[ESTABLISHING A BUSINESS ENTITY IN THE PHILIPPINES]
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industries must be either majority-owned, or wholly owned, by Filipino citizens. With the introduction of the OPC, corporations no longer have a required minimum number of directors although the maximum is retained at fifteen (15) directors. Other entities which are not incorporated under Philippine law, but nevertheless do business in the Philippines, are required to appoint a Resident Agent who resides in the Philippines. The role of the Resident Agent is to be the person authorized, on behalf of the foreign entity, to receive legal notices and processes. Relevantly, the RCC requires a domestic corporation who acts as a Resident Agent of a foreign corporation to be of sound financial standing and must show proof that it is in good standing as certified by the Securities and Exchange Commission. With the enactment of the RCC , certain corporations classified as “corporations vested with public interest” are required to have independent directors constituting at least 20% of their board of directors and to appoint a compliance officer. Under Philippine corporate law, all shareholders, regardless of the class of shares, are guaranteed certain voting rights, more commonly known as “fundamental rights”. The number and nature of shareholdings notwithstanding, any shareholder in any corporation may always vote on the following matters: 1. Any amendment of the articles of incorporation; 2. The adoption or amendment of the corporation’s by -laws; 3. Any transaction or disposition of all, or substantially all the corporate property;
4. Any initiative to incur, create, or increase the corporation’s bonded indebtedness; 5. Any increase or decrease of the corporation’s capital stock; 6. Any initiative to merge or consolidate of the with another corporation; 7. The investment of corporate funds in another corporation or business; and 8. Dissolution of the corporation. V. Foreign Investment, Thin Capitalisation, Residency and Material Visa Restrictions Subject to certain restrictions, business entities may be up to 100% foreign funded. The biggest hurdle will always be the nationality requirements of business entities in certain industries. The restrictions on foreign equity in certain industries are summed up by Philippine foreign investment laws as the “Negative List”.
ILN Corporate Group – Establishing a Business Entity Series
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