One of the requirements for all Branch Offices and Foreign Operating Corporations in the Philippines is to purchase and file for a Securities Deposit every year. This deposit should be an investment instrument purchased from an accredited bank. This interest-bearing instrument is a way to secure part of the foreign company’s investment in the Philippines. This is part of the annual filings for all foreign companies doing business in the Philipines.
The initial requirement is that all Branch Offices and Foreign Corporations must purchase a security with an actual market value of at least 500,000 Philippines Pesos. This must be done and submitted to the SEC within 60 days of the release of the SEC Incorporation Registration.
Every year an additional Security must be purchased and the amount depends on the gross sales of the Branch Office of Regional Operating Headquarters or the value of the previously purchased Securities.
If the company’s income is above 10,000,000 PHP (around 200,000 Euros) then they must purchase Securities equal to 2% of the gross sales. Additionally, if the previous investments made by the company depreciate in Peso value of 10% or more from the initial investment, then the company must make an additional investment to cover the difference.
This deposit typically must be done within 60 days of the end of the foreign corporations fiscal year.
Now with the current situation of the Corona Virus, everything has changed.
The majority of the Philippines is currently under MECQ, which stands for Modified-Enhanced Community Quarantine. This is a lockdown for almost all citizens, businesses, and government offices (except essential workers). Meaning it was very difficult for any business to comply with the purchasing of securities if their deadline for purchasing fell within the Lockdown period.
The Securities and Exchange Commission of the Philippines is aware of this and has released Memo Circular 11 in 2020. This eases the filing of these Security Deposits requirements and provides a grace period to file the deposits after the lockdown period is lifted. So regardless of when the lockdown is lifted a Branch Office will have 30 days to submit this requirement.
If your Branch Office or Regional Operating Headquarters needs assistance in filing its annual Security Deposit requirement or any of its annual filings please reach out to us at firstname.lastname@example.org to speak with a consultant.