Types of Business Organizations and Registration Requirements

There are several types of business enterprises an investor can choose from in establishing operations in the Philippines.

The following business organizations are organized under the Philippine Laws:

Sole Proprietorship

Sole Proprietorship is a business structure owned by an individual who has full control/authority of its own and owns all the assets, personally owes and answers all liabilities or suffers all losses but enjoys all the profits to the exclusion of others.

Registration Requirement

A Sole Proprietorship must apply for a Business Name and be registered with the Department of Trade and Industry - National Capital Region(DTI-NCR). In the provinces, application may be filed with the extension offices of the DTI.

Partnership

Under the Civil Code of the Philippines, a partnership is treated as juridical person, having a separate legal personality from that of its members. Partnerships may either be general partnerships, where the partners have unlimited liability for the debts and obligation of the partnership, or limited partnerships, where one or more general partners have unlimited liability and the limited partners have liability only up to the amount of their capital contributions. It consists of two (2) or more partners.

Registration Requirement

A partnership with more than three thousand pesos (P3,000.00) capital must register with the Securities and Exchange Commission(SEC).

Corporation

Corporations are juridical persons established under the Corporation Code and regulated by the Securities and Exchange Commission with a personality separate and distinct from that of its stockholders. The liability of the shareholders of a corporation is limited to the amount of their share capital. It consists of at least five (5) to fifteen (15) incorporators each of whom must hold at least one share and must be registered with the Securities and Exchange Commission (SEC). Minimum paid up capital: five thousand pesos (P5,000.00).

A corporation can either be stock or non-stock company regardless of nationality. Such company, if 60% Filipino and 40% foreign-owned, is considered a Filipino corporation; If more than 40% foreign-owned, it is considered a domestic foreign-owned corporation.

• Stock Corporation

This is a corporation with capital stock divided into shares and authorized to distribute to the holders of such shares dividends or allotments of the surplus profits on the basis of the shares held.

• Non-stock Corporation

It is a corporation organized principally for public purposes such as charitable, educational, cultural or similar purposes and does not issue shares of stocks to its members.