FOREIGN CORPORATION - CHAN ROBLES & ASSOCIATES LAW FIRM (2024)

Foreign investments,how made:

Foreign investmentsin the Philippines may be made under any of the following modes:

[1]By establishing a domestic branch office or operation;

[2]By establishing a Philippine representative office;

[3]By operating through a business association in the Philippines;

[4]By operating through a local subsidiary which may be owned entirely orpartially by the foreign business entity;

[5]By establishing joint venture arrangement with a local corporation orbusinessorganization;

[6]By establishing an affiliate in the Philippines.cralaw:red

Among thetypes of business organizationsallowed under Philippine law, a corporation is the most feasible modeofestablishing business in the Philippines. The choice of a particularmodeof establishing corporate presence in the Philippines will depend to agreat extent on the kind of business in which a foreign investor wantsto engage. Unless falling within the restricted list whereforeign ownership is limited to a certain percentage of equity, aforeigninvestor may establish corporate presence in the Philippines directly,i.e., by establishing a branch office or by creating awholly-ownedsubsidiary.

Foreign corporation,governing law:

As far asdomestic corporations are concerned,the governing law over their creation, formation, management,dissolutionand liquidation is the Corporation Code of the Philippines. Thissame law also governs the corporate relationships between thecorporationand its shareholders, the public, and the government.

As far asforeign corporations, however, areconcerned, the law governing their creation, formation, dissolution andliquidation is the law of the country where such foreign corporationswereorganized or established. This is a principle of internationallawwhich is fully recognized in Philippine jurisdiction. Further,Philippinecorporation laws were basically patterned after American corporationandenterprise laws. Consequently, it is no wonder that when uniquesituationsconfront Philippine courts, resort to American laws and jurisprudenceismade to resolve them.

Foreign corporation,right to sue:

Whether aforeign corporation is possessedof the right to sue in the Philippines is determined as follows:

[1]If the foreign corporation is transacting or doing business in thePhilippineswith a license, it has the right to sue within the jurisdictionofthe Philippines;

[2]If it is transacting or doing business without a license, it cannot sue;

[3]If it is not transacting or doing business in the Philippines, it cansueeven if it is not possessed of any license.

Foreign corporation,right to be sued:

A foreigncorporation may be sued in the Philippines:

[1]If it is transacting or doing business in the Philippines with alicense;

[2]If it is transacting or doing business in the Philippines without alicense;

However, ifit is not transacting or doingbusiness in the Philippines and does not have any license to sotransactor do business in the Philippines, it cannot be sued in the Philippinesfor lack of jurisdiction.

Foreign corporation,registration requirement; procedure; documentation:

Foreigncorporations intending to operatein the Philippines through the modes allowed by law, should registerwiththe Philippine Securities and Exchange Commission [SEC]. Suchregistrationis necessary to give legal personality thereto. Consequently,duly-registeredforeign corporations are treated as artificial beings possessed of allrights, benefits and privileges appurtenant to being a corporatecitizen,such as the capacity to sue and be sued, and/or invoke the protectionofPhilippine laws in all their business and commercial dealings.

Procedure:

The procedurefor the registration of a domesticor foreign corporation may be summed up as follows:

First step.Determination of whether the corporation is going to engage or dobusinessin an industry where the Philippine constitution and laws imposerestrictionsas to foreign equity ownership. If the restriction or prohibitionis absolute in nature, the foreign corporation will not bepermittedto be set up in the Philippines. If the restriction or prohibition isnotabsolute, a foreign corporation may be allowed to be set up in thePhilippinesbut just the same, it must comply with the strict foreign equityownershiplimitation. In case there is no such limitation or prohibition,absoluteor otherwise, the foreign corporation may directly engage in businessinthe Philippines under any of the permissible modes described above.

Second step.Confer with the proper government agency regulating or supervising theparticular industry where the foreign corporation desires to engagein.A certification from said appropriate government agency that it is notso prohibited from engaging in a business falling within that industrymust be secured. Certain industries require this certificationsuchas the banking industry, insurance, etc.

Third step.Proceed with the filing of the application with the Securities andExchangeCommission [SEC] which application must be accompanied by the saidcertification.The SEC will then examine the documents submitted and consequentlyreleasethe registration papers in due time.

Documentation:

[A]In the case of existing foreign corporations intending to set up abranchor representative office in the Philippines, the followingdocumentationprocess shall be undertaken::

[1]Verification of the name of the corporation with the SEC [a nameverificationslip is issued by the SEC for this purpose] to determine whether thereis similarity in the corporate name with any existing corporationsregisteredwith the SEC;

[2] Acopyof the Board Resolution of the corporation duly certified by theCorporateSecretary and/or members of the board, that the corporation isauthorizedto establish an office in the Philippines and naming or designatingthereinits authorized agent in the Philippines;

[3]Dulyaudited financial statements covering the year immediately precedingthefiling of the application;

[4]Certifiedcopies of the original Articles of Incorporation duly filed in thecountryof origin [or so-called home country] and translated in English;

[5]Verifiedproof of inward remittance such as bank certificate or credit advice.

[B] In thecase of domestic corporations, the following documentation requirementsshould be complied with:

[1]Copy of the proposed Articles of Incorporation;

[2]NameVerification Slip [issued by the SEC];

[3]Certificateof Deposit issued by a bank to show proof that the paid-up capitalportionof the authorized capital stock is duly deposited in said bank;

[4]Copyof the Alien Certificate of Registration, Special Investor's ResidentVisaor other types of visa;

[5]Proofof inward remittance which is required for non-resident aliens.

Philippinelaw allows one or more foreigncorporations to merge or consolidate with one or more domesticcorporationsin the Philippines. In the event, however, that the absorbedcorporationis the foreign corporation, the latter should file a petition forwithdrawalof its license with the Securities and Exchange Commission [SEC].