Learning how to start a corporation in the Philippines is a strategic move for entrepreneurs aiming to build a scalable, legally protected business. Governed by the Securities and Exchange Commission (SEC), the process involves several steps to ensure compliance with local laws. We’ll explain what a corporation is, why it’s a preferred business structure, and the detailed steps to register a corporation in the Philippines.
What is a Corporation
A corporation is a legal entity distinct from its owners, recognized under Philippine law as having its own rights and responsibilities. It can own property, incur debts, enter contracts, and be sued independently of its shareholders. A corporation provides limited liability, meaning shareholders’ personal assets are protected, and their financial risk is limited to their investment.
Why Choose a Corporate Business Structure
The main benefits of choosing a corporate business structure include:
- Limited liability ensures that shareholders are not personally responsible for the corporation’s debts or legal liabilities, safeguarding your personal wealth.
- Corporations can raise capital by issuing shares, making it easier to attract investors or secure funding for expansion.
- The separate legal entity status ensures business continuity, allowing the corporation to persist despite changes in ownership or management.
These benefits are not granted to sole proprietorships and partnerships, making them less ideal structures for large scale companies.
Corporations also enjoy tax advantages, such as deductions for operational expenses and potential incentives under laws like the CREATE Act for certain industries. Additionally, the formal structure enhances credibility with customers, suppliers, and financial institutions.
Step 1: Choose a Business Name
Your corporation’s name must be unique and distinguishable from existing entities registered with the SEC. Use the SEC’s online Company Name Verification System to check availability.
The name must include a corporate identifier like “Corporation,” “Corp.,” or “Incorporated” and avoid terms suggesting government affiliation (e.g., “Philippine”) or restricted industries (e.g., “bank”) without proper authorization. Reserve your name through the SEC’s eSPARC (Electronic Simplified Processing of Application for Registration of Company) with the reservation valid for 30 days.
Step 2: Prepare Required Documents
Prepare the following documents for SEC registration:
- Articles of Incorporation: Specifies the corporation’s purpose, structure, and authorized capital stock. It must be signed by at least five incorporators, each holding at least one share.
- Bylaws: Defines internal governance, including board meetings, officer roles, and operational procedures.
- Treasurer’s Affidavit: A sworn statement verifying that at least 25% of the authorized capital stock is subscribed and 25% of the subscribed amount is paid.
- Name Reservation Certificate: Confirms your approved business name.
- Bank Certificate: Verifies the deposit of paid-in capital, if applicable.
- Other Requirements: You’ll need other documents depending on your type of corporation. You can find a list on the SEC’s primary registration page.
Foreign investors may need additional documents, such as a Certificate of Inward Remittance for capital contributions or endorsements from agencies like the Board of Investments for specific industries.
Preparing the necessary documents for SEC registration and obtaining approval typically takes 2–3 weeks, depending on the complexity of your corporate structure. Errors in the documents may lead to rejections, requiring resubmission and potentially extending the timeline by another week or more.
The process of preparing the Articles of Incorporation and Bylaws can be complex and time-intensive, especially for those new to corporate registration. To ensure accuracy, we strongly recommend consulting a professional business registration service.
Step 3: Define Your Corporate Structure
A Philippine corporation requires 5–15 incorporators, who are shareholders and must be natural persons. Domestic corporations need at least 60% Filipino ownership, though sectors like export-oriented businesses may allow full foreign ownership.
Appoint a board of directors (minimum five) and officers, including a president, treasurer, and a corporate secretary, who must be a Filipino citizen and resident. Ensure compliance with industry-specific ownership rules, such as restrictions in media or public utilities.
Step 4: File with the SEC
Submit your documents via the SEC’s eSPARC portal or in person at an SEC office. Filing fees are based on authorized capital stock plus a legal research fee. The SEC reviews your application for compliance, and upon approval, issues a Certificate of Incorporation, officially recognizing your corporation. This process typically takes 1–2 weeks with eSPARC.
As mentioned earlier, errors in you documents may require resubmission, additional fees, and another 1–2 weeks for SEC review. To minimize this risk, we strongly recommend enlisting a professional business registration service to ensure accuracy and efficiency.
Step 5: Secure Post-Registration Permits
After SEC approval, obtain permits to complete business registration:
- Barangay Clearance: Apply at your local barangay office
- Mayor’s Permit (also called Business Permit): Register with the local government unit (LGU), with fees varying by business type and location.
- BIR Registration: Secure a Tax Identification Number (TIN) and register books of accounts with the Bureau of Internal Revenue, paying a small fee plus costs for official receipts.
- SSS, PhilHealth, and Pag-IBIG: Register as an employer if you have employees, ensuring compliance with labor laws.
- Other Licenses and Permits: Obtain other permits that you may require for your industry and business operations. Consult a business registration service to ensure complete compliance.
Step 6: Open a Corporate Bank Account
With your SEC Certificate, permits, and other documents, open a corporate bank account to deposit paid-in capital and manage transactions. Banks typically require the Articles of Incorporation, Bylaws, and SEC registration proof. A professional business registration service can assist you with choosing banks with policies favorable for corporate bank accounts.
Summary
A corporation has several advantages that make it the ideal business structure for businesses who want to scale. However, it is also the most difficult to register in the Philippines, involving a multi-step process across different government agencies. For this reason, it is highly recommended that you seek help from a professional business registration service.
The entire process typically takes about one month or longer, depending on preparation and SEC evaluation timelines. Errors in your submission could result in delays, resubmissions, and additional fees.
First Time Registering a Business? Here’s Where to Find Help.
Registering a business in the Philippines can be a complex and challenging process. With numerous permits and licenses required by the government, it’s easy to miss a document or forget to renew it. Unfortunately, this can lead to costly fines or even force your operations to shut down.
That’s where Triple i Consulting comes in. Our team of experienced lawyers and accountants provides comprehensive support for your business registration, so you don’t have to stress over the paperwork. Our expertise and network enable us to streamline your registration process, ensuring it’s completed swiftly and correctly.
We’ll handle the permits and renewals so you can focus on what matters most—running your business and achieving financial success.
Contact us today to schedule an initial consultation with one of our experts:
- Fill out the form below
- Call us at: +63 (02) 8540-9623
- Send an email to: info@tripleiconsulting.com
