Before You Choose a Structure, You Need Clarity — Not Guesswork
Every founder launching in the Philippines has had a version of the same story: you research online, you compare advice from different sources, and realize that the answers don’t align. What was supposed to be straightforward at first can quickly feel overwhelming.
There are multiple legal structures in the Philippines, and the “right” one depends on your ownership setup, industry rules, and where you plan to take the business.
One of the earliest, and most impactful decisions in your entrepreneur’s journey is to choose the right corporate structure.
The corporate structure defines how a business is legally set up: who owns it, how responsibilities and liabilities are shared, and how it is regulated and taxed. In the Philippine context, this decision often comes with more nuance than founders initially expect.
The goal of this guide is to give you clarity: the real differences, what structure fits which founder, and how to think through foreign participation, all grounded in Philippine realities, not generic advice.
⚠️ Why This Matters
Picking the wrong structure can slow down fundraising, complicate governance, limit foreign ownership, or create tax burdens you didn’t expect. Choosing correctly gives you structure, protection, and momentum — the foundation every builder deserves as they build from the Philippines for the world.
Main Types of Corporate & Business Entities in the Philippines
1. Stock Corporations
A stock corporation is formed for profit and issues shares of stock.
Key features:
- Separate legal personality
- Limited liability for shareholders
- Ownership based on shares
- Required board of directors
- Dividends may be distributed
Best for: founders planning to scale, raise capital, or bring in multiple investors.
1. A. Special case: One Person Corporation (OPC)
An OPC is a stock corporation with a single shareholder, introduced in the Philippines by the SEC in 2019, and built for founders who want corporate protection without needing multiple incorporators or shareholders.
Key features:
- Limited liability
- Single shareholder structure
- No need for a minimum capital unless regulated by the industry
- Allowed under the Revised Corporation Code (Republic Act No. 11232)
Best for: solo founders who want corporate protection without forming a partnership or multi-owner corporation.
If you want a clear, step-by-step path from SEC to BIR without the usual conflicting instructions, stay tuned for our next blog: How to Choose a Company Name in the Philippines: SEC Rules, Restrictions, and Tips
2. Non-Stock Corporations
Non-stock corporations are typically formed for non-profit, educational, religious, charitable, or professional purposes.
Key features:
- No shares of stock
- Members instead of shareholders
- Any profits must be reinvested in the organization
- Board of trustees instead of directors
Best for: NGOs, foundations, schools, cooperatives, and professional associations.
3. Domestic vs. Foreign Entities
Domestic Entities
Formed under Philippine laws and registered with the SEC, a domestic corporation may be Filipino-owned or Foreign-owned (if more than 40% and up to 100% foreign equity), subject to industry-specific limits and rules. We break these rules down in the foreign ownership section later in this guide.
Foreign Entities Operating in PH
Foreign entities (including foreign non-stock corporations and foreign corporations) still require SEC registration to conduct business or maintain a presence in the Philippines, even if they are created under the foreign law of the foreign head office. The Philippine registration does not create a new legal entity.
Below are the common structures foreign entities can operate through:
- Branch office – carries out the same business activities as the foreign head office; income is taxable
- Representative office – non-revenue generating; conducts liaison or support functions
- Regional/Area headquarters – supervisory, coordinating functions
- Regional operating headquarters – may derive income; certain allowed business activities
Each has different capitalization/remittance requirements, reporting duties, and allowed activities.
Best for: international companies that want local presence in the Philippines without setting up a domestic entity.
4. Partnerships (General, Limited, Professional)
A partnership is created when two or more persons bind themselves to contribute money, property, or industry to a common fund.
- General Partnership (GP): all partners have unlimited liability
- Limited Partnership (LP): at least one general partner with unlimited liability; limited partners risk only their contribution
- Professional Partnerships: for licensed professions (e.g., law, accounting); no corporate structure allowed
Best for: small groups of founders who want simplicity and control, and who are aware of liability implications.
What Differentiates These Structures: Key Features, Pros, and Cons
Below is a founder-friendly breakdown based on the factors that matter most.
1. Legal Personality & Liability
- Stock/Non-stock entities: separate legal personality; shareholders (or members for non-stock entities) have limited liability.
- Partnerships: General Partnerships have unlimited liability; Limited Partnerships have mixed.
- Foreign entities (including branches and representative offices): foreign HQ is liable for PH operations.
2. Ownership & Governance
- Stock corporations: 2+ shareholders; up to 15 directors; shareholders vote.
- OPC (a specific stock corporation): single shareholder; minimal governance layers; requires appointment of nominee and alternate nominee for succession.
- Non-stock: board of trustees; members vote.
- Partnerships: governed by partners; simple but higher personal risk.
3. Capital Requirements
Varies based on structure and industry. The law no longer imposes general minimum capital for most domestic corporations unless foreign-owned (subject to FINL and other rules). For foreign entities: representative offices require inward remittance; branch offices require assigned capital. We discuss these rules in the foreign ownership section below.
4. Best-Fit Scenarios
- Scaling startup: Stock corporation
- NGO/social org: Non-stock entity
- Foreign HQ expanding to PH: Stock corporation or Branch (with revenue-generating activities in the Philippines) or Representative office (support function to the Foreign entity)
- Professional services: Stock corporation or Professional partnership
- Solo founder wanting corporate protection: Stock corporation (regular or OPC)
Foreign Ownership & Restrictions in the Philippines
Foreign entrepreneurs face another layer of complexity as foreign ownership is restricted, with specific rules and capital requirements depending on the industry. And certain industries are even prohibited.
The foreign restrictions are listed in the Foreign Investment Negative List (FINL). Once the restrictions are clarified, foreign businesses can either form a domestic entity in the Philippines that can be partly or even fully foreign-owned, or keep the existing foreign entity as the head office and register it to operate in the Philippines (e.g., branch,representative office, etc.).
The Foreign Investment Negative List (FINL) in the Philippines
The FINL is divided into two parts:
- List A, which covers activities restricted by the Constitution or specific laws,such as mass media, private land ownership, and the practice of regulated professions,
- and List B, which includes activities restricted for security, defense, or risk reasons..
Foreign-owned domestic corporation (Philippine subsidiary)
If you are registering a domestic corporation, it is considered foreign-owned when the foreign equity represents more than 40% (and up to 100%). This is possible as long as you comply with the capital requirements and that your business activity isn’t restricted by the FINL.
If you plan to incorporate a foreign-owned domestic corporation, and you’re targeting the Philippine market (more than 40% of your revenues are generated within the Philippines), the usual rule is that you need at least USD 200,000 in paid-in capital.
Special case for export enterprises: if you qualify as an export enterprise (exporting at least 60% of gross sales), this USD 200,000 minimum is not required anymore.
Stricter capital requirements for specific industries: Retail is one of the most notable exceptions: foreign-owned retailers must meet a USD 2.5 million minimum paid-in capital. Financing and lending companies, banks, public utilities, and certain regulated sectors, such as education, are subject to higher, sector-specific capital requirements, often set by their regulators to reflect operational, consumer protection, or infrastructure risks rather than foreign ownership alone.
Foreign entities operating in the Philippines
If you’re not creating a new Philippine corporation, and instead you’re registering your existing foreign company to operate here. The SEC licensing options typically come with inward remittance / assigned capital requirements, depending on the mode:
• Representative Office: commonly requires at least USD 30,000 inward remittance as an annual funding requirement for operations.
• Branch Office: commonly requires USD 200,000 assigned capital.
•Regional (or Area) Headquarters / Regional Operating Headquarters: these are also inward-remittance-driven structures, with commonly cited minimums (often USD 50,000 for RHQ and USD 200,000 for ROHQ), depending on the exact setup and rules applied.
For a deeper breakdown of allowable industries and foreign equity limits, consult with us: contact@korp.ph
To recap, you must consider:
- Whether your industry is open to full foreign ownership
- Whether activities are revenue-generating or auxiliary
- Whether you need a domestic corporation or simply a branch/representative office
- Whether capital thresholds apply in your case
This is where many founders get stuck… and also where clarity becomes a competitive advantage.
Quick Comparison Table
Clarity Before Incorporation Is a Founder’s First Advantage
Understanding corporate structures isn’t about paperwork. It’s about protecting your time, your capital, and your mission. In a country where the incorporation journey is still scattered across SEC, BIR, DTI, and LGUs, clarity becomes a form of empowerment.
When founders choose the right structure, they move faster.
When they move faster, the Philippines moves forward.
If you want clarity before committing, talk to our experts.
We made business registration in the Philippines simple — finally.
Empowering entrepreneurs from the Philippines, for the world.
