Foreigners Prohibited in Offshore Investment Boards Under Anti Dummy Law and FINL
Foreign citizens are restricted from participating in the Board of offshore collective investment schemes or from being part of the Board of Directors of an Investment Company. This is pursuant to the Anti-Dummy Law and the Foreign Investments Negative List (FINL) of the Philippines. These limitations safeguard national interests and maintain local control over key industries.
Below are the key details of these restrictions to guide businesses and investors:
- An investment company is defined as a stock corporation primarily engaged or holds itself out as being engaged primarily or proposes to engage in the business of investing, reinvesting, and trading in securities.
- A company seeking to obtain a license to undertake activities of an investment company under Philippine laws must satisfy the requirements under the domestic laws, i.e. the director(s) of a registered investment company should be Filipino citizen(s) and elected to that office by the holders of the outstanding voting securities of such company. All members of the Board must be Filipino citizens, notwithstanding the intention to offer units of participation that are purely offshore. Accordingly, foreign nationals will not be allowed to have representation in the Board of Directors of funds constituted as investment companies notwithstanding the representation that (i) such funds will be wholly or partially owned by foreign stockholders, and (ii) the units of participation in those funds will be exclusively offered offshore (outside Philippine territory).
