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Business incorporation and paid-up capital in the Philippines

Business incorporation and paid-up capital in the Philippines

Foreign businessmen who want to conduct business in the Philippines usually put up either a domestic corporation or a branch office, but tend to favor the corporation more for the tax benefits.

 

Moreover, putting up a corporation on Philippine shores gives a non-local lesser legal liability and the opportunity for Philippine equity participation in activities which are restricted to them in a standard setup.

 

Prospective corporations are required to reserve and register a name, submit a proposed Articles of Incorporation (AI) and By-laws, and prove that they have the minimum capital requirement for their chosen industry.

 

For a corporation to be established it must have 5 to 15 incorporators.
Incorporators are stockholders or members mentioned in the AI who originally formed, and who are signatories of, the corporation.

Incorporators must meet the following criteria:

• Natural persons (i.e., not business entities or the like)
• Of legal age
• The majority are residents of the Philippines
• Must own or subscribe to at least one share of the capital stock

 

A corporation will have juridical personality when the Securities and Exchange Commission (SEC) issues it a Certificate of Incorporation and puts said corporation under the latter’s jurisdiction.

 

Articles of Incorporation (AI)

According to the Corporate Code of the Philippines or Batas Pambansa Bilang 68, all corporations must file with the SEC its proposed AI. This must be written in any of the country’s official languages and must be duly signed and acknowledged by all incorporators.

 

The AI should include the following information unless prescribed by the Code
or by special law:

 

• The corporation’s name
• The purpose of the company’s incorporation
• If there is more than one stated purpose, the primary and secondary
purpose. A non-stock corporation cannot include a purpose that would
change or contradict its nature
• Location of the corporation’s main office
• How long the corporation is to exist
• The names, nationalities, and places of residence of the incorporators
• The number of directors (which should not be less the five but not more
than 15)
• The names, nationalities, and residences of the directors or trustees until
the election of the first regular directors or trustees in accordance with the
Code
• For stock corporations:

o The amount of its authorized capital stock
o The number of shares it is divided into
o The value of each par value share
o The names, nationalities, and residences of the original subscribers,
the amount they subscribed and paid for

• For non-stock corporations:

o The amount of its capital
o The names, nationalities, and residences of its contributors and the
amount they contributed

• Additional information deemed necessary by the incorporators that are
not inconsistent with law

 

Other information about the documents and the full requirements you need to submit when registering a corporation in the Philippines can be found here.

 

Paid-up capital in the Philippines

 

Paid-up capital refers to the amount of money received from investors or shareholders in exchange for shares of stocks in the company. Paid-up capital could be in the form of cash, real property, service, equipment, or anything of value.

 

The minimum paid-up capital of a corporation is dependent on the industry it is involved with and its equity. The provisions of the Foreign Investments Act of 1991 become applicable to a corporation when there are foreign shareholders involved.

 

Minimum paid-up capital requirement based on industry

Finance

Financing Company – Main (in 1st
class cities)
P10,000,000
Financing Company – Main (in other
cities)
P5,000,000
Financing Company – Main (in
municipalities)
P2,500,000
Financing Company – Branch (in 1st
class cities)
P1,000,000
Financing Company – Branch (in
other cities)
P500,000
Financing Company – Branch (in
municipalities)
P250,000

 

Freight Forwarders

Freight Forwarders – Domestic P250,000
Freight Forwarders – International P2,000,000

 

Insurance

Insurance Broker P20,000,000
Reinsurance Broker P20,000,000
Insurance Broker and Reinsurance
Broker
P50,000,000
Life Insurance Company P1,000,000,000
Non-Life insurance Company P1,000,000,000
Reinsurance Company P2,000,000,000

 

Investment

Investment Adviser/Manager P10,000,000
Investment Company P50,000,000
Investment House P300,000,000
Lending Company – Main P1,000,000
Lending Company – Branch (in 1st
class cities)
P300,000
Lending Company – Branch (in other
cities)
P150,000
Lending Company – Branch (in
municipalities)
P75,000

 

Mining

Mining (authorized capital stock)  P100,000,000
Mining (paid-up capital stock)  P6,250,000

 

Recruitment

Recruitment for Local Employment
(Corporation)
P500,000
Recruitment for Local Employment
(Partnership)
P200,000
Recruitment for Overseas
Employment
P2,000,000

 

Schools (for stock corporations)

Elementary Education P1,000,000
Elementary and Secondary Education P2,500,000
Elementary, Secondary, and Tertiary
Education
P5,000,000

 

Security

Security Agency

P500,000
Securities Broker/Dealer (New/SROMember) P10,000,000
Securities Broker/Dealer in Propriety
Shares (Non-SRO-Member)
P5,000,000

 

Other Industries

Breakbulk agent  P250,000
Cargo Consolidator  P400,000
Health Maintenance Organization P10,000,000
Non-Vessel Operating Common
Carrier
P4,000,000
Pawnshop P100,000
Pre-Need Plan Issuer P100,000,000
Pre-Need Plan Agent P5,000,000
Retail Trade with Foreign Equity P2,500,000
Special Purpose Vehicle P31,250,000
Special Purpose Corporation P5,000,000
Transfer Agent P1,000,000

 

Minimum paid-up capital based on equity

 

For domestic corporations with more than 40% of foreign equity:

Domestic Market Enterprise US  $200,000
Export Market Enterprise  P5,000

 

For foreign branch offices:

Domestic Market Enterprise US $200,000
Export Market Enterprise P5,000 P5,000

 

For foreign branch offices:

Domestic Market Enterprise US  $200,000
Export Market Enterprise P3,000

 

For non-domestic corporations:

Foreign Representative Office US $30,000 $30,000
Regional Area Headquarters (RHQ)  $50,000
Regional Operating Headquarters
(ROHQ) US
$200,000

For more information about registering your corporation and paid-up capital,
just call FilePino today at +1.806.553.6552 (USA) or +63.917.892.2337
(Philippines).