One of the ways for a foreign corporation to establish a presence in the Philippines is to register a branch office with the SEC who will issue a license to operate. (Others ways are Subsidiary / Domestic Corporation, Representative Office)
Branch Office – is a foreign corporation structured and existing under the laws of its country of origin that carries out business activities of the head office and obtains income from the Philippines.
A branch office may engage in any business which is allowed to be operated by foreigners as stated in Foreign Investment Negative List A and Foreign Investment Negative List B.
It is mandatory to put up a minimum paid up capital of US$200,000 if the branch is a domestic market enterprise, which can be reduced to US$100,000 if activity involves advanced technology, or company employs at least 50 direct employees. Registration with the SEC is mandatory. Branches which export a minimum of 60% of their product/services are considered export enterprises and have to put up a minimum of PHP 100,000.00 as paid-in capital. BPO, Call Centers, Back Office activities, KPO, IT and Web Development Outsourcing are considered export enterprises.
Resident Agent:
The Securities and Exchange Commission requires that every foreign corporation operating a Branch Office in the Philippines designate a Resident Agent on whom any summons and other legal processes may be served in all actions or other legal proceedings against such corporation.
Liabilities
A foreign corporation doing business in the Philippines by setting up a branch is liable for all damages and/or other liabilities which may be incurred by its branch.
Philippines Branch Office Registration Requirements:
1 – Name Verification Slip (A name search will be done at the SEC to determine if the corporate name has any similarity with an existing corporation already registered with the SEC).
2 – Certified copy of Board Resolution authorizing the establishment of an office in the Philippines: designating the resident agent to whom summons and other legal processes may be served in behalf of the foreign corporation and stipulating that in the absence of such agent or upon cessation of its business in the Philippines, any summon of legal processes may be served to SEC as if the same is made upon the corporation at its home office.
3 – Financial Statements for the immediately proceeding year at the time of filing the application, certified by an independent Certified Public Accountant of the home country.
4 – Certified copies of the Articles of Incorporation/By-laws/Partnership with an English translation thereof if in a foreign language.
5 – Proof of Inward Remittance such as bank certificate of inward remittance or credit advices.
6 – Resident Agent’s acceptance of appointment (not necessary if agent is the signatory in the application form.
7 – Copy of passports, name and address of the present Corporate Directors and Officers with English translation.
All foreign documents must be authenticated by the Philippines Embassy/Consulate of the home country.
Once the SEC has issued a license to operate, the branch office is required to obtain Philippines local business permits and register with the Bureau of Internal Revenue. The branch may now apply for work permits and visa for its foreign employees.