Foreign ownership restrictions / limitation of foreign investments and equity in corporations in the Philippines

1) Are there any restrictions on foreign ownership in companies?

Yes there are restrictions on foreign ownership of companies in the Philippines. There are various laws enacted to limit foreign ownership in certain regulated businesses. The government periodically releases Foreign Investments Negative Lists to outline restrictions in foreign ownership or equity in companies.

2) Is government approval required for foreign investment in local companies?

Government approval is generally not required for foreign investment in local companies, with the exception of companies which need legislative or government franchises, and those where foreign equity will be 100%. Foreigners investing in these companies may be required to comply with certain reportorial submissions with government regulators as a condition for transfer of equity or ownership.

3) Which sectors are subject to special rules or restrictions for foreign investors?

Recruitment, Defense, Advertising, Public Utilities, Mining, Real Estate, Firearms and Ammunitions Manufacture, Sale and Distribution, Gaming and Gambling, Mass Media, Retail Trade, Lending. These are specifically listed in the Foreign Investments Negative List, the most recent of which is the 12th Foreign Investments Negative List.

4) Can foreign persons own 100% of a limited liability company or joint-stock company?

Yes, in certain sectors and industries.

5) Are beneficial ownership rules applicable to foreign participants?

Yes. Beneficial ownership rules apply to everyone, both nationals and foreigners.

6) Are there any quotas or thresholds on foreign ownership in strategic companies?

Yes there are. These are listed in the Foreign Investments Negative List. For example, Mass media is listed as a sector where no foreign equity is allowed. Recruitment and Manpower, both local and overseas, permit up to 25% foreign equity. Foreign equity in Advertising is allowed only up to 30%. There are many sectors specifically listed with thresholds on foreign ownership.

7) Is disclosure of foreign shareholders/participants required when registering a company?

When registering a company, the names of the incorporators/shareholders are required to be enumerated. Hence, their disclosure is necessary when registering a company.

8) Are there any restrictions on the acquisition of real estate by foreign legal entities?

Foreign ownership of private land is permitted, but limited to a maximum of 40% equity. Condominiums, however, may be fully owned (100%) by foreign legal entities, provided that foreign ownership does not exceed 40% of the total number of units in the entire condominium project.

9) Are there any business or office localization requirements for foreign investors?

Except for the general requirements of registration with the appropriate government agency (Securities and Exchange Commission for corporations and partnerships, Department of Trade and Industry for sole proprietorship, etc.), obtaining a physical office address for the principal office, and business registration with the local government prior to business operations, there are no other business or localization requirements for foreign investors.

10) Are sanctions or other restrictions applied to investors from specific countries?

There are no sanctions or restrictions applied to investors from specific named countries. The sanctions or restrictions equally apply to all. Nevertheless, under various laws, the President of the Philippines may block or restrict investments from specific countries. No restrictions have been issued to specific countries at this time.

Author: Krisanto Karlo Nicolas