Eligibility, capital and control under Philippine law
Foreign ownership in the Philippines requires a review of the proposed activity, the investors, and the rights they will hold. Establish what is permitted before agreeing on contributions or management powers. The resulting structure should remain consistent with the applicable law, filings, contracts, and actual operation of the business.
Foreign investors can own 100 percent of the equity in many Philippine businesses. Other activities remain reserved to Philippine nationals or subject to foreign equity limits. An ownership assessment should begin with what the business will actually do, then identify the governing law and any conditions for foreign participation.[1]
A general reference to a 60–40 ownership split cannot answer every investment question. Manufacturing, retail, a landholding company, and a regulated service may be governed by different requirements.
Using the current foreign ownership framework
Executive Order No. 113, issued on 13 April 2026, promulgated the 13th Regular Foreign Investment Negative List. Use this list together with the underlying laws when assessing a new investment or a proposed change in the business.[2]
List A reflects restrictions under the Constitution and specific statutes. List B covers specified activities for reasons including security, defense, public health and morals, and protection of smaller domestic market enterprises. Read each entry with its conditions and exceptions, including the qualifications in its footnotes.[3]
Check sector laws and licensing requirements alongside the Foreign Investments Act of 1991, as amended. Banking and other financial institutions are governed by separate laws, as are professions covered by professional regulatory statutes.[4]
Prepare a dated assessment identifying the activities reviewed, the relevant restrictions, and the conditions supporting the conclusion. Keep the underlying legal provisions and agency guidance with that record. An earlier approval for another enterprise may concern a different activity, ownership arrangement, or regulatory framework.
Consult Executive Order No. 113 and the current Negative List alongside the applicable sector laws. A foreign ownership assessment should explain the relevant entry and its conditions, including any exception relied upon, before the proposed investment is presented as legally available.
Identify any regulator whose approval, license, or determination is needed for the proposed activity. Establish what information that regulator will assess and when the required action must be obtained. The availability of foreign equity does not itself complete the business’s licensing or operating arrangements.
When the business involves more than one activity, assess each material component and how the activities will be carried out together. Resolve inconsistent assumptions in the corporate purposes, investment proposal, and business plan. A broad commercial description should not obscure a separately regulated function.
Identifying the activities and assets involved
Review all proposed activities, including secondary activities and assets the company intends to acquire. Permission to provide an unrestricted service does not establish eligibility to own private land. A corporation seeking to own private land generally must have at least 60 percent Filipino capital.[5]
For public service businesses, determine whether the activity is a public utility under the amended Public Service Act and whether critical infrastructure or national security conditions apply.
Renewable energy reforms likewise require checking the covered resource and applicable permits; they do not remove every regulatory or nationality condition affecting a project.[6]
Review the company’s purposes and licenses before expanding into a new activity. Its existing ownership structure may need to be reconsidered before the expansion proceeds.
Map the products, services, customers, and assets involved in the proposed operation. Include secondary activities and planned acquisitions that may affect eligibility. Foreign ownership should be assessed against that complete description rather than the principal activity alone or a company name selected for marketing purposes.
For a proposed property acquisition, identify the asset, intended owner, and rights being acquired. Review eligibility for that transaction independently of permission to provide the company’s services. Keep the property assessment with the project documents so that an operating approval is not mistaken for authority to acquire every required asset.
For regulated services, describe the actual function and the permissions needed to perform it. A change in technology, customer group, or service scope can affect the analysis. Review the governing provisions and regulator requirements before treating a broader business description as covered by an earlier conclusion.
Bring proposed expansion to the legal and compliance reviewers before signing new commitments. Identify whether the change affects foreign ownership, licensing, capital, or management. Record the decision and any required action so that the revised business begins operating under an arrangement that has actually been assessed.
Assessing capital thresholds and qualifying exceptions
The amended Foreign Investments Act generally reserves micro and small domestic market enterprises with paid-in equity capital below USD200,000 to Philippine nationals, subject to relevant special laws and exceptions. Confirm whether the enterprise falls within that category before fixing its foreign shareholding and capital.[7]
A minimum of USD100,000 may be allowed where one of the qualifying conditions is met:
- advanced technology determined by the Department of Science and Technology;
- endorsement as a startup or startup enabler by the designated lead host agency; or
- a notarized undertaking that a majority of direct employees will be Filipino, with at least 15 Filipino direct employees.[8]
The employee undertaking route requires certification from the appropriate DOLE Regional Office. DOLE validates compliance within six months from the start of commercial operation. Failure to satisfy the undertaking can require the higher investment amount and lead to penalties.[9]
These thresholds are not a universal capital requirement for Philippine corporations. Export enterprises and businesses governed by special statutes need separate assessment. An enterprise relying on export status must also satisfy the applicable export and reporting obligations.[10]
Start with the enterprise’s activities and market classification, then determine which capital rule applies. Identify the legal basis for any lower threshold and the supporting documents. Foreign ownership planning should distinguish the general rule, a qualifying exception, and a requirement imposed by a separate industry law.
Read the Foreign Investments Act implementing rules when preparing the evidence for the selected route. Record which agency must issue a determination, endorsement, or certification and the information required, rather than relying only on the enterprise’s own description of its qualifications.
For an employee undertaking, prepare a staffing plan that reflects both the Filipino majority condition and the minimum number of Filipino direct employees. Identify who will maintain the employment evidence and coordinate the required certification and validation. Monitor actual staffing against the undertaking after operations begin.
If export enterprise treatment is proposed, document the intended sales model and the evidence needed to support it. Assign responsibility for monitoring actual operations and the applicable reports. A foreign ownership assessment based on export status should be revisited if the customer mix or domestic sales plan changes.
Budget for the business’s actual operating needs as well as the applicable legal threshold. Identify initial expenditure, continuing costs, and the timing of funding. Capital eligibility is one part of the assessment; the enterprise also needs resources to carry out the obligations it proposes to accept.
Reviewing beneficial ownership, voting rights and control
Examine voting rights and beneficial ownership, including intermediate holding companies.
Under SEC Memorandum Circular No. 8, series of 2013, covered corporations apply the required Filipino percentage to both shares entitled to vote in directors’ elections and total outstanding shares, whether voting or nonvoting, subject to special laws. Review nominee arrangements and contractual control as part of that assessment.[11]
Where the Anti-Dummy Law applies, allowing an unqualified person to enjoy a reserved right or exercise prohibited intervention in management can expose participants to criminal liability. Nominal Filipino shareholders must not be used to conceal unlawful ownership or control.[12]
Section 2-A allows foreign board representation in proportion to the foreign investors’ allowable participation or share in the capital. Assess management appointments separately under the applicable sector rules and statutory exceptions.[13]
Review the practical effect of minority protections and veto rights. Draft them so that they protect the investment within the ownership and control rules applicable to the business.
An ownership chart should identify the relevant holders, their nationalities, share classes, voting rights, and beneficial interests. Include intermediate entities and the information needed to assess them under the applicable rules. A foreign ownership review should explain the basis for the calculation rather than rely on the headline percentage alone.
Read the proposed subscriptions and share rights alongside funding arrangements, proxies, security documents, and other related agreements. Consider their combined practical effect. Identify any provision that requires further review because it may affect who enjoys the investment or exercises authority over the business.
Assess appointments separately from the equity calculation. Identify the directors, officers, and managers proposed for the actual roles, then review the applicable nationality and statutory conditions. An allowance for foreign board representation should not be assumed to answer every question about executive or operational responsibilities.
For minority protections, identify the decision each proposed veto or approval right would affect. Review how that right operates alongside the board’s duties and the restrictions applicable to the activity. Foreign ownership documents should protect lawful investment interests through rights that can be exercised consistently with those requirements.
The Anti-Dummy Law provision on reserved activities and board representation should be considered when reviewing the proposed management and control arrangements. Address uncertainty before implementation and avoid side agreements that conceal the actual rights or responsibilities of the participants.
Documenting the investment and continuing compliance
Before incorporation or acquisition, prepare an ownership chart identifying the ultimate beneficial owners and planned capital contributions. Review the shareholders’ agreement, management appointments, and authority to enter material contracts.
Keep the structure consistent with SEC filings, bank records, regulator submissions, and the actual conduct of the business. Reassess nationality compliance before an ownership change. Corporate secretaries of covered corporations must monitor continuing compliance with the ownership requirements.[14]
Prepare the investment documents against the structure that has been legally assessed. Identify the parties, contributions, share rights, conditions to completion, and required approvals. A foreign ownership review should be completed before the documents assume that a proposed transfer or management appointment can proceed.
Reconcile the ownership chart with the corporate records and supporting documents. Check that the names, share interests, beneficial ownership information, and authority recorded for each participant agree. Resolve unexplained differences before using the documents in a filing or presenting the structure to a bank or regulator.
Assign a reviewer for proposed share transfers, new subscriptions, changes in voting rights, and revisions to shareholder arrangements. Establish which matters require additional legal or regulatory review before approval. Foreign ownership compliance should be considered when the transaction is proposed, with evidence of the review retained in the company records.
Provide the corporate secretary and responsible managers with the information needed to monitor compliance. Identify who will report a change in ownership, beneficial interests, activities, or appointments. Keep a record of the resulting assessment and the filings or other actions completed in response.
The following record connects the principal review areas with evidence and a decision before investment. Adapt it to the actual enterprise and governing rules, and update it when the facts change. It supports the assessment rather than replacing the legal analysis of a particular transaction.
| Review area | Evidence to maintain | Decision before investment |
| Activities and assets | Business plan, service descriptions, and proposed acquisitions | Which nationality and licensing rules apply? |
| Capital eligibility | Applicable category, funding plan, and exception documents | Does the enterprise meet the relevant threshold or conditions? |
| Ownership and control | Ownership chart, share rights, and related agreements | Do the proposed interests and powers comply with the rules? |
| Continuing compliance | Review responsibilities, company records, and change procedures | Who will assess and document later changes? |
Reviewing an investment before a new activity begins
Consider a foreign investor proposing to acquire an interest in an existing services company. The business plan also contemplates a new regulated service and a property purchase. The initial assessment should identify each intended activity and acquisition rather than extending the company’s present eligibility to the entire proposal.
The foreign ownership review should then examine the proposed shareholding, capital position, beneficial interests, and management rights against the applicable rules. Identify the approvals and supporting documents needed before completion. The investor and existing shareholders should understand which parts of the proposal remain conditional.
Review the transaction documents and any related funding arrangements together. Check that the ownership chart, corporate approvals, and proposed governance provisions describe the same investment. Address provisions that would give a participant rights inconsistent with the legal basis on which the structure is being presented.
Before the new activity begins, confirm that the agreed conditions and required regulatory steps have been addressed. Set responsibility for monitoring the continuing requirements and proposed changes. Keep the assessment available to the people who will approve future transfers, funding, and operational decisions.
Questions on foreign ownership
Can a foreign investor own all the shares of a Philippine business?
Full foreign participation is available in many activities, but eligibility depends on the business and governing rules. Review the current Negative List, sector laws, and applicable conditions. A general assumption that every company requires a 60–40 split does not resolve the investment assessment.
Does every company with foreign shareholders need USD200,000 in capital?
The domestic market capital rule is not a universal requirement for all corporations. Assess the enterprise’s category, applicable exceptions, and any special statute. Foreign ownership planning should establish the relevant rule before fixing the contribution or representing that the company qualifies for a reduced amount.
Does employing fifteen people automatically qualify for the lower threshold?
The employee route requires a Filipino majority among direct employees and at least fifteen Filipino direct employees, with the prescribed undertaking and DOLE certification. The rules also provide for validation and monitoring. Review the full conditions and supporting evidence rather than the total headcount alone.
Does an unrestricted service business automatically qualify to own land?
Permission to provide an unrestricted service does not itself establish landholding eligibility. A corporation seeking to own private land generally must have at least sixty percent Filipino capital. Assess the proposed acquisition separately, including the intended owner and the applicable constitutional and legal requirements.
Is the registered shareholder list enough to establish compliance?
The assessment also requires attention to voting rights, beneficial ownership, intermediate entities, and relevant agreements. For covered corporations, apply the SEC ownership requirements and any special law. The foreign ownership review should explain how the records and actual rights support the claimed compliance.
Can Filipino shareholders simply hold shares for an unqualified investor?
Nominal shareholders must not be used to conceal unlawful ownership or control. Review the actual beneficial interests and agreements against the applicable restrictions, including the Anti-Dummy Law where relevant. A registered name does not validate rights that a participant is prohibited from enjoying.
Does a foreign board seat automatically permit an executive appointment?
Board participation and management appointments require separate assessment under the applicable rules. The statutory allowance for proportionate foreign board representation does not settle every executive or operational role. Review the specific office, activity, and any relevant nationality requirement or statutory exception before appointment.
When should the company reassess foreign ownership compliance?
Review proposed changes in activities, assets, capital, shareholding, beneficial interests, voting rights, and management arrangements. Keep the structure consistent with filings and actual conduct. An earlier assessment should be revisited when a material change affects the facts or legal conditions supporting the original conclusion.
Legal assistance with foreign investment structures
ATL Law Firm advises investors on foreign participation, ownership structures, shareholder arrangements, and the regulatory conditions affecting Philippine investments.
[1] Implementing Rules and Regulations of Republic Act No. 11647 (Foreign Investments Act amendments), r. VI, § 18 (July 11, 2022).
[2] Executive Order No. 113, s. 2026 (Promulgating the Thirteenth Regular Foreign Investment Negative List), § 1 & annex (Apr. 13, 2026).
[3] Id. annex, Lists A–B.
[4] Republic Act No. 11647 § 11 (2022) (adding § 18 to the Foreign Investments Act).
[5] CONST. art. XII, §§ 2–3, 7; Executive Order No. 113, s. 2026 annex, List A, item 16 (Apr. 13, 2026).
[6] Republic Act No. 11659 §§ 4, 23–25 (2022); Executive Order No. 113, s. 2026 annex, List A, items 15, 17 & nn. 8–11 (Apr. 13, 2026).
[7] Republic Act No. 11647 § 8 (2022) (amending § 8 of the Foreign Investments Act).
[8] Implementing Rules and Regulations of Republic Act No. 11647 r. XII, § 39(c) (July 11, 2022); Republic Act No. 11647 § 8 (2022).
[9] Implementing Rules and Regulations of Republic Act No. 11647 r. VI, § 19(c)(ii)(3) (July 11, 2022).
[10] Id. r. VIII, §§ 25–28.
[11] Securities & Exchange Commission, Memorandum Circular No. 8, s. 2013 pmbl. & §§ 1–2 (May 20, 2013).
[12] Commonwealth Act No. 108, § 2-A, as amended by Presidential Decree No. 715 § 1 (May 28, 1975).
[13] Id. (final proviso on board representation).
[14] Securities & Exchange Commission, Memorandum Circular No. 8, s. 2013 § 3 (May 20, 2013).
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