Guide to Register a Subsidiary Company in the Philippines

If you are planning to set up a subsidiary company in the Philippines, you must understand the legal requirements and ownership restrictions to ensure your business is compliant with local regulations. 

In this article, we will walk you through the essentials of registering a subsidiary company in the Philippines, including the requirements and step-by-step process. 

Overview of a Subsidiary Company in the Philippines

A subsidiary in the Philippines is a company that’s owned and controlled by another company, known as the parent company or the holding company. The parent company usually owns the majority of the shares and determines the policies and operations. 

For both foreign and local investors, a subsidiary company allows them to expand their business operations in the country or explore new industries.

Compared to a branch office, a subsidiary operates as an independent company, while a branch is simply an extension of the parent company and doesn’t have its own legal status. Subsidiaries offer more flexibility to engage in a broader range of business activities, making them a preferred choice for many foreign companies investing in the Philippines.

Foreign Ownership Restrictions for Subsidiaries in the Philippines

Although foreigners are allowed to set up subsidiaries in the country, the Philippine government has implemented foreign ownership limits. The Twelfth Regular Foreign Investment Negative List outlines the classification of businesses specifying the maximum percentage that foreign investors can hold in a specific industry. 

Foreign Ownership Limit	Industry
0% (No foreign ownership)	– Mass media (except recording) – Practice of certain professionsRetail trade (capital < Php 25M) – CooperativesPrivate detective agencies – Small-scale mining – Marine resource utilization – Cockpit management – Nuclear and biological weapons – Firecracker manufacturing
25%	– Private recruitment – Defense-related construction contracts
30%	– Advertising
40%	– Infrastructure procurement – Natural resource exploration and utilization – Private land ownership (limited cases) – Public utilities – Educational institutions (non-religious) – Rice and corn trading (subject to conditions)
100%	Any industry not specifically restricted, including IT, manufacturing, and various service sectors.

Key Requirements to Register a Subsidiary in the Philippines

Designating Corporate Officers

When establishing a subsidiary in the Philippines, it is essential to appoint specific corporate officers to manage critical functions and ensure compliance with local laws:

• President – Serves as the corporation’s signatory and must also be a director and shareholder.
• Corporate Secretary – Responsible for managing company administration and maintaining records of meetings. This position must be held by a Philippine citizen.
• Treasurer – Manages the corporation’s finances and must be a resident of the Philippines.
• Compliance Officer – Ensures adherence to legal and tax regulations; no specific residency requirement is mandated for this role.

Documents for Subsidiary Registration

To register a subsidiary in the Philippines, foreign investors must meet several key requirements and coordinate with specific government agencies. Here’s a breakdown of the essential documents for registering a company in the Philippines:

1. Articles of Incorporation – serves as the corporation’s charter and outlines essential details about the company including the company name, business purpose, intended lifespan of the corporation, capital structure, and incorporators. 
2. By-Laws – Internal rules governing the management and operation of the subsidiary.
3. Treasurer’s Affidavit – A declaration by the treasurer confirming the amount of paid-in capital.
4. Company Registration Data Sheet – A form that provides essential information about the company, including its address and business activities.
5. Name Reservation Certificate – Proof that the chosen company name has been reserved with the Securities and Exchange Commission (SEC).
6. Bank Certificate of Deposit – Confirmation from a local bank that the required minimum capital has been deposited.
7. Identification Documents – Valid identification for all incorporators and directors, typically including passports or government-issued IDs.
8. Proof of Address – Documentation showing the registered office address of the subsidiary.
9. Tax Identification Number (TIN) – a unique identifier assigned to individuals and businesses in the Philippines for tax purposes obtained from the Bureau of Internal Revenue (BIR). 

How to Register a Subsidiary Company in the Philippines

Registering a subsidiary in the Philippines involves navigating various legal requirements and understanding local regulations. Emerhub has a team of compliance experts in the country to guide you throughout the subsidiary registration process:

1. Choose a Business Structure

When setting up a company in the Philippines, one of the first steps is to choose the appropriate legal entity. In the case of a subsidiary, it is advisable to register a corporation in the Philippines as it offers limited liability protection and allows 100% foreign ownership.

The corporations in the Philippines are mainly divided into two categories; domestic corporations & foreign-owned domestic corporations depending on the ownership structure. For a subsidiary, if more than 40% of the shares are owned by a foreign company, it would be considered a foreign-owned domestic corporation.

The key difference between both is that foreign-owned companies have higher minimum capital requirements and restrictions on operating in certain industries.

For more details on this, refer to our guide to Starting a Business in the Philippines. 

2. Name Reservation and Subsidiary Company Registration with SEC

We can help you secure a name verification slip from the Security and Exchange Commission (SEC) to ensure your chosen business name is unique and available. We can also prepare the required documents including:

• Articles of Incorporation – a document that outlines the company’s structure and purpose.
• By-Laws – governs internal management of the corporation.
• Treasurer’s Affidavit – declaration regarding the capital contribution.
• Registration Data Sheet – form detailing company information.

3. Acquire a Barangay Clearance and Business Permit (Mayor’s Permit)

To register your new company, you need to acquire a Barangay clearance from the Local Government Unit (LGU) where your business will operate, confirming that your business complies with local regulations. 

4. Obtain a TIN from BIR

Emerhub can also help secure all the necessary documents needed to obtain a Tax Identification Number (TIN) from the Bureau of Internal Revenue (BIR). These documents include an SEC Certificate of Registration, a Mayor’s Permit, and BIR Form 1903. 

5. Employee-related Compliance

Subsidiaries in the Philippines must also comply with employee-related benefits to ensure compliance with labor regulations from the Department of Labor and Employment (DOLE). This includes adherence to minimum wage laws, occupational safety standards, and other mandates that protect worker’s rights. 

Emerhub can help register your company under three government-mandated employee benefits: 

• Social Security Coverage – By registering with the Social Security Services (SSS), subsidiaries ensure that their employees are entitled to social security benefits, including retirement, disability, and death benefits. This registration is crucial for the welfare of employees and their families.
• Health Insurance – Registration with PhilHealth allows employees to access health insurance benefits, which is essential for medical care for hospitalization and health-related expenses.
• Housing Benefits – Through Pag-IBIG registration, employees can avail themselves of housing loans and savings programs, promoting home ownership and financial stability.

6. Open a Corporate Bank Account and Other Local Compliance

Emerhub is here to assist you with essential compliance requirements, such as fulfilling Corporate Secretarial responsibilities, Treasurer functions, and other administrative tasks mandated by the Corporation Code for all companies operating in the Philippines.

Furthermore, we can help meet ongoing obligations, including the submission of annual reports to the SEC and BIR, as well as conducting annual meetings. 

Register Your Subsidiary Company in the Philippines with Emerhub 

Ready to set up your subsidiary company in the Philippines? Emerhub’s business advisors can help.

From reserving the potential business name for your subsidiary to company registration and securing mandatory licenses & permits, our local experts can handle the entire process on your behalf.

Fill out the form below and one of our advisors will be in touch about your subsidiary registration process in the Philippines!