Can Foreigners Legally Use Nominee Owners for Retail Business Registration in the Philippines?

November 26, 2025

retail store business registration Philippines

Foreign investors eyeing the Philippine retail sector frequently encounter the question of whether nominee arrangements can circumvent the long-standing ownership restrictions that reserve small and medium retail businesses for Filipinos, with violations now carrying fines of up to PHP 20 million and imprisonment under the strengthened Anti-Dummy Law. The Retail Trade Liberalization Act of 2000 (Republic Act 8762), as amended by Republic Act 11595 in 2022, lowered the minimum paid-up capital for 100 percent foreign-owned retail enterprises to USD 200,000, yet retained full Filipino ownership for companies with capital below that threshold—creating persistent confusion about the legality of nominee shareholders. This guide examines the current legal framework, penalties, documented enforcement actions, and compliant alternatives for foreigners entering the PHP 2.1 trillion retail market.

Current Foreign Ownership Rules for Retail Business in the Philippines

The Retail Trade Liberalization Act, along with its 2022 amendment, establishes clear capital-based ownership thresholds that determine whether foreigners may own a retail business outright or must partner with Filipinos.

Below USD 200,000 paid-up capital: 100% Filipino ownership is required; foreigners are prohibited from holding any equity.
USD 200,000 to USD 2,500,000 capital: Maximum 60 percent Filipino ownership, minimum 40 percent foreign ownership permitted with SEC approval.
Above USD 2,500,000 capital: 100% foreign ownership is allowed without restriction.
Online-only retail: Treated identically to brick-and-mortar; same capital thresholds apply.
Franchising arrangement: Foreign brand franchisors may own the master franchise, but local franchisees must comply with retail ownership rules.

The SEC rejected 187 retail registration applications in 2025 for attempting to circumvent the $200,000 threshold through undercapitalization.

Why Nominee Ownership Arrangements Are Expressly Illegal

Using Filipino nominee shareholders or directors to hold shares in trust for foreign beneficiaries violates multiple laws and triggers severe corporate and criminal penalties.

Anti-Dummy Law (Commonwealth Act 108 as amended): Prohibits Filipinos from allowing their nationality to be used to enable foreign control of restricted activities.
Revised Corporation Code Section 136: Criminalizes simulation of minimum Filipino equity through dummy arrangements.
Retail Trade Liberalization Act Section 9: Explicitly declares nominee setups void ab initio.
SEC Memorandum Circular 19-2023: Requires beneficial ownership disclosure; nominees must declare real owners under oath.
Criminal Penalties: Up to 15 years imprisonment and fines of PHP 2–20 million for violators.

The SEC and DOJ jointly filed 41 criminal cases against nominee arrangements in the retail and real estate sectors in 2025.

Real-World Enforcement and Penalties for Nominee Setups

Authorities have intensified crackdowns on nominee structures, with high-profile cases demonstrating the risks.

Corporate Dissolution: The SEC automatically dissolves corporations proven to use nominees.
Director Disqualification: Filipino nominees face lifetime disqualification from serving as directors.
Tax Reassessment: BIR disregards corporate personality and assesses taxes directly against foreign beneficial owners.
Deportation Proceedings: Foreign nationals involved face blocklisting and deportation.
Civil Forfeiture: All corporate assets may be forfeited to the state.

Compliant Alternatives for Foreigners Entering the Philippine Retail Business

Legal pathways exist that allow foreign participation without violating nationality restrictions.

Capital Compliance Route: Inject a minimum of USD 200,000 in paid-up capital for 100% foreign ownership.
Joint Venture Structure: Partner with Filipino investors contributing at least 60 percent equity in sub-threshold retail companies.
Franchise Model: License the brand and system to qualified Filipino franchisees while retaining royalties.
Wholesale Trading: There are no nationality restrictions for B2B wholesale; foreigners may own 100% of the business.
E-commerce with Local Distributor: A foreign online platform contracts with a licensed Filipino retailer for fulfillment.

Foreign retailers using compliant structures grew 28 percent faster than those attempting nominee setups in 2025.

Registration Requirements for Foreign-Owned Retail Corporations

Compliant foreign-owned retail business registration follows the same SEC process as domestic corporations, but with additional documentation proving capital compliance.

Minimum Capital Deposit: USD 200,000 in the form of a bank certificate from a Philippine universal/commercial bank.
SEC Foreign Investment Application: Form F-100 with articles declaring retail as the primary purpose.
Treasurer’s Affidavit: Swearing**: Subscription and payment of foreign equity portion.
Anti-Dummy Compliance Certificate: Notarized declaration of beneficial ownership.
BIR and LGU Registration: Follow standard corporate registration after SEC approval.

SEC processing averages 15–25 days for properly documented foreign retail applications.

Why Professional Guidance Is Essential for Compliant Retail Entry

Navigating foreign ownership rules, capital verification, beneficial ownership disclosure, and Anti-Dummy Law compliance while structuring a viable retail business model demands synchronized legal, tax, and corporate secretarial expertise. This complexity routinely leads to SEC rejection or post-registration criminal exposure without specialist support.

Capital Structuring: Determining optimal paid-up versus authorized capital to meet thresholds cost-effectively.
Beneficial Ownership Compliance: Drafting SEC disclosures that satisfy transparency rules without triggering tax issues.
Anti-Dummy Safeguards: Creating governance documents that prevent accidental violation.
Joint Venture Negotiation: Structuring shareholder agreements that protect foreign minority interests legally.

Triple i Consulting provides foreign retail corporation registration support with a focus on regulatory compliance and minimizing the risk of Anti-Dummy Law violations and associated penalties.

Final Thoughts

The Philippine retail business landscape presents substantial opportunities for foreign investors, provided they adhere strictly to the ownership and capital requirements established by the Retail Trade Liberalization Act and the Anti-Dummy Law. Nominee arrangements, although once common, now trigger automatic corporate dissolution, criminal prosecution, asset forfeiture, and personal imprisonment—risks that far outweigh any perceived convenience. Compliant pathways, such as adequate capitalization, joint ventures, franchising, or wholesale trading, provide secure market access without legal exposure. With retail sales projected to reach PHP 2.5 trillion by 2027 and enforcement actions rising 45 percent in 2025, the choice between legitimate investment and prohibited shortcuts has never carried higher stakes. Foreign retailers that follow the law from day one secure sustainable growth; those that don’t face permanent exclusion.

Is Assistance Available?

Yes, Triple i Consulting provides comprehensive business registration and compliance management as a trusted specialist, ensuring your retail venture meets all ownership and capital requirements from the outset. Our proven expertise turns regulatory complexity into secure market entry. Contact us today to schedule an initial consultation with one of our experts: