We’ll cover some of the basic procedures in registering a company in the Philippines. Whether a sole proprietorship, partnership, corporation, branch office or representative office, many of the steps in the process will be the same. The main difference between setting up a company is in the documentary requirements.
All of the company organizations are relatively easy to process, but the simplest type is a sole proprietorship. It is more of registering with the Department of Trade and Industry to obtain a business name enabling you to begin operations. The owner of the Sole Proprietorship is fully liable for all of the businesses carried out under the trade name. The tax rate for the business is the same as the highest personnel tax in the Philippines; 32%. All income can be declared as personal income and all of your personnel assets can be included in company finances.
The first step in the process is to register the business name at DTI, afterward place the minimal capitalization in a local bank of your choosing in a treasury account. The difference between a foreigner and Filipino citizen capitalization is significant (as with all businesses in the Philippines) 5,000 Php for a Filipino and 200,000 USD for a foreigner to establish. This amount can be reduced if you are participating in export business, employing more than 50 individuals, or utilizing new and advanced technology. Return to DTI with the certificate from the bank, your application, and name reservation, they should issue in 2-3 days a certificate of registration for your business.
For the other types of business registrations the Securities and Exchange Commission SEC is the governing body handling the registration.
The first step with each kind of setup is to reserve the business name. This is crucial in filling out of all the the other documents you will need during the registration process. You will always need to know the name that you intend to use so having the reservation ensures you can place it on your articles or application.
Name reservation is done at the SEC on the third floor. It can also be accomplished online through the SEC website, but sometimes the site has experiences glitches. Usually, reservation can take place instantly. However, sometimes, if the name is too closely related to another business name, you will need to request a manual override of the name, which could take up to 5 days to have complete.
After you have your name reservation on hand, you fill up the application requirements. There is a slight variation between company structures here, but they are all quite simple to comply with. Either articles of incorporation for new corporations and partnership agreements for partnerships. For existing companies setting up in the Philippines you need to submit all the documents showing your company exists abroad. Articles of Incorporation and by-laws, an audited Financial Statements and a board resolution from the company to open an office in the Philippines, these must be authenticated in the nearest Philippine Embassy to the host country for verification. You should make at least 6 copies of the documents as they will be needed for various parts of the process.
Once you have the completed articles of incorporation or parent company documents, the treasury account must be set up in a local bank. This is a pretty simple process but I’ll go over it in another post. Depending on which formation you are setting the amount needed in the treasury will vary. You will submit a notarized articles or application to the bank which they will keep. Once the amount is deposited the bank should issue you a certificate of remittance or deposit on the funds.
Take the remaining 5 copies of application requirements, name reservation, and bank certificate to the 2nd floor of the SEC to the Monitoring and Regulation Dept. There is a separate lane for corporations, one for partnerships, and one for foreign companies (branch offices, representative offices). The documents are then reviewed by an SEC examiner. This is where companies and individuals will run into the most problems. The examiners often use personal judgment, rather than printed fact to determine what is a correctly submitted application. A good business consultant can have the documents received the first time, while inexperience could result in dozens of rejections until the application is finally accepted.
Once you have the application stamped and received (you will have to forfeit another set of applications), you can go downstairs to the first floor and pay the cashier. After you have paid you will get a receipt and take it across the hall to the receiving room (which is now in the same room as the cashier). You will submit 3 more copies of the application, and 1 receiving copy to the receiving desk, you must then wait 3-5 business days for certificate of registration release. They will provide you a contact number to check if the documents have been released already.
Despite seeming difficult; company registration is actually a relatively simple process once you have prepared the registration requirements.
Should you have any questions regarding registering a company in the Philippines, or regulatory affairs consulting Contact Us to speak to a consultant.