We discuss each of these in further detail below.

    Shareholders in a Corporation in the Philippines

    The table below shows the requirements for shareholders in the Philippines:

    Type of CorporationNumber of DirectorsWho can be a shareholder
    Domestic Corporation2 to 15Natural person
    Partnership
    Association
    Corporation

    *foreign or local
    One person Corporation1Natural person
    Trust
    Estate

    *foreign or local

    Foreigners can hold shares in a domestic corporation if the relevant industry allows for foreign ownership. Similarly, a foreign investor can open a one person corporation if the industry allows 100% foreign ownership.

    The percentage of allowed foreign ownership depends on the industry. Many industries allow for full foreign ownership. However, there are a few which require majority Filipino ownership. The table below shows examples of businesses that allow foreign ownership.

    Business/IndustryAllowed foreign ownership
    IT100%
    Lending business100%
    Agriculture 100%
    Pharmaceutical100%
    Consultancy100%
    Telecom40%
    Real Estate (buying and selling of land)40%
    Private recruitment25%

    Liability of Shareholders in a Corporation in the Philippines

    Shareholders of a corporation in the Philippines have limited liability. As such, they will not be personally liable for the corporation’s debts. Should the company fail, their personal assets will be safe. The extent of their liability is the same as the value of their investment.

    Directors in Philippine Corporations

    The board of directors manages the corporation in accordance with the Corporation Code of the Philippines. Shareholders vote and elect members of the board of directors. A director holds this position usually for 1 year or until shareholders elect successors.

    Qualifications of Directors

    Aside from getting elected by shareholders, directors must also meet the following requirements:

    • A natural person
    • Must be of legal age
    • Must own at least 1 share
    • Must not have been convicted of a criminal offense punishable by imprisonment for a period exceeding 6 years
    • Must not have violated the Corporation Code within five years prior to the date of election

    Because a director must also be a shareholder, there can be no more than 15 directors in a corporation. For the same reason, foreign nationals can only hold the director role if the industry allows full or partial foreign ownership. Note that in industries that only allow partial foreign ownership, the majority of directors must be Filipino citizens.

    Board of Directors’ Roles and Responsibilities

    The board of directors can act on behalf of the corporation. They can perform tasks including but not limited to the following:

    • Make strategic decisions in the company;
    • Make day-to-day decisions
    • Appoint senior management

    In line with their roles within the company, the board of directors must always act in good faith. The board of directors must protect the interests of the corporation and its stockholders. Members of the board cannot make decisions for their individual benefit. The board of directors must also sure that the company follows legal and accounting requirements.

    Corporate Officers in a Philippine Corporation

    All corporations in the Philippines must have the following corporate officers. The board of directors assigns the corporate officers.

    President

    The president acts as the signatory on behalf of the corporation. He or she reports to the board of directors. 

    Requirements for the president of a corporation in the Philippines:

    • A natural person
    • Must be of legal age
    • Must be a shareholder and director

    There is only one shareholder in a one person corporation. As such, he or she must be the president of the company.

    A foreigner may hold this position provided that he or she meets all other requirements. The president does not need to be a resident of the Philippines.

    Corporate Secretary

    The corporate secretary handles all of the corporation’s administrative and informative work.

    The requirements for a corporate secretary:

    • A natural person
    • Must be of legal age
    • Must be a Filipino citizen

    Many corporate secretarial tasks involve maintaining compliance with local laws. The corporate secretary is in charge of the following tasks:

    • Documenting changes to the company’s share capital;
    • Documenting election or resignation of directors;
    • Preparing certifications of board resolutions;
    • Authorizing documents circulating in the corporation

    Your corporate secretary must be someone who is familiar with relevant laws and regulations in the Philippines. You should not appoint someone just because they meet the citizenship and residency requirements.

    One way to fill this role is by outsourcing your corporate secretary. Our legal team will take care of these tasks and ensure that you maintain compliance with local laws.

    Outsource corporate secretarial tasks in the Philippines.

    Treasurer

    The treasurer takes care of all of the corporation’s financial matters. These include annual statements, financial reports, funds, and similar valuable effects that belong to the corporation.

    The treasurer must meet the following requirements:

    • A natural person
    • Must be of legal age
    • Must be a resident of the Philippines

    A foreigner may hold this position as long as he or she is a resident of the Philippines. 

    The president of a one person corporation may also be the treasurer. This option is not open to domestic corporations.

    If the president of a one person corporation appoints himself or herself as the treasurer, they must pay a surety bond. The company’s authorized capital stock serves as the basis for the amount of the bond.

    The table below shows the surety bond necessary:

    Authorized capital stock (in PHP)Surety bond coverage (in PHP)
    1 to 1,000,0001,000,000
    1,000,001 to 2,000,0002,000,000
    2,000,001 to 3,000,0003,000,000
    3,000,001 to 4,000,0004,000,000
    4,000,001 to 5,000,0005,000,000
    5,000,001 and aboveSurety bond coverage is equal to the authorized capital stock 

    Setting up a company in the Philippines? Emerhub is ready to assist you with company registration in the Philippines. Our consultants will advise and facilitate incorporation. Our legal team can also accomplish corporate secretarial tasks on your behalf. Learn more about how Emerhub can help you by filling out the form below or sending an email to [email protected].

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