If you have thought about setting up a company in the Philippines and found it all a bit too hard, then hopefully the practical tips below will allow you to incorporate and maintain control over your company.
When setting up a company in Philippines, you need to be aware of the differences between incorporators, directors and shareholders. Incorporators organise the corporation, directors run it, while shareholders own it. The incorporators can also be the directors of the company, and he/she must own at least one (1) share in the company.
One of the key differences is that a majority of directors and incorporators need to be residents in the Philippines. So here are some practical tips to ensure that you still have control over your Philippine company (without having to fly a minimum of 3 of your staff members to Philippines):
- Requiring affirmative votes of at least 2/3 or all of the Board of Directors, instead of a simple majority, before a corporate act can be validly approved.
- For certain transactions, requiring affirmative votes of at least 2/3 of the Board of Directors AND of shareholders owning or holding at least 2/3 of the outstanding capital stock.
- Forming an Executive Committee, appointed by the Board of Directors, composed of not less than three (3) members of the Board of Directors. The Executive Committee may act by majority vote on behalf of all its members on such specific matters within the competence of the Board of Directors. [Note, however, that in certain industries, foreign representation in the Executive Committee shall only be in the proportion to the foreign shareholdings in the corporation allowed by law.]
- Setting up the bank account in the name of the company but with access provided through internet banking to authorised directors only, so that you have control over the finances of the company.
- Independently hiring a certified public accountant to file the company’s tax returns and to prepare the audited financial statements.
Special thanks to our Associate firm, Zambrano and Gruba Law Office, Partner Angelo Advincula and Senior Associate, Samantha Dy, for the assistance in preparing this summary.