Setting up a business in a new country means foreign investors have important compliance milestones to meet. Meeting your compliance requirements in the first year of trading will ensure your business runs smoothly, retains your valuable business licenses, and establishes you as a reputable business with your governing authorities. If you are a multi-national company, subsidiary, branch office, or regional headquarters setting up in Manila and other areas, it is important to ensure you follow corporate compliance requirements in the Philippines to ensure a long-term successful business.
Key Officers Required
To set up a compliant foreign-owned company in the Philippines, you will need to appoint certain officers. These officers must be resident in the Philippines as set out in the Revised Corporation Code of the Philippines.
- Resident Agent: Foreign Corporations (Branch/Representative Office) must appoint a Resident Agent. This must be an individual who has been continuously resident in the Philippines or a local company. The Resident Agent will receive any legal notices, communications from the government, and court proceedings on your behalf.
- Corporate Secretary: All local companies are required to appoint a Corporate Secretary. This officer must be a citizen of the Philippines and resident there. Their role is to keep the official company minute book, keep the stock transfer register, submit annual report requirements, and certify board resolutions.
- Corporate Treasurer: The company must appoint a Treasurer to manage the finances of the company, including bank accounts and financial reporting. This officer must be resident in the Philippines; they must be a citizen of the Philippines or place a fidelity bond depending on the shareholding of the company.
- Nominee Director: Many foreign investors will appoint Nominee Directors to meet the legal requirements of having a board of directors. These directors will provide the local oversight needed and will always be compliant.
- Compliance Officers: Any company that is a public interest company or falls under a particular regulation must appoint a Compliance Officer. This officer will be responsible for ensuring all compliance requirements are met and managing risk and enforcing company governance.
- Anti-Money Laundering Officers: Companies that are financial institutions, real estate, designated non-financial businesses or specialists will need to appoint a compliance lead. They will be responsible for monitoring company transactions, performing Know Your Customer procedures and meeting the requirements of the relevant financial intelligence unit.
- Health and Safety Officers: Any company which has an office, factory, shop or technical site must appoint a certified occupational health officer. This will ensure the company complies with the Department of Labor and Employment.
- Management Officers: Foreign enterprise management will need to have a clear management structure in place. This will ensure your local management is aligned with your global requirements.
Important Annual Filings
It is very important to keep on top of your compliance requirements. You will have strict requirements from various authorities, including the Securities and Exchange Commission and the Bureau of Internal Revenue. If you fail to meet these requirements, you may face hefty fines, suspension of your company, or complete revocation.
- General Information Sheet (GIS): Foreign-owned companies must submit a General Information Sheet to the Securities and Exchange Commission. This must be submitted within 30 days of the Annual Stockholders Meeting. This form will include current shareholding, directors, officers, and addresses.
- Audited Financial Statements (AFS): Companies must prepare and submit Audited Financial Statements stamped by an independent CPA to the Securities and Exchange Commission and the Bureau of Internal Revenue. This will show financial transparency and will help calculate tax.
- Books of Accounts: Regulated companies must keep Books of Accounts. These must be paper loose-leaf or computerized. Companies must also submit monthly, quarterly, and annual income tax returns, Value Added Tax returns, and Withholding Tax returns.
- Local Government Unit: Companies operating in the Philippines must renew their Mayor’s Permit, sanitary requirements, fire certificate, and local business tax in January each year.
- Annual Registration Fee: All companies that pay tax must pay their Annual Registration Fee to their Revenue District Office at the beginning of each tax year.
- Quarterly Information: Listed Companies, Financial Institutions, Foreign Branches and Regional Headquarters must submit quarterly information regarding their financial performance, changes and updates.
- Environmental Compliance: If your company has premises where business or industry takes place affecting the environment, then you will need to submit self-monitoring reports to the relevant Environmental Bureaux.
- Tax Exemptions: If your company has tax exemption through a tax treaty or tax status, then you will need to submit application and confirmation forms regularly.
Additional Registrations and Data Protection Laws
Depending on what activity your company is carrying out and how sensitive the personal data you hold is, there will be additional requirements to meet. If you are in a particular industry, then you will have ongoing requirements to interact with specific government bureaus.
- Data Protection Officer (Philippines): Companies processing personal data relating to employees or customers must appoint a Data Protection Officer and register their personal data processing with the National Privacy Commission. This is set out in the Data Privacy Act of 2012.
- Investment Promotion Agency (IPA): Companies receiving tax incentives through agencies such as the Philippine Economic Zone Authority or Board of Investments must submit Quarterly and Annual Reports regarding capital spending, exports, and local employment.
- Bangko Sentral ng Pilipinas (BSP): Registering your foreign inward investment with the Central Bank of the Philippines will ensure you have the right to source foreign exchange for repatriation of profits and dividends.
- Industry-Specific Licenses: Companies that operate in specialized industries such as Financial Technology, Medical Distribution, Environmental, and Retail must obtain and maintain licenses.
- Social Security and Labour: Companies must register with Social Security Agencies. This will ensure payments are made each month on behalf of your employees.
- Trademarks: Foreign parent companies must register trademarks, patents, brands, and licensing arrangements with the Intellectual Property Office of the Philippines.
- Import/Export Licenses: Companies that are involved in international trade must obtain customs approval, register with the national trade portal, and keep their importer up to date.
- Consumer Protection: Companies involved in retail, direct selling, or online must ensure they are following fair trading practices set by the Department of Trade and Industry.
Ensuring Continued Company Management
By having a good company management structure in place, you can avoid any issues with your management. This ensures there are no unnecessary fines and leaves your foreign company ready for any trading, audit, or surprise visits. Having a good system in place to ensure you have a good company management structure will ensure any changes are recorded properly in line with local company law.
- Company Management Services: Using professional company management services will ensure your board minutes, share certificates, required books, and compliance deadlines are met on time.
- Annual Meetings: Companies must hold Annual Stockholder and Board Meetings in line with your bylaws.
- Ownership Changes: Any changes to share ownership, share transfers, director resignations, company restructuring, and increases in authorized share capital must be approved, executed, and recorded by the board.
- Internal Compliance Checks: By holding internal compliance checks, you can identify any missing requirements, tax submissions, or company management issues long before the State comes to audit.
- Keeping Paperwork: Having a good system in place to store your certificates, board minutes, tax clearance certificates, local licenses, and company receipts will protect your company.
- Board Resolutions: Foreign companies must have uniform board resolution templates, secretarial certificates, and approvals in place. This will make it easier when dealing with banking.
- Officer Resignation: When officers or directors resign from the company, company management will ensure a smooth transition, notification to the SEC, and an update to your signatories.
- Contracts: Having a central list of all active contracts, property leases, service agreements, and intercompany agreements will ensure your company is supported by contracts.
Overcoming Complex Compliance Issues
Meeting local compliance requirements can be very complex. There are strict requirements, tight deadlines, and constantly changing circulars. Getting your company management running smoothly in the Philippines requires expert local knowledge, in-depth knowledge of the regulations, and dedicated administration. Without this, you could experience delays to your business, large fines, or lose your license.
Working with an experienced company advisory firm such as Triple i Consulting will give you peace of mind knowing your compliance requirements are being met by a reliable legal team. Ensuring you have expert advice from the outset will ensure your foreign-owned company has a clean compliance record so your management can focus on growing the business.
Summary
Meeting your compliance requirements in the Philippines correctly from the get-go will ensure the success of your long-term growth. By having officers in place, submitting the required documents, ensuring data protection, and having good company management, your foreign company will have a strong base to ensure long-term success.
Is Assistance Available?
Triple i Consulting can provide you with expert advice to ensure all legal requirements are met by your foreign-owned company. Get in touch with our expert team today to find out how our bespoke company management services can protect your business investment in the Philippines.
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