Paid-Up Capital Philippines: A Guide to Business Incorporation

April 15, 2025

In the Philippines, business establishment involves navigating a complex financial and regulatory requirements landscape, with paid-up capital as a cornerstone of corporate formation. Paid-up capital Philippines represents the funds shareholders contribute to a company, forming the financial bedrock for operations and compliance with the Securities and Exchange Commission (SEC). This article provides a detailed examination of paid-up capital requirements, offering actionable insights for entrepreneurs and foreign investors aiming to incorporate and register a business in the Philippines.

What Is Paid-Up Capital in the Philippines?

Paid-up capital is the amount of money or assets shareholders have paid to a corporation in exchange for shares, reflecting the company’s initial financial commitment. It is a critical component of business incorporation in the Philippines, ensuring companies have sufficient resources to operate and meet regulatory standards. Below is a breakdown of its key aspects:

Definition: Paid-up capital is the portion of subscribed capital fully paid by shareholders in cash or tangible assets like property or equipment. Unlike labor or services, only measurable contributions qualify.
Role in Incorporation: The SEC requires corporations to declare paid-up capital during registration to verify financial viability and compliance with industry-specific thresholds.
Legal Framework: The Revised Corporation Code (Republic Act No. 11232) governs paid-up capital, removing the general minimum for most corporations but retaining specific requirements for certain sectors.
Significance for Stakeholders: It signals to creditors, investors, and regulators the company’s ability to sustain operations and settle obligations, fostering trust in its financial health.
Distinction from Other Capital Types: Unlike authorized or subscribed capital, paid-up capital represents funds available for immediate use, not just commitments or permissions.

Entrepreneurs must understand what paid-up capital is in the Philippines to ensure compliance and build a stable financial foundation.

Difference Between Paid-Up and Authorized Capital Philippines

A common point of confusion for new business owners is distinguishing paid-up capital from authorized capital. These terms, while related, serve distinct purposes in a corporation’s financial structure. Here’s a clear comparison to clarify the difference between paid-up and authorized capital Philippines:

Authorized Capital Stock: This is the maximum amount of capital a corporation can issue, as outlined in its Articles of Incorporation. It sets the ceiling for potential share issuances.
Paid-Up Capital: This is the amount shareholders have paid for their subscribed shares, representing real funds or assets in the company’s possession.
Regulatory Requirements: The SEC requires at least 25% of authorized capital to be subscribed and 25% of subscribed capital to be paid up at incorporation, though specific industries may demand higher thresholds.
Flexibility: Authorized capital allows room for future share issuances without amending corporate documents, while paid-up capital reflects current financial contributions.
Practical Implications: A high authorized capital may signal growth ambitions, but only paid-up capital provides immediate operational funds, making it a key focus for regulators and creditors.

Grasping this distinction helps business owners plan their capital structure effectively, balancing ambition with practical financial commitments.

Minimum Capital Requirement Philippines by Industry

The Philippines has tailored paid-up capital requirements to reflect different industries’ economic and operational demands. While the Revised Corporation Code eliminated the general minimum of PHP 5,000 for most corporations, specific sectors still face mandatory thresholds. Below are the minimum capital requirement Philippines standards for key industries:

General Domestic Corporations: No minimum paid-up capital is required unless specified by special laws, allowing flexibility for small and medium enterprises (SMEs).
Retail Trade (Foreign-Owned): Republic Act No. 11959 mandates a minimum paid-up capital of PHP 25 million (approximately USD 500,000) for foreign retailers, reduced from USD 2.3 million to encourage investment.
Insurance Companies: The Amended Insurance Code requires PHP 1 billion in paid-up capital to ensure financial stability in this high-risk sector.
Financing Companies: Metro Manila-based firms need PHP 10 million, other cities require PHP 5 million, and municipalities need PHP 2.5 million, reflecting urban-rural cost differences.
Mining: Due to the capital-intensive nature of operations, a minimum paid-up capital of PHP 2.5 million is required, with an authorized capital stock of at least PHP 10 million.
Workforce and Recruitment: PHP 3 million is mandated to protect workers and ensure operational reliability in labor-intensive services.

The Philippines’ paid-up capital requirements vary to balance industry demands with economic accessibility, particularly for startups and SMEs.

Capital Requirements for Foreign Investors in the Philippines

Foreign investors face unique paid-up capital obligations under the Foreign Investments Act (Republic Act No. 7042, as amended). These rules aim to attract international capital while safeguarding national interests. Here are the key capital requirements for foreign investors establishing a paid-up capital for foreign companies in the Philippines:

Domestic Market Enterprises: Foreign-owned corporations (40% or more foreign equity) catering to the domestic market must have a minimum paid-up capital of USD 200,000, ensuring sufficient investment in local operations.
Export-Oriented Businesses: Companies exporting at least 60% of their goods or services are exempt from the USD 200,000 requirement, often requiring only PHP 5,000 to promote export-driven growth.
Advanced Technology Firms: Businesses using technology certified by the Department of Science and Technology (DOST) qualify for a reduced minimum of USD 100,000, incentivizing innovation.
Special Economic Zones (SEZs): Firms in SEZs, like those under the Philippine Economic Zone Authority (PEZA), may also secure a USD 100,000 minimum and benefit from tax and capital incentives.
Retail Sector: As noted, foreign retailers need PHP 25 million, aligning with relaxed rules to boost foreign participation in consumer markets.
Restricted Industries: Sectors listed in the Foreign Investments Negative List (FINL), such as media or public utilities, limit foreign ownership and impose stricter capital rules to protect national interests.

These capital requirements for foreign investors reflect the Philippines’ strategy to balance openness to global business with regulatory oversight.

How to Increase Paid-Up Capital in the Philippines

As businesses grow, they may need to boost their paid-up capital to fund expansion, meet regulatory demands, or attract investors. Increasing paid-up capital involves specific steps and compliance with SEC guidelines. Here’s a step-by-step guide on how to increase paid-up capital in the Philippines:

Board and Shareholder Approval: Secure a two-thirds vote from shareholders and board approval to amend the Articles of Incorporation to reflect the new capital structure.
Issue New Shares: Allocate additional shares from the authorized capital stock, ensuring at least 25% of the increase is subscribed, and 25% of the subscribed amount is paid.
Deposit Funds: Transfer the paid-up capital into the corporation’s bank account, obtaining a bank certificate to verify the transaction for SEC submission.
File with the SEC: Submit amended Articles of Incorporation, a board resolution, and proof of payment (e.g., bank certificate or auditor’s report) to the SEC within six months of approval.
Update Records: Reflect the increased paid-up capital in corporate books and financial statements, ensuring transparency for stakeholders and regulators.
Consider Non-Cash Contributions: If using assets like property or equipment, obtain an independent valuation to confirm their fair market value for SEC compliance.

Increasing paid-up capital demonstrates financial strength, but the process’s complexity underscores the need for expert guidance. Triple i Consulting, a trusted provider of corporate services, offers specialized assistance to navigate these intricate requirements. Our expertise ensures compliance and minimizes delays, making us an invaluable partner for businesses tackling this critical step.

Why Paid-Up Capital is Important

Paid-up capital is more than a regulatory checkbox; it shapes a company’s credibility, operational capacity, and long-term success. Its importance spans financial, legal, and strategic dimensions, particularly in the Philippines’ dynamic business environment. Here’s why paid-up capital matters:

Regulatory Compliance: Adequate paid-up capital ensures adherence to SEC and industry-specific rules, avoiding penalties or registration denials that could derail operations.
Financial Stability: It provides the initial funds needed for startup costs, operational expenses, and unforeseen challenges, reducing reliance on debt in the early stages.
Investor Confidence: A robust paid-up capital signals commitment and financial health, making the company more attractive to investors and lenders seeking low-risk opportunities.
Market Competitiveness: Higher capital allows businesses to invest in technology, talent, and infrastructure, positioning them to compete effectively.
Creditor Protection: It assures creditors of the company’s ability to meet obligations, reduce financial risk, and foster trust in business dealings.
Growth Potential: Sufficient capital supports expansion plans, whether through new product lines, market-entry, or acquisitions, driving long-term profitability.

Paid-up capital in the Philippines is a vital indicator of a company’s readiness to thrive in a competitive economy. It underpins compliance and ambition.

Final Thoughts

Paid-up capital Philippines serves as the financial foundation for businesses, shaping their ability to comply with regulations, attract investment, and pursue growth. From understanding its definition to navigating industry-specific requirements and foreign investment rules, entrepreneurs must approach paid-up capital precisely. Whether launching a startup or expanding an established firm, aligning capital strategies with regulatory and operational needs is critical. Businesses can build stability and credibility in the Philippines’ vibrant market by prioritizing adequate paid-up capital.

Is Assistance Available?

Yes, Triple i Consulting at tripleiconsulting.com offers expert guidance to simplify the complex process of managing paid-up capital and incorporation. Our tailored solutions ensure compliance and efficiency, empowering your business to succeed.

Ready to establish your business in the Philippines with confidence? Contact us today to schedule an initial consultation with one of our experts: