BASICS ON STARTING UP A CORPORATION IN THE PHILIPPINES

WHAT IS A CORPORATION?
A corporation is an artificial being created by operation of law, having the right of
succession and the powers, attributes and properties expressly authorized by law or
incident to its existence.
It is a legal entity, a juridical person which is separate and distinct from its owner
or incorporators.
A corporation is deemed imbued with juridical personality from the time the
Certificate of Incorporation is issued by the Securities and Exchange Commission.
There are two classifications of corporations in the Philippines:
a. STOCK CORPORATION --- A corporation with authorized capital stock
dividend into shares of stock either with or without par value. A stock
corporation is engaged in income generating activities and is authorized to
declare dividends; and
b. NON-STOCK CORPORATION --- A corporation with no authorized capital
stock. It is organized for charitable, religious, educational, professional,
cultural, fraternal, literary, scientific, social civil service, or similar purposes,
like trade, industry, agricultural and like chambers, or any combinations
thereof.

WHAT BUSINESS ACTIVITIES THAT NO FOREIGN OWNERSHIP IS ALLOWED

AND IS FULLY RESERVED TO FILIPINO CITIZENS?
a)Mass Media
b)Practice of professions
c)Retail trade enterprises with paid-up capital of less than US$2,500,000
d)Private Security Agencies
e)Small scale mining
f)Utilization of marine resources in archipelagic waters, territorial sea, and
exclusive eonomic zone as well as small-scale utilization of natural
resources in rivers, lakes, bays and lagoons
g)Ownership, operation and management of cockpits
h)Manufacture of firecrackers and other pyrotechnic devices.

WHAT BUSINESS ACTIVITIES ALLOWS FOREIGN OWNERSHIP?

FOREIGN OWNERSHIP BUSINESS ACTIVITIES
Participation of foreigners to the extent a)Private radio communications network
of 25%
b)Private recruitment whether for local of
overseas recruitment

c)Contract for the construction and repair

of locally funded public works
d)Contracts for the construction of defense
related structures
Participation of foreigners to the extent The business activity of advertising
of 30%
Participation of foreigners to the extent a)Exploration, development and utilization
of 40% of natural resources
b)Ownership of private lands
c)Operation of public utilities
d)Educational institutions other than those
established by religious groups and
mission boards
e)Culture, production, milling, processing,
trading except retailing of rice and corn
and acquiring, by barter, purchase or
otherwise, rice and corn and the by-
products thereof
f)Contracts for the supply of materials,
goods and commodities to government-
owned or controlled corporation, company,
agency or municipality
g)Facility operator of an infrastructure or a
development facility requiring a public
utility franchise
h)Operation of deep-sea commercial
fishing vessel
i)Adjustment companies
j)Ownership of condominium units
k)Manufacture, repair, storage, and/or
distribution of products and/or ingredients
requiring Philippine National Police (PNP)
Clearance
l)Manufacture, repair, storage and/or
distribution of products requiring
Deparment of National Defense (DND)
clearance
m)Manufacture and distribution of
dangerous drugs
n)Sauna and steam bathhouses, massage
clinics and like other activities regulated by
law because of risks posed to public health
and morals
o)Domestic market enterprises with paid-in
equity capital of less than the equivalent of
US$200,000
p)Domestic market enterprises, which
involved advanced technology or employ
at least fifty direct employees with paid-in
equity capital or less than the equivalent of
US$100,000
Participation of foreigners MAY BE
MORE THAN 40% UP TO ONE a)Export enterprises;
HUNDRED PERCENT b)Domestic market enterprises with paid-in
equity capital of at least the equivalent of
US$200,000; and
c)Domestic market enterprises, which
involved advanced technology or employ
at least fifty direct employees with paid-in
equity capital of at least the equivalent of
US$100,000
 The term "export enterprise" shall mean an enterprise wherein a manufacturer,
processor or service (including tourism) enterprise exports sixty percent (60%) or more
of its output, or wherein a trader purchases products domestically and exports sixty
percent (60%) or more of such purchases.

The term "domestic market enterprise" shall mean an enterprise, which produces
goods for sale, or renders services to the domestic market entirely or if exporting portion
of its output fails to consistency export at least sixty percent (60%) thereof.

WHERE TO REGISTER A CORPORATION?

1. Securities and Exchange Commission
2. Local Government Units where your business is located:
o Barangay
o Mayor’s Office
3. Bureau of Internal Revenue
4. If you have employees, you need to register to the following:
o Social Security System
o Philippine Health Insurance Corporation
o Home Development Mutual Fund

WHAT ARE THE BASIC REQUIREMENTS IN SETTING UP A

CORPORATION?
Securities and Exchange Commission

 Articles of Incorporation;
 By Laws
 Treasurer’s Affidavit; and
 Joint affidavit of two incorporators undertaking to change corporate name
immediately upon receipt of notice or directive from the Securities and Exchange
Commission that another corporation, partnership, or person has acquired a prior
right to the use of that name or that name has been declared misleading,
deceptive, confusingly similar to a registered name, or contrary to public morals,
good customs or public policy.

Barangay Clearance
Once the corporation is registered with SEC the next step is to get a barangay
clearance in the barangay where your business is located.

 Application form
 Certificate of Business Registration from SEC
 Two (2) valid IDs
 Proof of Address such as Contract of Lease (if rented) or Certificate of
Land Title (if owned)

Business Permit from the Mayor’s Office

Requirements:

 Application form
 Certificate of Business Registration from SEC
  Barangay Clearance Certificate
 Two (2) valid IDs
 Proof of Address such as Contract of Lease (if rented) or Certificate of
Land Title (if owned)

Register with the Bureau of Internal Revenue (BIR)

Once you have the Mayor’s Business Permit, you can now register with the BIR.

Requirements:
 Go to the Regional District Office (RDO) where your business is located
 BIR Form 1903 – Application for Registration
 Certificate of Registration form SEC
 Barangay Clearance
 Business Permit From the Mayor’s Office
 Proof of Address such as Contract of Lease (if rented)
 Valid IDs, if applicable.
 Registration Form (BIR Form 0605)
 Documentary Stamp Tax (BIR Form 2000), if applicable.
 Register your book of accounts and receipts/invoices.
 Claim your Certificate of Registration (BIR Form 2303)

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