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Registration of Investments of Non-Philippine Nationals

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Registration of Investments of Non-Philippine Nationals

 

AT A GLANCE:

Under Section 5 of Republic Act No. 7042, otherwise as the “Foreign Investments Act of 1991,” as amended, provides that a non-Philippine national who is not otherwise disqualified by law may, without need of prior approval, register with the SEC, or with the DTI in the case of single proprietorships, and do business or invest in a domestic enterprise up to one hundred percent (100%) of its capital, unless participation of non-Philippine nationals in the enterprise is prohibited or limited to a smaller percentage by existing law and/or under the provisions of this Act.

Who is a Philippine National?

 

A Philippine National shall mean the following: 

  1. a citizen of the Philippines or a domestic partnership or association wholly owned by citizens of the Philippines; 
  2. A corporation organized under the laws of the Philippines of which at least sixty percent (60%) of the capital stock outstanding and entitled to vote is owned and held by citizens of the Philippines; 
  3. A trustee of funds for pension or other employee retirement or separation benefits, where the trustee is a Philippine national and at least sixty (60%) of the fund will accrue to the benefit of the Philippine nationals: Provided, That where a corporation and its non-Filipino stockholders own stocks in a Securities and Exchange Commission (SEC) registered enterprise, at least sixty percent (60%) of the capital stocks outstanding and entitled to vote of both corporations must be owned and held by citizens of the Philippines and at least sixty percent (60%) of the members of the Board of Directors of both corporations must be citizens of the Philippines, in order that the corporations shall be considered a Philippine national (Section 3(a), Republic Act No. 7042)

 

How Can a Non-Philippine National Register an Investment? 

 

To register investment of Non-Philippine Nationals, Section 5 of the Foreign Investments Act of 1991, as amended by Republic Act No. 11647, reads: 

Without need of prior approval, a non-Philippine national, as that term is defined in Section 3(a), and not otherwise disqualified by law may, upon registration with the Securities and Exchange Commission (SEC), or the DTI in the case of single proprietorships, do business as defined in Section 3(d) of this Act or invest in a domestic enterprise up to one hundred percent (100%) of its capital, unless participation of non-Philippine nationals in the enterprise is prohibited or limited to a smaller percentage by existing law and/or under the provisions of this Act. The SEC or the DTI, as the case may be, shall not impose any limitations on the extent of foreign ownership in an enterprise additional to those provided in this Act.

 

The same provision further states that any enterprise seeking to avail of incentives under the Omnibus Investment Code of 1987 must apply for registration with the BOI, which shall process such application for registration in accordance with the criteria for evaluation prescribed in said Code.   

 

Lastly, Section 5 of the Foreign Investments Act of 1991, as amended by Republic Act No. 11647, also provides that a non-Philippine national intending to engage in the same line of business as an existing joint venture, in which he or his majority shareholder is a substantial partner, must disclose the fact and the names and addresses of the partners in the existing joint venture in his application for registration with SEC. During the transitory period as provided in Section 15 hereof, SEC shall disallow registration of the applying non-Philippine national if the existing joint venture enterprise, particularly the Filipino partners therein, can reasonably prove the domestic market activities to be undertaken by SEC shall effect registration of any enterprise applying under this Act within fifteen (15) days upon submission of completed requirements.

 

Read more: Green Lanes for Strategic Investments (Executive Order No. 18)

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Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries regarding legal services, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/ 09175772207/ 09778050020.

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