Foreign investors eyeing the Philippines are often drawn by its growing economy, strategic location, and competitive labor force. However, before diving into business, it’s crucial to understand the rules surrounding foreign ownership in Philippine companies. The country has specific restrictions and requirements that vary by industry and ownership percentage.
This guide breaks down the key rules, the Foreign Investment Negative List (FINL), and the capital thresholds foreign investors need to meet for company registration in the Philippines.
1. Can Foreigners Own Companies in the Philippines?
Yes, foreigners can own businesses in the Philippines, but ownership is regulated depending on the industry and the percentage of foreign equity.
The rules are primarily governed by:
- The Foreign Investments Act (FIA) of 1991
- The Foreign Investment Negative List (FINL)
- Sector-specific laws (e.g., retail, media, telecoms)
Generally, foreigners can own:
- Up to 100% of a company in many export-oriented and non-restricted industries
- Up to 40% in industries listed in the FINL
Knowing the limitations is vital before you proceed to register a company in the Philippines.
2. What Is the Foreign Investment Negative List (FINL)?
The Foreign Investment Negative List is a government-issued list of sectors where foreign equity is restricted or limited. It is updated regularly, and as of the latest 12th FINL, it is divided into two parts:
List A: Activities limited by the Constitution or specific laws
These include:
- Mass media (100% Filipino-owned)
- Professional practice (law, medicine, accounting)
- Retail trade (with some exceptions)
- Public utilities (up to 40% foreign ownership)
List B: Activities regulated for reasons like security or risk to public health
These include:
- Firearms and ammunition manufacture
- Marine resource exploitation
- Small-scale mining
If the business activity falls under either list, it impacts how much foreign ownership is allowed during company registration in the Philippines.
3. 100% Foreign-Owned Companies in the Philippines
Certain businesses allow 100% foreign ownership, especially if they meet specific criteria, such as:
- Exporting at least 60% of output (export-oriented enterprises)
- Operating in sectors not listed in the FINL
- Registering as a Domestic Market Enterprise (DME) with the required capital
Key Eligible Sectors:
- IT-BPOs and call centers
- Manufacturing for export
- Software development
- E-commerce (not in retail trade)
Online company registration in the Philippines for these sectors is now easier through the government’s centralized portals like SEC’s eSPARC and BIR’s eRegistration.
4. Capital Requirements for Foreign-Owned Companies
Capitalization is a critical requirement in determining how much foreign equity you can hold in a Philippine business.
For Export-Oriented Enterprises (≥60% export):
- Minimum paid-up capital: USD 1.00 (or PHP 5,000) – minimal requirement
For Domestic Market Enterprises:
- If foreign ownership is less than 40%:
- Minimum capital: PHP 5,000
- If foreign ownership is 40% to 99.99%:
- Minimum paid-up capital: PHP 200,000
- If foreign ownership is 100%:
- Minimum paid-up capital: PHP 200,000 (can go up to PHP 2.5M for retail, depending on business model)
Capital Reduction Exemptions:
A foreign investor may register with less than PHP 200,000 capital if:
- The company uses advanced technology (subject to DOST certification)
- It hires at least 50 direct Filipino employees
These thresholds are strictly monitored during company registration in the Philippines with the SEC.
Also Read: How to acquire a shelf Company in Singapore?
5. Foreign Ownership in Retail Trade
Retail is a highly regulated sector for foreign investors. Here are the key points:
| Business Type | Foreign Ownership Allowed | Capital Requirement |
|---|---|---|
| Retail with paid-up < PHP 25M | Not allowed | N/A |
| Retail with paid-up ≥ PHP 25M | Up to 100% | PHP 25M minimum |
| High-end or luxury retail | Up to 100% | USD 250,000 per store |
If your retail business doesn’t meet these thresholds, it’s best to partner with a Filipino citizen to comply with ownership rules.
6. How to Register a Foreign-Owned Company in the Philippines
Here’s an overview of how foreigners can proceed with online company registration in the Philippines:
Step 1: Decide on Business Structure
- Domestic Corporation (with Filipino and/or foreign owners)
- Branch Office (of a foreign parent)
- Representative Office (limited to non-revenue-generating activities)
Step 2: Name Reservation and Business Name Approval
Via SEC’s eSPARC portal.
Step 3: Prepare Incorporation Documents
These typically include:
- Articles of Incorporation and By-Laws
- Treasurer’s Affidavit
- Notarized foreign parent company docs (if applicable)
Step 4: Open a Corporate Bank Account
Deposit the required capital and obtain a bank certificate.
Step 5: Register with BIR, SSS, PhilHealth, and Pag-IBIG
Mandatory for all companies, regardless of ownership.
Foreigners are encouraged to work with legal consultants or corporate service providers to ensure smooth company registration in the Philippines.
Also Read: What are the Types of LLC Registration in Singapore
7. Common Mistakes to Avoid
- Choosing the wrong business activity not aligned with FINL restrictions
- Underestimating capital requirements, especially for 100% foreign-owned entities
- Failing to appoint resident agents or Filipino directors where required
- Skipping compliance with local agencies like BIR, DTI, and PEZA
If you’re planning to register a company in the Philippines, it’s crucial to consult with a professional to avoid costly setbacks.
8. Summary: Foreign Ownership Rules in the Philippines
| Criteria | Allowed Foreign Ownership | Capital Requirement |
|---|---|---|
| Export-Oriented (≥60%) | Up to 100% | Minimal (PHP 5K) |
| Domestic-Oriented (≤40%) | Yes | PHP 5K |
| Domestic-Oriented (100%) | Yes | PHP 200,000+ |
| Retail Trade | Yes (if ≥ PHP 25M capital) | PHP 25M – USD 250K |
Foreigners are welcome to invest in the Philippines, but the rules, limits, and thresholds must be fully understood and respected.
Final Thoughts
The Philippines remains a promising destination for foreign entrepreneurs and investors. But before starting a business, it’s essential to study the Foreign Investment Negative List, check if your sector is restricted, and ensure you meet the minimum capital requirements.
Whether you’re starting an export firm, an IT services company, or a joint venture, being informed will help you successfully register a company in the Philippines without regulatory roadblocks.
