 Domestic market enterprises (i.e.

 Domestic market enterprises (i.e., entities that do not export 60
percent or more of their output) with a paid-in equity capital of less
than the equivalent of US $200,000
Up to 60 percent Foreign Equity
 Financing of companies regulated bythe Philippine Securities and
Exchange Commission (“SEC”)
 Investment houses regulated by the SEC
Persons that will engage in construction activities in the Philippines are also required
to obtain a license from the Philippine Contractors Accreditation Board (“PCAB”).
Under the rules of the PCAB, the license isreserved for and issued only to Filipino
sole proprietorships or partnerships/corporations with at least 60 percent Filipino
equity participation and duly organized and existing under and by virtue of the laws
of the Philippines.
The foregoing is a non-exhaustive enumeration of the sectors/activities that are
subject to foreign equity limitations.
2. Anti-Dummy Law
The Philippines has an Anti-Dummy Law that imposes criminal and civil penalties
on persons violating foreign equity limitations.
Under the Anti-Dummy Law, a person who, having in his name or under his control
a right, franchise, privilege,property or business, the exercise or enjoyment of which
is expressly reserved by law to Philippine citizens or to corporations or associations
where at least 60 percent of the capital isowned by such citizens, is prohibited
from (a) permitting or allowing the use, exploitation or enjoyment of such right,
franchise, privilege, property or business bya person, corporation or association not
possessing the qualifications prescribed by law, or (b) in any manner permitting or
allowing any person not so qualified to intervene in the management, operation,
administration or control of such right, franchise, privilege, property or business,
whether as an officer, employee, or laborer, with or without remuneration (except
technical personnel whose employment may be specifically authorized by the Secretary
of Justice). However, foreign nationals may serve as members of the board or governing
body of corporations engaged in partially nationalized activities in a number
proportionate to their actual and allowable equity in the company.
3. Forms of Investment Vehicle
There are three general forms of business organizations in the Philippines: sole
proprietorship, partnership, and corporation.
A sole proprietorship is a business owned and operated by a single natural person.
The liability of the sole proprietor is unlimited, and there is no distinct and separate
personality of the business enterprise from that of the owner.
Subject to nationality requirements pertaining to the intendedactivity, Philippine
law allows foreign investors to establish and register a domestic corporation, a
branch, and a representative office.
A domestic corporation may be a joint venture or a wholly owned subsidiary.
A branch and a representative office are mere extensions of their head offices.
A foreign investor may also invest as a limited or general partner in a partnership.