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Starting a Business in the Philippines: A Guide for Foreign and Domestic Investors
Anyone who plans to start a business in the Philippines is complied to register their company in the Securities and Exchange Commission (SEC). Registration in the SEC will require a company to identify what kind of corporation structure they want to pursue. The appropriate corporate structure influences taxation, control, investment opportunities, risk management, and your legal obligations.
Based on their ownership structure, business plan, and strategic objectives, investors and entrepreneurs can use this guide to determine which corporation type is best for them.
What are the different kinds of corporate structure in the Philippines?
As of recent SEC regulations and the Revised Corporation Code of the Philippines, the main types of corporations which an investor or entrepreneur can choose to register are:
a. Stock Corporation - Formed for profit; income is distributed to shareholders.
b. Non-Stock Corporation - Formed for purposes other than profit (e.g., charitable, educational, cultural, or religious).
c. One Person Corporation (OPC) - A single stockholder can form a corporation with limited liability.
d. Foreign Branch or Representative Office - For foreign companies establishing a presence in the Philippines.
What should you choose based on your Business Plan?1. Startups and SMEs (Solo or Small Team): Recommended for business types in the field of E-commerce, tech apps, service-based ventures, and personal brands.
We recommended for you to register as a One Person Corporation (OPC) which is ideal for solo founders, freelancers, consultants, or those testing a product or service. The key benefits of this type of structure is the Limited liability (separate legal entity) and there is no need for incorporators or partners. Further, it is easier to manage and register than a regular corporation.
Note: You must be a natural person of legal age, a trust, or an estate. Foreigners may form OPCs subject to foreign equity restrictions.
2. Growing Teams or Investor-Backed Ventures: Recommended for startups seeking investors, joint ventures, or growing SMEs.
We recommend for you to register as a Stock Corporation which are ideal for teams of at least 2 to 15 shareholders. The benefits of this corporate structure is that it is suitable for raising capital, easier to onboard new shareholders and issue shares, allows profit-sharing and ownership flexibility.
Tip: Choose a stock corporation if you're planning to eventually raise funding from angel investors, venture capitalists, or go public.
3. For NGOs, Foundations, or Advocacy-Driven Entities: Recommended for Entities with social missions rather than profit goals like non-profits, educational institutions, cooperatives, civic organizations.
We recommended for you to register as a Non-Stock Corporation. The benefits of registering as a Non-Stock Corporation is that you may qualify for tax exemptions and donor incentives and there is a structured governance and SEC oversight.
Reminder: No dividends are issued, and surplus funds are used to further the mission.
4. Foreign-Owned Companies Entering the PH Market
For foreign-owned companies entering the PH market, you may opt to register as a Branch Office which has legal rights and privileges as the foreign parent; However, you must remit a capital of at least USD 200,000. This is recommended for foreign companies directly doing business in the Philippines.
Another option for you to take is to register as a Representative Office. However, this corporate structure cannot earn income and supports liaison, research, or marketing only. This is recommended for foreign companies with functions such as market testing or local support functions.
Last option that you may choose is to register as a Domestic Corporation with Foreign Equity. You may own 40% to 100% foreign equity depending on business activity. This type of corporate structure is recommended for ventures planning to localize while maintaining foreign control.
Check: Foreign Investment Negative List (FINL) for restricted industries and equity caps.How may we help you?
This short guide may be helpful for you to consider what type of corporate structure to register with the SEC. However, there are a lot of other factors which should also be considered such as the following:
1. Capital Requirements: minimum capital may vary depending on structure and foreign equity,
and domestic stock corporations with at least 25% of authorized capital stock subscribed and 25% of that paid-up,
2. Industry-Specific Regulations: Banking, insurance, education, and utilities require compliance with additional government agencies.
3. Long-Term Goals: planning for IPO, joint ventures, franchising
Based on these considerations, our consultancy firm can help you set-up your business by providing consultations and helping you with the following decisions:
✅ Determining the nature of your business (for-profit or not).
✅ Decide on number of owners and long-term plans.
✅ Verify foreign ownership limits (if applicable).
✅ Assess capital and compliance requirements.
✅ Consult with legal and business advisors or SEC’s helpdesk.
Based on their ownership structure, business plan, and strategic objectives, investors and entrepreneurs can use this guide to determine which corporation type is best for them.
What are the different kinds of corporate structure in the Philippines?
As of recent SEC regulations and the Revised Corporation Code of the Philippines, the main types of corporations which an investor or entrepreneur can choose to register are:
a. Stock Corporation - Formed for profit; income is distributed to shareholders.
b. Non-Stock Corporation - Formed for purposes other than profit (e.g., charitable, educational, cultural, or religious).
c. One Person Corporation (OPC) - A single stockholder can form a corporation with limited liability.
d. Foreign Branch or Representative Office - For foreign companies establishing a presence in the Philippines.
What should you choose based on your Business Plan?1. Startups and SMEs (Solo or Small Team): Recommended for business types in the field of E-commerce, tech apps, service-based ventures, and personal brands.
We recommended for you to register as a One Person Corporation (OPC) which is ideal for solo founders, freelancers, consultants, or those testing a product or service. The key benefits of this type of structure is the Limited liability (separate legal entity) and there is no need for incorporators or partners. Further, it is easier to manage and register than a regular corporation.
Note: You must be a natural person of legal age, a trust, or an estate. Foreigners may form OPCs subject to foreign equity restrictions.
2. Growing Teams or Investor-Backed Ventures: Recommended for startups seeking investors, joint ventures, or growing SMEs.
We recommend for you to register as a Stock Corporation which are ideal for teams of at least 2 to 15 shareholders. The benefits of this corporate structure is that it is suitable for raising capital, easier to onboard new shareholders and issue shares, allows profit-sharing and ownership flexibility.
Tip: Choose a stock corporation if you're planning to eventually raise funding from angel investors, venture capitalists, or go public.
3. For NGOs, Foundations, or Advocacy-Driven Entities: Recommended for Entities with social missions rather than profit goals like non-profits, educational institutions, cooperatives, civic organizations.
We recommended for you to register as a Non-Stock Corporation. The benefits of registering as a Non-Stock Corporation is that you may qualify for tax exemptions and donor incentives and there is a structured governance and SEC oversight.
Reminder: No dividends are issued, and surplus funds are used to further the mission.
4. Foreign-Owned Companies Entering the PH Market
For foreign-owned companies entering the PH market, you may opt to register as a Branch Office which has legal rights and privileges as the foreign parent; However, you must remit a capital of at least USD 200,000. This is recommended for foreign companies directly doing business in the Philippines.
Another option for you to take is to register as a Representative Office. However, this corporate structure cannot earn income and supports liaison, research, or marketing only. This is recommended for foreign companies with functions such as market testing or local support functions.
Last option that you may choose is to register as a Domestic Corporation with Foreign Equity. You may own 40% to 100% foreign equity depending on business activity. This type of corporate structure is recommended for ventures planning to localize while maintaining foreign control.
Check: Foreign Investment Negative List (FINL) for restricted industries and equity caps.How may we help you?
This short guide may be helpful for you to consider what type of corporate structure to register with the SEC. However, there are a lot of other factors which should also be considered such as the following:
1. Capital Requirements: minimum capital may vary depending on structure and foreign equity,
and domestic stock corporations with at least 25% of authorized capital stock subscribed and 25% of that paid-up,
2. Industry-Specific Regulations: Banking, insurance, education, and utilities require compliance with additional government agencies.
3. Long-Term Goals: planning for IPO, joint ventures, franchising
Based on these considerations, our consultancy firm can help you set-up your business by providing consultations and helping you with the following decisions:
✅ Determining the nature of your business (for-profit or not).
✅ Decide on number of owners and long-term plans.
✅ Verify foreign ownership limits (if applicable).
✅ Assess capital and compliance requirements.
✅ Consult with legal and business advisors or SEC’s helpdesk.