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 (AOI)

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

The AOI 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

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

For Non-stock Corporations

  • The amount of its capital
  • 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

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

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

… and you might just need our assistance.

Ready to incorporate your company or business in the Philippines? Set up a consultation with FilePino today! Call us at (02) 8478-5826 (landline) and 0917 892 2337 (mobile) or send an email to info@filepino.com.