The Philippines continues to attract Korean companies as a Southeast Asian business hub, supported by a domestic market of more than 100 million people, widespread use of English, and continued growth in sectors such as BPO, manufacturing, and distribution.
Even after deciding to enter the Philippine market, many companies are unsure where to begin. This article summarizes the basic structure, foreign investment rules, incorporation process, and required documents for establishing a local company in the Philippines.
Choosing the Right Market-Entry Structure
Foreign companies generally have three main options when entering the Philippines:
- Local corporation
- Branch office
- Representative office
| Category | Local Corporation | Branch Office | Representative Office |
| Revenue Generation | Permitted | Permitted | Not permitted |
| Legal Personality | Separate legal entity | Part of foreign head office | Part of foreign head office |
| Parent Company Liability | Limited to investment in principle | Parent company bears liability | Parent company bears liability |
| Minimum Capital Requirement | USD 200,000 where foreign ownership exceeds 40%, subject to exceptions | USD 200,000 | Annual remittance of at least USD 30,000 |
| Best Suited For | Long-term business and revenue-generating operations | Direct operation of the parent company's business | Market research and liaison activities |
For companies planning long-term operations and revenue generation, a local corporation is generally the most common structure.
The procedures and documentation below therefore focus primarily on establishing a Philippine domestic corporation.
Foreign Investment Rules: Two Issues to Review Before Incorporation
1. Check Whether the Business Falls Under the Foreign Investment Negative List
The Philippines restricts foreign ownership in certain industries.
The 13th Regular Foreign Investment Negative List (FINL), issued in May 2026, is the current reference point for determining applicable foreign ownership restrictions.
Certain sectors, such as mass media and small-scale retail activities, may prohibit or limit foreign investment to between 0% and 40%.
For business activities not subject to ownership restrictions, 100% foreign ownership may generally be permitted.
2. Review the Minimum Paid-In Capital Requirement
Foreign-owned companies serving the domestic Philippine market are generally subject to a minimum paid-in capital requirement of USD 200,000 where foreign ownership exceeds 40%.
However, under the amended Foreign Investments Act and related legislation, the threshold may be reduced to USD 100,000 where certain statutory conditions are satisfied, such as:
- use of advanced technology recognized by the Department of Science and Technology (DOST);
- qualification as a startup or startup enabler under the Innovative Startup Act (RA 11337); or
- employment of at least 15 direct Filipino employees, with a majority of employees being Filipino nationals.
Industry classification and capitalization requirements should be reviewed together.
If either issue is overlooked, the application may be rejected at the Securities and Exchange Commission (SEC) stage or the company may later need to restructure its ownership.
Five Steps to Establish a Philippine Local Corporation
Step 1. SEC Registration
The company name is reserved with the Philippine Securities and Exchange Commission (SEC).
The company then prepares and submits the Articles of Incorporation and By-laws, generally through the SEC’s online registration platform.
Once the documentation is complete, the Certificate of Incorporation is typically issued within approximately seven days, although processing times may vary.
Step 2. Barangay Clearance and Business Permit
The company must obtain a Barangay Clearance from the barangay where its office is located.
It must then obtain a Mayor’s Permit or local business permit from the applicable city or municipality.
These procedures are generally completed after incorporation and are commonly required within approximately 30 days of establishment.
Step 3. BIR Registration
The company must register with the Bureau of Internal Revenue (BIR).
This process includes matters such as:
- issuance of a Tax Identification Number (TIN);
- VAT registration, where applicable; and
- authority to issue official receipts or invoices.
Registration should be completed within the applicable statutory deadline following SEC registration. Delays may result in penalties.
Step 4. Registration with Labor and Social Welfare Agencies
Before hiring employees, the company must complete employer registrations with relevant agencies, including:
- Social Security System (SSS)
- PhilHealth
- Pag-IBIG Fund / Home Development Mutual Fund (HDMF)
Step 5. Open a Corporate Bank Account and Fund the Capital
The company opens a bank account in its corporate name.
Where foreign equity is involved, capital is generally remitted through an inward remittance.
A Bank Certificate of Inward Remittance may be required as supporting documentation in connection with SEC filings and capitalization records.
Key Documents for Establishing a Local Corporation
Typical documents required for SEC registration include:
- Articles of Incorporation — notarization required
- By-laws — notarization required
- Treasurer’s Affidavit
- Personal information and identification documents of shareholders, directors, and officers
- Bank Certificate of Inward Remittance, where foreign investment is involved
- Where the shareholder is a foreign corporation: parent company charter documents, by-laws, and board resolution — usually requiring apostille or consular authentication
- Office lease agreement or proof of registered address
The company should also confirm officer eligibility requirements in advance.
Under the amended Revised Corporation Code (RA 11232), the company must appoint the required corporate officers, including a President, Corporate Secretary, and Treasurer.
In particular, the Corporate Secretary must be a Filipino citizen and resident.
Failing to secure qualified local personnel in advance may delay the incorporation process.
DECENT Insight: Review the Structure Before Preparing the Documents
Establishing a Philippine company is not procedurally difficult in itself.
Most practical problems arise because companies skip the pre-incorporation review or incorrectly classify the intended business activity.
If a company discovers after SEC registration that its ownership structure does not comply with foreign investment restrictions, it may need to revise its shareholding structure, change its business purpose, reapply for licenses, or, in some cases, consider re-incorporation or liquidation.
The recommended order of review is clear:
Business activity classification → Foreign ownership restrictions → Capital requirements → Corporate structure → Document preparation
DECENT Law Firm’s Global Business Practice Team provides practical legal support throughout the Philippine market-entry process, including:
- business activity classification;
- foreign ownership review;
- corporate structuring;
- SEC registration; and
- post-incorporation licensing and regulatory procedures.
If your company is considering entering the Philippine market, it is advisable to review the legal structure before beginning the incorporation process.