Question (Q): What are the requirements in setting up a corporation in the Philippines?
Answer (A): The minimum requirements are:
Q: Why do we need 5 directors?
A: The Philippine Corporation code requires that in setting up a corporation in the Philippines, there must be at least 5 directors.
“Batas Pambansa Blg. 68 Section 10. Number and qualifications of incorporators. – Any number of natural persons not less than five (5) but not more than fifteen (15), all of legal age and a majority of whom are residents of the Philippines, may form a private corporation for any lawful purpose or purposes. Each of the incorporators of s stock corporation must own or be a subscriber to at least one (1) share of the capital stock of the corporation.”
Q: Why is a resident director (RD) required?
A: The same provision quoted above requires that the majority must be residents of the Philippines. They do not need to be citizens of the Philippines though.
Q: Can the corporation be owned 100% by a foreigner?
A: Yes. So long as the business is outside of the negative list of investment. The negative list enumerates the threshold of foreign ownership. The full text of the negative list can be seen here: http://www.doe.gov.ph/doe_files/pdf/Issuances/EO/EO%2098.pdf
Q: What do I need to be a director:
A: Own at least 1 share in the corporation. For purposes of general information sheet filing, you should secure a tax identification number in the Philippines
Q: What are the requirements in SEC registration?
A: The basic requirements are found here: http://www.sec.gov.ph/gsr/primary/primaryreg_newv.html#table1
Q: What are the requirements for BIR registration?
A: The requirements can be found here:
Q: Do I need to comply with the 60% Filipino-40% Foreigner equity split?
A: It depends on the industry and from where most of the revenue will come from
The restricted/nationalized industries are found in the negative list. This negative list is the list of industries where there is a cap for foreign equity. For example recruitment, the maximum foreign equity is 25%. The same applies to industries in advertising (30%), education (30%), development of natural resources (30%) etc. The full list can be found the “Negative list.”
If the business is not falling under the restricted list, there is a possibility that 60%-40% may not be needed. These are:
Thus, if the business is export oriented, it can be owned by 100% foreigners. If the business owners are able to put up 200,000 usd capitalization, regardless if it’s an export oriented company, then it can also be owned by 100% foreigner.
If none of the above is true, the 60-40% is necessary.
Q: Do I need 200,000 usd capital to set up a business?
A: It depends. On the ownership structure and where the revenue will come from. If the business is export oriented, no 200,000 usd is not need. If the business is not export oriented AND you’d like a foreigner to own most of the shares (majority ownership) then 200,000 usd capital is needed.
Q: How are the SEC fees computed?
A: Please visit SEC Registration Calculator for details. http://www.sec.gov.ph/online-services/registration-calculator-2/