Many entrepreneurs with ambitious business plans look to company incorporation — and it’s not without good reason. 

In the case of a domestic corporation, there’s a number of perks: access to more capital, shared ownership and management responsibility, limited liability, and a more formal organization structure. 

If a sole proprietorship or partnership business doesn’t quite fit your business goals, registering as a domestic corporation might be the best choice. In that case, read on to find out what you need to do to get started. 

📖In summary

• Although the Philippines doesn’t have private limited companies or limited liability companies per se, the domestic corporation is your next closest option. 
• The domestic corporation’s unique juridical personality comes into existence after successful registration with the Securities and Exchange Commission. 
• You must have at least five incorporators whose names are mentioned in the Articles of Incorporation. 
• A domestic corporation must have shareholders, directors, and corporate officers.

How Philippine law defines a domestic corporation

A domestic corporation is an artificial entity organized, registered, and existing under Philippine law. 

Under the Revised Corporation Code of the Philippines (RCC), the domestic corporation has some form of limited liability since it has a unique juridical personality. In effect, this business entity can hold assets and liabilities that are separate from the ones personally owned by its stakeholders.

However, It’s important to note that the legal concept of a private limited company (PLC) and limited liability company (LLC) doesn’t exist in the Philippines. PLCs and LLCs generally have less reporting requirements and more operational flexibility. 

That said, for many entrepreneurs and investors in the Philippines, registering as a domestic corporation is more than sufficient for their business needs. Stakeholders aren’t personally liable for a domestic corporation’s debts and obligations. Plus, shareholders are held accountable up to the extent of their shares in the company. 

Overview of domestic corporation registration requirements

1. Specify the breakdown of corporation equity

The RCC requires domestic corporations to disclose how much foreign investment is flowing into their operations. Depending on the company’s ownership mix, here are your options:

• 100% Filipino-owned. The minimum capital requirement is $100 or ₱5,000. 
• 60% Filipino-owned + 40% foreign-owned. The minimum capital requirement is $100 or ₱5,000. 
• 40.01% to 100% foreign-owned. The minimum capital investment is $200,000.

2. Have at least five incorporators, but not more than 15.

Their names are explicitly mentioned in the company’s Articles of Incorporation. They must be natural persons of legal age, have at least one share of capital stock in the company, and majority must be residents of the Philippines. 

3. Create an organizational structure composed of the following stakeholders.

• Shareholders. Shareholders are individuals that own at least one share in the company. Their stake gives them certain governance rights and the ability to make final decisions on key company matters. That said, they usually delegate decision-making responsibilities to the board of directors. 
• Directors: Directors oversee company strategy and hold various executive functions.  They are nominated and elected by the shareholders. Their terms usually run for a year or until the shareholders decide to reshuffle the roster. They are also tasked with selecting corporate officers for the company. A director in a domestic corporation must:
  • Be a natural person of legal age
  • Own at least one share of the company
  • Must not have been convicted of a criminal offense punishable by an imprisonment sentence of more than six years
  • Must not have violated the Revised Corporation Code for five years consecutively.

• President. The president of a corporation is a key corporate officer who serves as the signatory for the entire company. He or she is appointed and reports to the board of directors. In the Philippines, a corporation president must be a natural person of legal age, own at least one company share, and be a member of the board of directors.
• Corporate treasurer. The treasurer is tasked with the company’s financial due diligence. He or she prepares annual statements and monthly reports, monitors company cash flow, works closely with an external auditor, and so on. The treasurer must be a resident of the Philippines.
• Corporate secretary. The corporate secretary is in charge of a company’s administrative responsibilities, which encompasses a broad set of activities — from record keeping and communicating with shareholders to ensuring corporate compliance. A domestic corporation’s corporate secretary must be a Filipino Citizen. 

💡Ease your corporate compliance workload in the Philippines

Corporations need to be on top of corporate housekeeping and mandatory annual filings. There’s an array of to-dos to keep track of, whether it’s in the area of corporate governance, tax compliance, or labor compliance. 

For professional support, seek out Loft’s corporate compliance services. Our team has assisted thousands of companies in the Philippines with some of the most common business compliance tasks — hiring nominee directors, assigning a corporate secretary, changing your business address, and more. 

Contact us by phone at +63-917-899-1111 or send an email inquiry to learn more.

The registration process for domestic corporations

The exact steps to register as a domestic corporation depends on your specific ownership/equity mix. Nevertheless, the process for the most part involves the following steps.

1. Name registration with Securities and Exchange Commission (SEC)

The first step in domestic corporation registration is registering the corporation name with the SEC. The corporation name must be unique to the company. The business name cannot be deemed inappropriate or obscene. Additionally, the domestic corporation’s juridical personality comes into existence after the Certificate of Registration from the SEC is issued.

2. Mayor’s Permit or LGU Registration

A Mayor’s Permit or business permit is also needed to ensure compliance with the city’s business and safety standards. You’ll need to visit the Business Permit and Licensing Office of the city where you plan to do business. Typical requirements they’ll ask for include:

• Application Form 
• Zoning Clearance
• Fire Safety Inspection Permit
• Sanitation Permit

3. Bureau of Internal Revenue (BIR) registration

With the SEC and LGU registration in tow, the next step is registering the corporation with the BIR. This government body will issue the company a corporate taxation registration. The company will be assigned a Taxpayer Identification Number and will be authorized to use official receipts and keep a book of accounts. 

4. Employee registration

Domestic corporations must ensure compliance with Philippine labor regulations. The tediousness of this step depends on the exact number of people employed by the company. Here are your options:

• A company who benefits from the services of at least one person must be registered with SSS.
• A company must register employees to the Home Development Mutual Fund (HDMF or PAG-IBIG) for housing loan benefits.
• A company employing five or more people is encouraged to register with the DOLE.
• A company employing 50 or more employees is required to register with DOLE.

5. Register your domestic corporation with Loft

The process of incorporating a domestic corporation in the Philippines takes a lot of paperwork and back and forth visits to different government agencies.

You don’t have to deal with the entire process yourself. Reach out to the Loft Team for expert business registration guidance. Complete the short form below to get in touch.

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