Company Registration in Philippines

In comparison to the other ASEAN nations, the Philippines is expected to have a quickly expanding economy in 2022. The Philippines has made a lot of legislative and regulatory changes to make the business environment more conducive. Local and foreign business owners have been drawn to the Philippines by these regulatory improvements and the efforts of the Philippine government. Without actually being there, a person can establish a firm in the Philippines. As a result, businesses can be established virtually with the bare minimum.

There are three main geographical divisions in this nation: Luzon, Visayas, and Mindanao. Manila is regarded as the country’s principal commercial centre. In the Philippines, registering a business is rather simple, and various corporate structures can be used.

With a current GDP growth rate of 6.6%, the nation is exhibiting progressive expansion in terms of GDP. Data demonstrate that the GDP growth rate is now increasing. For foreign business owners, the Philippine government offers a variety of investment options. An investor would therefore wish to register a company in the Philippines.

In the Philippines, there are various types of credit rating organisations that have a significant impact on the financial industry and the growth of the economy.

Regulatory Authority/ Body for Company Registration in Philippines

The Securities and Exchanges Commission is the main regulatory body in charge of overseeing company registration in the Philippines (SEC).

Types of Business Structures in the Philippines- Company Registration in Philippines

In the Philippines, business establishment is permitted for both domestic and foreign entrepreneurs. In the Philippines, there are basically three types of business vehicles. They include companies, partnerships, and single proprietorships (both domestic and foreign).

• Single-person business:

A sole proprietorship is run by a single natural person, and the owner has unlimited liability. The business is also independent of its owner and does not exist as a separate legal entity.

• Partnership-

A partnership is a legal commercial arrangement between two or more people. Here, two or more partners commit to investing money, assets, and labour into the partnership structure with the goal of engaging in business activities to produce profits that will be divided among them. A partnership is regarded as having its own distinct legal personality in the Philippines. The debts and obligations of the partnership are wholly borne by the partners.

• Corporations-

In the Philippines, a corporation is comparable to an LLC or a limited liability company in other countries. Under the current regulations governing the incorporation of corporations by foreigners, a foreigner may register a corporation.

These are the 6 types of businesses that a foreign entity can form in the Philippines. They consist of:

• Regional Operational Headquarters (RHQ) Domestic Corporation One Person Corporation Branch Office Representative Office (ROHQ)

• Domestic Corporation or Subsidiary

A foreign firm may establish a domestic corporation or a subsidiary in the Philippines. It has a distinct legal personality from its stockholders as a corporate concern. A Limited Liability Company or a Private Limited Company with comparable structure can be found in various nations.

The minimum number of incorporators needed to form a domestic corporation has been reduced from 5 to 2, but the maximum number of incorporators has only been set at 15, in accordance with the most recent revisions to the Revised Corporation Code and the most recent rules introduced in the SEC Memorandum Circular No. 16 of the 2019 series. This makes it possible to form corporations with two, three, and four members.

The founding stockholders who must sign the articles of incorporation are known as incorporators. At the moment of incorporation, each incorporator must hold onto at least one share. In accordance with the most recent modifications, any combination of partnerships, associations, corporations, and natural individuals may now register a domestic corporation as incorporators, whereas this ability was previously limited to natural persons alone.

Except in situations where a different law has specified it, the amended Commercial Code does not require a minimum capital stock for stock corporations.

• One-person business (OPC)

The Revised Commercial Code and SEC regulations have also made it possible to register a one-person corporation (OPC), in which a single natural person can establish the company and serve as its sole stockholder. The corporation’s sole incorporator, director, and president is this individual. The OPC’s liability is capped to the corporate assets, not including the personal assets of the corporation.

The establishment of an OPC by a foreigner is permitted, but they must once more adhere to the Foreign Investment Negative List. A nominated stockholder and an alternate nominee stockholder must also be named in the articles of incorporation by the OPC. . Then the the the the. This time, this time, this time. This time, this time. This time, this time. This time, this time. Once more, the OPC has 15 days to nominate a corporate secretary or treasurer. When providing a surety bond, the sole shareholder might serve as the treasurer.

• Division Office

Foreign businesses that want to have a presence in the Philippines might use the branch office structure. This branch office in the Philippines is an outpost of its international parent firm rather than a distinct legal entity. Hence, the foreign business is in charge of the company’s entire debt load. It has been incorporated in accordance with the laws of the foreign country in which it has done so.

Foreign firms must also select a resident agent to receive letters from government agencies on behalf of the branch office. A domestic corporation or an individual may serve as this resident agent.

The same as for a domestic corporation, there are setup charges. It can register with 5,000 if it exports more than 60% of its total sales. Additionally, the overseas parent firm is obliged to provide an annual deposit of 5,00,000. Furthermore, the number of 5,000 shall grow annually by 2% if the branch office’s annual income exceeds the sum of $10 million.

It is only allowed to serve as a liaison office, supporting its parent business’s marketing and sales efforts, performing market research, checking the quality of items related to the foreign company, etc. The required capital is at least $30,000.

It hasn’t been allowed to make money or provide services to other clients. Also, it is ineligible for tax benefits.

• Regional Executive (RHQ)

A Regional Headquarters is an administrative division of a foreign organisation that has been granted permission to inspect, monitor, and oversee the operations of the corporation’s branches, representative offices, and affiliates globally. It serves as a hub for communication for all of its partners. and a lot of the.

It can carry out developmental projects in the Philippines, obtain raw resources, perform research and development, and train staff.

An RHQ must choose a resident agent and provide documentation of its registered business address, just like Representative Offices. $50,000 is the required paid-up capital to launch a RHQ.

It is prohibited from overseeing the operations of the subsidiaries, affiliates, and affiliates of its parent firm. With the customers of its parent firm in the Philippines, it may pursue any business. Moreover, none of these operations may be carried out by its parent firm through its RHQ.

• Operational Headquarters in the Region (ROHQ)

An extension of its overseas parent firm, the Regional Operating Headquarters (ROHQ) is able to make money by providing the authorised services to its head office, subsidiaries, branch offices, and other affiliates all over the world. It is not a distinct legal person

It is necessary to name a resident agent and provide documentation of a registered business address, just like RHQ. The minimal paid-up capital needed to establish a ROHQ is $200,000. It cannot solicit business from any other firm by providing any qualified services for anybody other than its parent company and its affiliates.

Documents for Company Registration in Philippines

The following documents are required for company registration in Philippines:

• filing a registration application
• Copy of the document (Board Resolution, Director’s Certificate, Secretary’s Certificate, or equivalent document) that authorises the company to invest in the corporation that is going to be formed and that designates a signatory on behalf of the corporation, and that has been duly authenticated by a Philippine Consulate or has an apostille attached to it.
• Verification of Notarized Articles of Incorporation A name-reservation slip for the business (before beginning the registration process, the applicant must reserve the name of the business)
• Filipino incorporators, directors, and officers’ Tax Identification Numbers (TINs)
• The Articles of Organization should include the tax identification number (TIN) of the principle and signatory (or passport number in the case of international investors).
• Authentic identification for the incorporators, directors, and officers
• Evidence of the registered office address in the form of a lease agreement or land title certificate

Pre-Requirements for Company Formation in Philippines

Before beginning the process of business formation in the Philippines, the ensuing prerequisites must be satisfied:

Setup specifications

Every domestic corporation must have a minimum of two incorporators or investors and a maximum of fifteen. Each of these stockholders must own at least one share of capital stock. Only Filipino citizens should make up the bulk of these incorporators.

In order to register with the Bureau of Internal Revenue (BIR) and other local government agencies, you must also provide proof of your business’s legal address. In accordance with the most recent modifications, it is now possible to adopt an official virtual address throughout the registration process and switch to the physical address after it is complete.

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For the purpose of registration, the following three officers must be appointed by all local corporations in the Philippines:

1. Head of State, Treasurer, and Corporate Secretary
2. A foreign national who does not currently reside in the Philippines is eligible to run for president. But, they must also hold at least one share of capital stock and be a director.
3. Again, the Treasurer role might be filled by a foreign national. Such a person must, however, be a Filipino citizen.

One who is a Philippine citizen and a sole resident of the Philippines may hold the job of corporate secretary.

Capital Minimum Requirements

The minimum capital required for domestic corporations with 100% Filipino ownership is $5,000, or $100. A local corporation with at least 60% Filipino ownership and 40% foreign ownership is subject to this criteria.

The minimum capital requirement is $200,000 in cases where foreign ownership in the domestic corporation is sought to be greater than 40%. For businesses that engage in advanced technology-related operations or have at least 50 direct employees, an exception has been made.

Restrictions

The Foreign Investments Negative List, published by the government of the Philippines on a regular basis, comprises some sectors of the economy where domestic businesses with foreign ownership are prohibited from operating.

Procedure for Company Registration in Philippines

The following steps must be taken in order to register a company in the Philippines:

• Philippine government website for registering names SEC
• assembling and preparing the aforementioned paperwork for submission to the SEC
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• signing up with the BIR
• signing up with a number of government organisations

• Registration of a name with the SEC

Selecting and reserving the preferred corporate name with the SEC is the first step in registering a corporation. The Securities and Exchange Commission of the Philippines must receive the applicant’s reservation for the desired name.

• assembling and preparing the aforementioned paperwork for submission to the SEC

The applicant must next compile and collect the necessary paperwork before submitting it to the Philippine Securities and Exchange Commission. The required documentation have already been mentioned.

• signing up with the BIR

The corporation must register with the Bureau of Internal Revenue (BIR) and get the following documents before starting its business operations:

• Certificate of Registration under BIR

Authorization to Print Receipts/Invoices (manual receipts), Cash Register Machine (CRM), or Point of Sale (POS) Certificate of Registration of Books and Accounts

signing up with a number of government organisations

The domestic corporation must register as an employer with the following government bodies if it plans to hire staff:

System of Social Security (SSS)

Housing Development Mutual Fund (Pag-IBIG Fund), Philippine Health Insurance Corporation, and Department of Labor and Employment (DOLE) (philHealth)

All foreign investors, whether they are natural or legal persons, must get a Tax Identification Number (TIN) after the firm is incorporated. The General Information document submitted to the SEC is intended to include this TIN.

Frequently Asked Questions

Does the incorporation process need an investor to travel to the Philippines?

No, an investor does not need to fly to the Philippines to incorporate a business; the entire procedure may be done online.

Are there any minimum capital requirements for Filipino company registration?

The Philippines does indeed have a minimum capital requirement for company registration.

Are Filipino residents required to be the company’s shareholders?

No, stockholders of the corporation are not obliged to be Filipino citizens.

Where must my annual accounts be turned in?

Absolutely, the Bureau of Internal Revenue must receive annual accounts and other compliances.

Frequently Asked Questions

Is a trip to the Philippines required for incorporation purposes by an investor?

There is no need for an investor to travel to the Philippines; the entire incorporation procedure can be done online.

Is there a minimum capital required to register a business in the Philippines?

Indeed, there is a minimal capital need for Filipino company registration.

Do the stockholders of the corporation have to be Filipino citizens?

The stockholders of the company are not obliged to reside in the Philippines.

Where should I submit my annual accounts?

A submission to the Bureau of Internal Revenue is required for annual accounts and other compliances.

Can I appoint directors from abroad?

It is possible to nominate a foreign director to lead a company in the Philippines.

Are local licences and permits required in order to operate?

Yes, you must register with the Local Government Unit and receive a licence from them in order to legalise your business where you wish to situate it.

What actions should I do before forming the company?

You should decide on the organisational structure and reserve the firm name before incorporating.

A representative office is what?

Representative offices run their businesses in service of their parent firm; they are not permitted to run for-profit ventures.