Company Incorporation and Business Registration in the Philippines

The Philippines is an attractive and competitive hub when it comes to business ventures and investments. With its growing highly skilled labor market, strategic geographical location, and susceptive consumer market, the country has become one of the brightest investment spots in the Southeast Asian region.

Before entrepreneurs can start and establish their entity in the Philippines, they must register or incorporate their company with various government agencies to operate legally in the country. Here are the types of businesses that local and foreign investors can set up in the Philippines, as well as the offices that foreign entities can register when seeking company expansion:

• What are the types of business for foreign investors in the Philippines? 
• What are the Legal Entities that can be registered to local and foreign nationals? 
  • Domestic Corporation
  • One Person Corporation (OPC)
• What types of offices can a foreign national register when expanding in the Philippines?
  • Branch Office
  • Representative Office
  • Regional Headquarters (RHQ)
  • Regional Operating Headquarters (ROHQ)
• What We Offer?

Types of Business Entities Available to Foreign Investors in the Philippines

Foreign nationals seeking to establish an entity in the Philippines can set up businesses in the country, subject to certain limitations based on the Foreign Investment Negative List (FINL). Industries on the FINL are either partially or wholly reserved for Filipino entrepreneurs.

Local and Foreign Investors Seeking to Establish a Company

Local and Foreign nationals looking to establish a business in the Philippines have two types of legal entities they can register. The options are:

Domestic Corporation

Domestic Corporation (or Subsidiary Corporation if with foreign equity) is the most common type of corporation in the Philippines. Its legal entity is separate from its shareholders and is required to have at least two incorporators, which must be natural persons of legal age and subscribers of at least one share of capital stock in the corporation.

Upon the effectivity of the Revised Corporation Code on 23 February 2019, the absolute requirement of having a minimum of 5 individuals in the formation of corporations has been removed. Moreover, partnerships, associations, or corporations are now allowed to be incorporators.

This type of corporation is required to acquire a Certificate of Incorporation and a Certificate of Registration from the SEC. A Certificate of Incorporation legitimizes its existence as a corporation and is currently operating in accordance with Philippine legislation. On the other hand, the Certificate of Registration authorizes it to engage in business inside and outside the Philippines.

There are three types of domestic corporations in the Philippines:

• 100% Filipino-Owned Domestic Corporation
• 60% Filipino-Owned and 40% Foreign-Owned Domestic Corporation
• 40% to 100% Foreign-Owned Domestic Corporation

A domestic corporation’s minimum capital requirement will rely on its revenue source, which may be any of the following:

• Export-Market Enterprise. When a company’s revenues are at least 60% generated outside the Philippines, the minimum paid-up capital will be US$100.
• Domestic-Market Enterprise. Otherwise, if the company’s revenues are 40% generated within the Philippines, the minimum paid-up capital is US$200,000.

Learn more about How to register a Domestic Corporation in the Philippines

One Person Corporation (OPC)

A One Person Corporation (OPC) is a type of corporation with a single stockholder who shall also be the sole director and president. It offers the full authority and control of a sole proprietorship and the limited liability of a domestic corporation, an ideal setup for aspiring entrepreneurs planning to run a corporation on their own without the associated risks of incurring personal liabilities and having business partners.

The single stockholder (also known as incorporator) can be a natural person of legal age, a trust or an estate. Under applicable laws, the trust does not refer to a trust entity, but to the subject being managed by a trustee.

Similar to a Domestic Corporation, an OPC is also required to obtain a Certificate of Incorporation and a Certificate of Registration from BIR.

A foreign natural person can set up an OPC, provided they engage in areas of investment not restricted from foreign participation.

Unlike other types of corporations, an OPC is not required to have a minimum authorized capital stock, except as otherwise provided by law. Further, unless stated by applicable laws or regulations, no portion of the authorized capital is required to be paid up at the time of incorporation.

The single stockholder is required to designate a nominee and alternate nominee who shall be indicated in the Articles of Incorporation to replace the single stockholder if they die or become incapacitated to operate the OPC.

Learn more about How to register a One Person Corporation in the Philippines

Types of Offices for Foreign Entities in the Philippines

Foreign entities seeking to expand their business in the Philippines can register offices that serve as their business extensions. The available options include the following:

Branch Office

A branch office is a corporate entity that generates revenue by representing its overseas parent company’s operations in the Philippines. It does not have an independent legal identity from its parent firm, and the head office’s international operations are responsible for its responsibilities.

A branch’s office minimum paid-up capital is US$200,000.00, but can be reduced to the following:

• If it engages in business activities that involve technology or employ at least 50 direct employees, the paid-up capital will be US$100,000.00
• If it seeks to be an Export-Market Enterprise that generates income overseas, the paid-up capital will be US$100.00
• If the branch intends to operate as a Domestic Market Enterprises (DMEs) that exclusively sell products and services within the Philippines, the capitalization requirement remains at US$200,000.
• In all cases, the branch is required to post an initial securities deposit in the amount of at least P500,000.00 and an annual additional deposit of 2% of the amount by which the branch office’s gross income exceeds P10,000,000.00.

Learn more about How to register a Branch Office in the Philippines

Representative Office

A representative office is a business entity established by a foreign company to conduct non-commercial activities in another country. Therefore, it does not have a separate legal entity from its foreign parent company, and its liabilities are acquired by the head office overseas. Since it is a non-generating income entity, they are not permitted to offer services to clients or third parties in the Philippines.  In the Philippines, a representative office typically serves the following purposes:

• Marketing, information dissemination, and promotion of company services/products
• Facilitation of client orders from abroad
• Quality control of products for export
• Any other passive acts that support the business activities of the parent company and do not involve the earning of any income

The minimum capital requirements of a representative office are US$30,000.00.

Learn more about How to register a Representative Office in the Philippines

Regional Headquarters (RHQ)

A regional headquarters is a non-income-generating entity that can be established by foreign corporations with international subsidiaries, branches, and affiliates. It can function as a contact center or back office to oversee, monitor, and organize administrative tasks. Additionally, it may procure raw materials, market goods, provide employee training, and conduct research and development within the legal framework of the Philippines.

The regional headquarters has no separate legal identity from its parent firm, making the head office in another country responsible for all its obligations.

Under Philippine law, a Regional Headquarters (RHQ) focuses on specific activities to support its parent company. As such, it benefits from exemption from engaging in the following:

• Generate income or offer services to third parties in the Philippines
• Manage the operations of its subsidiaries, branches, and affiliates
• Deal directly or do business with its clients in the Philippines

Its parent company is also not permitted to sell or market products through the RHQ office.

The minimum capital requirement for setting up a Regional Headquarters (RHQ) is US$50,000.00, which must be annually remitted by the parent company to cover operating expenses.

Learn more about How to register a Regional Headquarters in the Philippines

Regional Operating Headquarters (ROHQ)

Regional Operating Headquarters (ROHQ) are income-generating entities that extend the business activities of their foreign parent company into the Philippines. These can only be established by foreign corporations with global affiliates, subsidiaries, and branches, serving as a service hub for the parent company’s businesses.

Under Philippine law, an ROHQ is prohibited from directly or indirectly soliciting or marketing products and services for its parent company, subsidiaries, branches, and affiliates. It is also not permitted to offer qualifying services to third-party enterprises beyond its associated entities.

Furthermore, the parent company must remit at least US$200,000 annually to support the entity’s operational costs.

Learn more about How to register a Regional Operating Headquarters in the Philippines

What We Offer

Before starting and operating a business in the Philippines, several registrations and requirements must be completed. We offer comprehensive assistance in the following areas:

• Company incorporation and foreign corporations’ local office registration
• Corporate secretarial and corporate housekeeping work
• General post-incorporation and registration compliances

We assist clients in choosing the right type of business entity to register, whether their goal is to generate income or set up a back office in the country. In addition to the services mentioned above, we help clients evaluate the following:

• Ownership structure
• Capital requirements on the industry to engage in
• Need for special or secondary licenses/permits (if they intend to engage in regulated industries)
• Location of business