Legal BlogFinancially Sound Ratios!

February 25, 20130
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President Benigno Aquino once told the “Philippine story of transformation from being a sick man of Asia into one dynamic country bucking a global economic downturn.   The sick man of Asia is now revitalized, more dynamic than it ever was in its history, marching toward equitable progress!”

The Philippines is experiencing great positive changes in terms of economic growth.  This is, in fact, increasingly driven by private sector activity, including investments based on the reports.   With this vast development in the country, a huge number of investors are enticed to ride the country’s momentum.  In fact, a foreign investor has once said, “Philippines is the world!”

Foreign corporations are highly increasing in numbers in the Philippines.  While foreign corporation set up has been remarkably known entity to form in the country, it’s worth emphasizing, however that this is a “privilege more than a right.  Foreign applicants need to comply strictly with the requirements of the Philippine law”.  (borrowing from SEC evaluator)

It is imperative to note that on top of the documentary requirements for foreign corporation set up, not to mention the business activity has to be outside the FIA negative list, the applicant’s financial ratios must be free from insolvency.   The ability of the applicant to meet its long term debts is very crucial, falling short the benchmark disqualifies any aspirants.   Applicant’s financial capacity in terms of current and leverage ratios may be cured, by way of a surety bond, though.

All said, Foreign corporations aspiring to do business in the Philippines must bear in mind the financial ratios imposed by the Securities and Exchange CommissionGive us a holler and we will assess your Financial Statements for qualification.

By: Atty Grace R. Pangilinan

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