Guide to Setting Up a Company in the Philippines: 2019 Edition

Philippines’ rapidly growing economy and regulatory changes attract foreign investors from all over the world. In February 2019, President Duterte signed the Republic Act No. 11232 that simplified the process of setting up a company in the Philippines significantly. In this guide, we will pinpoint the key changes as well as give an overview of the […]

Philippines’ rapidly growing economy and regulatory changes attract foreign investors from all over the world. In February 2019, President Duterte signed the Republic Act No. 11232 that simplified the process of setting up a company in the Philippines significantly.

In this guide, we will pinpoint the key changes as well as give an overview of the options available to foreign investors for registering a company in the Philippines.

Overview of different legal entity types in the Philippines

Minimum capital requirement

Liability

Number of shareholders

Domestic corporation with over 40% foreign ownership

US$ 200,000

Limited

1-15

Domestic corporation with less than 40% foreign ownership

PHP 5,000 (~US$ 100)

Limited

1-15 (max. 40% foreign ownership)

Branch office

US$ 200,000

Parent company is fully liable

Extension of a parent company

Representative office

US$ 30,000 deposit from the parent company

Parent company is fully liable

Extension of a parent company

Setting up a domestic corporation with foreign shareholdings

The most popular legal entity type among foreign nationals in the Philippines is a domestic corporation with foreign shareholdings.

Previously, you needed at least five incorporators for setting up a company in the Philippines. However, the New Corporation Code removed the minimum number of incorporators and now allows to establish corporations in the Philippines even with one shareholder.

This shareholder can either be a:

  • Person
  • Partnership
  • Association
  • Corporation

A domestic corporation with one shareholder is a One Person Corporation.

There is no minimum authorized capital for One Person Corporations. However, corporations with one shareholder are still subject to the minimum capital requirement and the Foreign Investment Negative List (FINL).

Find more information in our guide to One Person Corporation in the Philippines.

Requirements for corporate officers

Every corporation in the Philippines also requires at least three officers:

  1. President
  2. Corporate Secretary
  3. Treasurer

Out of these three, only the Corporate Secretary must be a citizen of the Philippines. The Treasurer must be a resident in the Philippines. The President can also be a non-resident; however, the President must be a director as well as hold at least one share. 

  Shareholder

  Director

Citizen

Resident

President

Corporate Secretary

Treasurer

If you don’t have a local corporate secretary yet, Emerhub can help you. Find more information about our corporate secretary service in the Philippines here.

The minimum capital requirement in the Philippines

The minimum capital requirement for setting up a company in the Philippines depends on your business activities and the percentage of foreign ownership. Note that at least 25% of the subscribed capital must be paid-up capital.

The general minimum capital requirement in the Philippines for domestic corporations with more than 40% of foreign shareholding is USD 200,000.

However, the paid-up capital for domestic corporations with less than 40% of foreign ownership starts at PHP 5,000 (~US$100).

How to reduce the minimum capital requirement

There are also ways to lower the capital requirement in the Philippines:

Minimum capital requirement

Applies to

USD 200,000

The general requirement for majority-foreign-owned businesses

USD 100,000

Businesses that are considered pioneers in the Philippines; employ at least 50 Filipinos, or use advanced technology

PHP 5,000 (~100 USD)

Businesses that export at least 60% of their products or have at least 60% of local ownership

How to start a business in the Philippines without paid up capital?

If you wish to reduce the minimum capital requirement but don’t comply with any of the conditions mentioned above, the easiest way is to use shareholding service provided by Emerhub.

It allows you to set up a domestic corporation in the Philippines with a minimum capital of as little as ~US$ 100. A set of legal agreements will protect your rights and give you full control over the company.

setting up a company in the Philippines

Contact us via [email protected] for a complimentary consultation to determine the best practice for your business in the Philippines.

When do I need to inject the capital?

The paid-up capital is not required to be deposited until your company has a bank account in the Philippines. However, it needs to be transferred before submitting the audit of your first year’s financial statement.

Business classifications available to foreign investors in the Philippines

Most business lines in the Philippines are open to foreign ownership as long as the applicable minimum capital requirement is fulfilled.

However, for certain business lines, the percentage of the allowed foreign ownership is regulated by the Foreign Investment Negative List (FINL). Also, keep in mind that joint ventures with local partners are still subject to the negative list.

The current, 11th Foreign Investment Negative List is less restrictive than the previous one. Among other lifts, the 11th FINL allows 100% foreign ownership in five new business classifications:

  • Internet business
  • Wellness centers
  • Teaching in higher education
  • Training centers outside the formal education system
  • Adjustment companies, lending companies, financing companies, and investment houses

Read our previous article to learn more about the Foreign Investment Negative List in the Philippines.

How to register a corporation in the Philippines?

setting up a company in the Philippines

The total time of incorporation in the Philippines is 2-3 months. [email protected].

Alternatives to setting up a company in the Philippines

Branch office

Another way to start doing business in the Philippines is to open a branch. Branch offices can do business and generate income in the Philippines. However, it cannot engage in any activities that are in the Foreign Investment Negative List.

The minimum capital requirements for branch offices are the same as for foreign companies – US$ 200,000.

As a branch office is considered an extension of the parent company, it does not need separate directors or corporate officers. It does, however, need a resident agent. If the person is a foreign national, he or she must have a work permit in the Philippines.

Representative office

Representative offices in the Philippines cannot engage in any commercial activities nor earn any revenue. However, they can provide customer service, conduct market research, and promote the company’s products.

Representative offices are also great for companies who would like to register their products but not to deal with the distributors yet.

To set up a representative office in the Philippines, you must transfer US$ 30,000 to the corporate bank account in the Philippines. The same amount must be remitted annually to cover the operating expenses of the representative office.

Outsourcing business activities

Setting up a company is not always the fastest nor the most reasonable market entry strategy. You can also choose the option to outsource only some of the services to a third-party service provider such as Emerhub.

Some of our services include:

Find more benefits of outsourcing your non-core activities in our previous article.

Ready to start with setting up a company in the Philippines?

Fill in the form below to contact us for a complimentary consultation to discuss the details of setting up a company in the Philippines. Our consultants are happy to help you in choosing the best solution for you.

Since 2011, Emerhub has helped over 500 companies of all sizes enter Southeast Asian markets.

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