Foreign corporations can secure a license to transact business in the Philippines. As defined under the Revised Corporation Code, a foreign corporation is one formed, organized or existing under laws other than those of the Philippines. Based on the principle of reciprocity, a foreign corporation cannot secure a license if its country/state of registration does not allow Filipino citizens/corporations to do business in said country/state.
A foreign corporation lawfully doing business in the Philippines shall be bound by all laws, rules and regulations applicable to domestic corporations of the same class, except those which provide for the creation, formation, organization or dissolution of corporations or those which fix the relations, liabilities, responsibilities, or duties of stockholders, members, or officers of corporations to each other or to the corporation. Foreign corporation with existing license to operate as of the date of effectivity (23 February 2019) of the Revised Corporation Code shall continue to have such authority under the terms and conditions of its license.
DOING BUSINESS WITHOUT A LICENSE
No foreign corporation transacting business in the Philippines without a license, or its successors or assigns, shall be permitted to maintain or intervene in any action, suit or proceeding in any court or administrative agency of the Philippines; but such corporation may be sued or proceeded against before Philippine courts or administrative tribunals on any valid cause of action recognized under Philippine laws. [See What constitutes doing business]
LICENSE REQUIREMENT; APPLICATION
A foreign corporation must apply for a license to transact business in the Philippines. It must submit the required documents, including the requisite application form, its authenticated Articles of Incorporation, designation of Resident Agent, authenticated certification that the applicant’s home country/state allows Filipino citizens and corporations to do business therein. These requirements are discussed in a separate article. [See Application for registration of branch/representative office and Application for registration of RHQ/ROHQ]
In lieu of securing a license to operate, foreign investors may also opt to register a 100% foreign-owned corporation in the Philippines, subject to the limits provided by law. [See Registration of foreign-owned domestic company]
ISSUANCE OF LICENSE
If the SEC is satisfied that the applicant has complied with all the requirements of the Revised Corporation Code and other special laws, rules and regulations, the SEC shall issue a license to transact business in the Philippines to the applicant for the purpose/purposes specified in such license.
Upon issuance of the license, such foreign corporation may commence to transact business in the Philippines and continue to do so for as long as it retains its authority to act as a corporation under the laws of the country or State of its incorporation, unless such license is sooner surrendered, revoked, suspended, or annulled in accordance with Philippine laws.
POSTING OF SECURITIES DEPOSIT
Within 60 days after the issuance of the license to transact business in the Philippines, the licensee shall deposit with the SEC satisfactory securities. [See Requirement of securities deposited with SEC]
APPOINTMENT OF RESIDENT AGENT
The applicant foreign corporation must appoint a Resident Agent, who may be either an individual residing in the Philippines or a domestic corporation lawfully transacting business in the Philippines. Service of summons on the Resident Agent, in all actions or other legal proceedings against the foreign corporation, is considered a service of summons on such foreign corporation. The requirements in the designation of a Resident Agent is discussed in a separate post. [See Resident agents for foreign corporations licensed to do business in the Philippines]
WHEN AMENDED LICENSE NEEDED
A foreign corporation authorized to transact business in the Philippines must obtain an amended license in the event it changes its corporate name, or desires to pursue other or additional purposes in the Philippines, by submitting an application with the Commission, favorably endorsed by the appropriate government agency in the proper cases.
AMENDEMENTS TO AOI AND BYLAWS
Whenever the articles of incorporation or bylaws of the licenses foreign corporation are amended, such foreign corporation shall, within 60 days after the amendment becomes effective, file with the SEC (and in the proper cases, with the appropriate government agency) a duly authenticated copy of the amended articles of incorporation or bylaws, indicating clearly in capital letters or underscoring the change or changes made, duly certified by the authorized official or officials of the country or State of incorporation. Such filing shall not in itself enlarge or alter the purpose or purposes for which such corporation is authorized to transact business in the Philippines.
MERGER OR CONSOLIDATION
One or more foreign corporations authorized to transact business in the Philippines may merge or consolidate with any domestic corporation or corporations if permitted under Philippine laws and by the law of its incorporation. In such case, the requirements for merger/consolidation specifically for foreign corporations, as provided in the Revised Corporation Code, must be followed.
Whenever a foreign corporation authorized to transact business in the Philippines shall be a party to a merger or consolidation in its home country or State as permitted by the law authorizing its incorporation, such foreign corporation shall, within 60 days after the effectivity of such merger or consolidation, file with the SEC (and in proper cases, with the appropriate government agency) a copy of the articles of merger or consolidation duly authenticated by the proper official or officials of the country or State under whose laws the merger or consolidation was effected. However, if the absorbed corporation is the foreign corporation doing business in the Philippines, the latter shall at the same time file a petition for withdrawal of its license.
WITHDRAWAL OF FOREIGN CORPORATION
Subject to existing laws and regulations, a foreign corporation licensed to transact business in the Philippines may be allowed to withdraw from the Philippines by filing a petition for withdrawal of license. No certificate of withdrawal shall be issued by the Commission unless all the following requirements are met:
- (a) All claims which have accrued in the Philippines have been paid, compromised or settled;
- (b) All taxes, imposts, assessments, and penalties, if any, lawfully due to the Philippine Government or any of its agencies or political subdivisions, have been paid; and
- (c) The petition for withdrawal of license has been published once a week for 3 consecutive weeks in a newspaper of general circulation in the Philippines.
REVOCATION OF LICENSE
The license may be revoked based on a number of grounds. Upon the revocation of the license to transact business in the Philippines, the SEC shall issue a corresponding certificate of revocation, furnishing a copy thereof to the appropriate government agency in the proper cases.
The SEC shall also mail the notice and copy of the certificate of revocation to the corporation, at its registered office in the Philippines. [See Grounds for revocation of license of foreign corporations]