Corporate Legal Entities in the Philippines
There are different corporate legal entities that a foreign and local investor can choose from. Investors must determine first their exact planned business activities to analyze the most suitable entity for the company.
LIMITED LIABILITY COMPANY
Domestic corporation under FIA
Domestic Corporations under FIA are for entities that will be 100% foreign-owned. 40% and above foreign shares are defined as 100% foreign-owned. This is the commonly chosen entity to register due to the fact that there is no Filipino person requirement for the incorporators and shareholders. For the corporate officers however, this requirement is needed. Click this link for more information.
Domestic corporation under 60-40
The name is pretty self-explanatory regarding this entity. Domestic Corporations under 60-40 are suitable for foreign investors who have Filipino partners. It is also applicable for business activities that are regulated for 100% foreign ownerships. Construction industry and retail trading are one of those. Considering that a 60-40 set-up is a local corporation, the corporate officers are required to be Filipino individuals as well.
One Person Corporation
OPC or One Person Corporation is a new entity that was recently added to the Corporate Code of the Philippines. This is intended to cater for sole investors. In this type of entity, the sole shareholder will also be the President and Incorporator of the company. OPC is still a limited liability company. The only difference is its nature since One Person Corporation is a sole ownership. Check out this link for more information.
Domestic Corporation for 100% Filipino-owned
A 100% Filipino-owned corporation has a minimal issue in terms of registration. A local corporation is open for all types of business activities in the Philippines.
For clearer understanding of this entity, the Representative Office is basically a support office of the parent company abroad. This type of entity is not allowed to generate revenue in the Philippine market and is only allowed to be a back office. The SEC requires the authenticated parent company documents as they thoroughly verify if the main office can support the representative office here in the Philippines. Click this link for more information.
The corporate structure of the parent company is followed in this entity. Hence, it is considered as a foreign company. The difference between a Representative Office and a branch is that it can generate revenue in the local market. Branch office registration takes longer to register since the SEC also requires the authenticated parent company documents. The parent company must be running for at least 2 years already and is generating big revenues and assets. The required inward remittance amounting to 200,000 USD is needed during the initial registration as well, therefore, the parent company must be financially capable.