The Philippines has significantly liberalized its investment climate through recent legislative reforms, most notably the Revised Corporation Code (Republic Act No. 11232) and amendments to the Foreign Investments Act (Republic Act No. 7042). For foreign investors, establishing a domestic corporation remains a primary vehicle for doing business.

A corporation is considered foreign-owned in the Philippines if more than 40% of its voting stock is held by non-Filipino citizens.

1. Capitalization Requirements

The minimum paid-in capital depends on the nature of the business and the intended market.

Domestic Market Enterprises (DME)

If the corporation intends to sell goods or services within the Philippines, it is classified as a DME.

Standard Requirement: A minimum paid-in capital of USD 200,000.00.
Reduced Requirement: The capital requirement may be lowered to USD 100,000.00 if the enterprise:
1. Involves advanced technology (as certified by the Department of Science and Technology); or
2. Employs at least 50 direct Filipino employees.

Export Market Enterprises

If the corporation exports at least 60% of its goods or services, it is considered an Export Market Enterprise.

Requirement: There is generally no minimum paid-in capital requirement beyond the standard SEC registration fees (often as low as PHP 5,000.00), provided the industry is not on the Foreign Investment Negative List. However, to avail of tax incentives, these entities typically register with the Philippine Economic Zone Authority (PEZA) or the Board of Investments (BOI).

2. Compliance with the Foreign Investment Negative List (FINL)

Foreign ownership is subject to the Regular Foreign Investment Negative List (FINL), which identifies areas of economic activity where foreign equity is restricted or prohibited.

List A: Areas reserved for Filipino citizens by the Constitution or specific laws (e.g., Mass Media—0% foreign equity; Advertising—30% foreign equity).
List B: Areas restricted for reasons of security, defense, risk to health and morals, and protection of small and medium-scale enterprises (e.g., Saunas, massage clinics, and certain defense-related activities).

3. Documentary Requirements for SEC Registration

The Securities and Exchange Commission (SEC) is the primary regulatory body for incorporation.

Core Documents

Name Verification: Reservation of the corporate name via the SEC’s online portal (Electronic Simplified Processing of Application for Registration of Company or ESPARC).
Articles of Incorporation (AOI): Outlining the corporation's name, purpose, principal office address, term of existence (usually perpetual), and details of the incorporators.
Bylaws: Establishing the internal rules for the corporation's management.
Treasurer’s Affidavit: A sworn statement by the elected Treasurer certifying that the required capital has been paid.
SEC Form F-100: An application form specifically for corporations with more than 40% foreign equity.
Bank Certificate: A certificate of Inward Remittance from a local bank proving that the foreign capital has been transferred into the Philippines.

Organizational Structure Requirements

Incorporators: Can be between 1 (for a One Person Corporation) and 15 individuals. They can be foreigners, provided the industry allows it.
Directors: Must hold at least one share of stock. Under the Revised Corporation Code, directors are no longer required to be residents of the Philippines.
Corporate Officers:
- President: Does not need to be a Filipino citizen or resident.
- Treasurer: Must be a resident of the Philippines.
- Corporate Secretary: Must be a Filipino citizen and a resident of the Philippines.

4. Post-SEC Registration Process

Obtaining the Certificate of Registration from the SEC is only the first step. The corporation must then clear several local and national government hurdles:

Local Government Units (LGU)

Barangay Clearance: Obtained from the local district where the office is located.
Mayor’s Business Permit: Requires the submission of the SEC registration, lease contract, and various local clearances (Fire, Sanitary, and Zoning).

Bureau of Internal Revenue (BIR)

The corporation must register with the BIR to:

Obtain a Tax Identification Number (TIN) for the corporation.
Register Books of Accounts.
Secure an Authority to Print (ATP) official receipts or invoices.

Social Agencies

As an employer, the corporation must register with the following mandatory social agencies:

Social Security System (SSS)
Philippine Health Insurance Corporation (PhilHealth)
Home Development Mutual Fund (Pag-IBIG)

5. Ongoing Compliance and Reporting

Once registered, a foreign-owned corporation must maintain its "good standing" by filing annual reports:

General Information Sheet (GIS): Filed within 30 days of the annual stockholders' meeting.
Audited Financial Statements (AFS): Stamped by the BIR and filed with the SEC annually.
Special Reports: If the corporation is registered with PEZA or BOI, it must submit quarterly and annual reports to maintain its tax incentives.