A group report on SEC & DTI Registration, Subsidiary vs. Branch Company, and Regional Headquarters

1. A Report on:
1. SEC Registration
2. DTI Registration
3. Subsidiary vs. Branch
4. Regional Headquarters
Prepared By:
Daniel Ricio
LA Villarico
Tricia Barba
Ferdinand
Nica Erguiza
Patricia De Guzman
Adrianne Tan-Gatue

2. SEC Registration
The Express Lane
Under the express lane system, applications for registration of articles of
incorporation and by-laws and articles of partnership with cash
payment of subscription are processed upon presentation of all
documents and certificate of registration released after 2 days from the
time of payment of filing fee.
1. Verify proposed corporate name with records division (SEC
Annex Bldg.). Reserve name in case incorporation documents
will not be submitted within 3 days. Reservation for a fee is up to
30 days.
2. Buy an express lane form for a specific line of business from
the Express Lane Center.
3. Present accomplished express lane forms/documents to the
express lane unit of the company registration and monitoring
department (CRMD) at SEC ground floor for pre-processing.

3. SEC Registration
a. Business requiring a secondary franchise for their prior comments.
b. Upon receipt of favorable endorsement, stamping of "approved for payment"
follows if all papers are found in order by processing staff.
4. Proceed to Cashier (Ground Floor) for payment of filing fees.
5. Cashier forwards the application for records set up assignment work
cell, sorting, encoding, assignment of registration number. Then
forwarded to the Express Lane Unit for recording, typing of certificate of
incorporation and review.
6. Express Lane Unit forwards the application with certificate of
incorporation to the director for signature.
7. Approved documents are updated through the computer for Work
Assignment Status (WAS).
8. Claim the certificate of incorporation at the Releasing Unit, Records
Division (Ground Floor) upon presentation of receipt of payment of filing
fee.

4. SEC Registration
The Regular Lane
1. Verify proposed corporate name with Records Division.
Reserve name in case submission of documents for
incorporation will not be made within 3 days. Reservation for
a fee is up to 30 days.
2. Prepare documents required to be submitted as per
brochure.
3. Proceed to cashier for payment of filing fee. (Ground Floor)
4. Submit 6 copies of documents to the Receiving Unit.
(Records Division)
5. The documents are forwarded to Financial Analysis and Audit
Division (FAAD) of Company Registration and Monitoring
Department (CRMD) for processing/examination of capital and
preparation of report by the assigned examiner.

5. SEC Registration
7. Approval by the FAAD Assistant Director.
8. The documents together with the FAAD report will be
forwarded to Corporate and Partnership Registration Division
(CPRD) for processing of the legal aspect of incorporation.
9. Papers are assigned to processors
10. Businesses requiring a secondary franchise are indorsed to the
department/agency concerned for their prior comments.
11. Return indorsed documents to CPRD for further action by
processors.
12. The papers are assigned to the clerical pool for typing of the
certificate of incorporation.

6. SEC Registration
13. The papers are returned to the processors for
his review and initial of the certificate of
incorporation.
14. The papers are forwarded to the Assistant
Director of CPRD for further review and initial of the
certificate.
15. The papers are forwarded to the CRMD director
for signature of the certificate of incorporation.
16. Claim the certificate of incorporation at the
Releasing Unit, Records Division (Ground Floor) upon
presentation of receipt of filing fee.

7. SEC Registration
Notes: 4
1. Applications of domestic corporations (stock) where subscribed capital stock
are paid in cash are forwarded by the Records Division directly to the CRPD.
2. Verified name is deemed unofficial unless and until approved by the
commission, i.e. after issuance of the certificate of incorporation.
3. For businesses involving pre-need plans and commodity futures,
clearance of the proposed corporate name from pre-need department and
market regulation department, respectively, is required before verification of
the name with the Records Division at the SEC Annex Bldg. (For all
applications for registration, express or regular lane.)
4. The application for registration of non-stock corporations is processed solely by the CRPD.
5. Application under the Foreign Investment Act of 1991 or those with more than 40% foreign
equity are pre-processed first by CRMD before payment of filing fee.

8. DTI Registration
PDF File:
http://www.dti.gov.ph/dti/uploads/file/BRR-
Learning%20Center.pdf

9. Branch Office vs
Subsidiary
As to Taxability
Branch Subsidiary (Domestic Corporation)
1.Subject to income tax only on Philippine source 1.Subject to income tax on worldwide income
income
2.Dividends paid by a Philippine subsidiary to non-
2.Profits remitted by the branch to its head office are resident shareholders is subject to 30% in general or 15%
subject to branch profit remittance tax of 15% or 10% subject to certain conditions or preferential tax treaty
depending on certain tax treaties; however, if located in rates.
a special economic zone then they are tax exempt.
3.A subsidiary is liable to pay DST on the original
3.A branch office is not subject to documentary stamp issuance of shares of stock at the rate of P2.00 for every
tax (DST) simply because it does not issue shares of P200.00 or fractional part of the par value of the shares
stock of the outstanding shares of stock
4.Subject to certain conditions, overhead expenses of the 4.The Philippine subsidiary is not entitled to the
Head Office may be allocated to the Philippine branch allocation of overhead expenses of its parent company.
office
5.A subsidiary is liable to pay the 10% improperly
5.A branch is not liable to pay the 10% improperly accumulated earnings tax.
accumulated earnings tax

10. Branch Office vs
Subsidiary
As to its Nature
Branch Subsidiary (Domestic Corporation)
A branch office is merely an extension A subsidiary is a juridical entity
of the head office, thus its liabilities separate and distinct from that of its
are considered liabilities of the head parent company, hence its liabilities
office are generally not regarded as the
liabilities of the parent company.

11. Branch Office vs
Subsidiary
As to its Capitalization
Branch Subsidiary (Domestic Corporation)
As a 100% foreign-owned entity, a branch A subsidiary with more than 40% foreign
must have a capital of at least US$200,000 equity must also have a minimum paid up
unless the branch will be exporting goods or capital of at least US$200,000 unless the
services or generating revenue from abroad company will be exporting goods or services
amounting to more than 60% of its gross sales or generating revenue from abroad
it can be fully foreign owned, as it is amounting to more than 60% of its gross sales
considered an Export Enterprise under the it can be fully foreign owned, as it is
Foreign Investments Act. Hence, the branch considered an Export Enterprise under the
can be registered with as little as P5,000 paid Foreign Investments Act. Hence, the
up capital. However, most banks require company can be registered with as little as
P25,000 - P50,000 to open a corporate bank P5,000 paid up capital. However, most
account. banks require P25,000 - P50,000 to open a
corporate bank account.

12. Branch Office vs
Subsidiary
As to the Number of Incorporators
Branch Subsidiary (Domestic Corporation)
A branch may be set up with only one The establishment of a subsidiary
(1) person who will act as the resident requires at least five (5) but not more
agent than fifteen (15)
incorporators/directors (all of whom
must be natural persons) majority of
whom must be residents of the
Philippines.

13. Branch Office vs
Subsidiary
As to the deposit requirement of securities with SEC
Branch Subsidiary (Domestic Corporation)
A branch is required initially to Subsidiaries are not required to
deposit with the SEC for the benefit of deposit securities with the SEC.
present and future creditors,
acceptable securities with market
value equivalent to at least P100,000
plus an annual additional deposit of
2% of the amount by which the branch
office’s gross income exceeds five (5)
million pesos

14. Branch Office vs
Subsidiary
As to Registration Requirements
Branch Subsidiary (Domestic Corporation)
A branch is required to obtain a license to do For the establishment of a subsidiary in the
business here in the Philippines with the Philippines, it must be registered with the
Securities and Exchange Commission SEC. The SEC will require the following from
(SEC). This license shall be issued by the SEC the applicant:
upon compliance with the following
requirements: 1. A corporate name which must not be similar
to existing names already registered with the
1. Fill up and file the SEC Form 103 (Application SEC.;
of a Foreign Corporation) to Establish a Branch
Office in the Philippines). This application may 2. The Articles of Incorporation must provide
be signed by any person authorized by the the specific purpose or purposes for which the
applicant’s Board of Directors. If this is signed corporation is being formed.
outside of the Philippines, it must be
authenticated by the nearest Philippine Embassy
or Consulate. Pay the SEC filing and legal
research fees.

15. Branch Office vs
Subsidiary
As to Registration Requirements
Branch Subsidiary (Domestic Corporation)
2. Pay the SEC filing and legal research fees. For 3. As to the capital stock requirement and since
the registration of a branch with a US$200,000 the foreign equity will exceed 40%, it must have
assigned capital, the SEC registration fees shall a minimum paid up capital of US$200,000 as
be calculated on the basis of its converted provided under the Foreign Investments Act
equivalent in Philippine pesos. For an initial unless export oriented. For this purpose, the
assigned capital of US$200,000, the SEC applicant must submit a Certificate of Inward
registration fees may be calculated as the peso remittance issued by a Philippine bank on the
equivalent of the following: remittance of at least US$200,000 net of bank
Filing Fee (US$200,000 x charges to your Philippine account;
1%)=US$2,000 + Legal Research fee
(US$2,000 x 1%) =US$20.00 or a total 4. Provide the name of the subscribers to the
of US$2,020. (this will not apply to authorized capital stock of the corporation and
export oriented businesses) the number of shares and amount subscribed
by each subscriber.

16. Branch Office vs
Subsidiary
As to Registration Requirements
Branch Subsidiary (Domestic Corporation)
3. Remit the initial assigned capital of 5. Provide the names, nationalities, addresses,
US$200,000 which should be remitted separatelypassport numbers of the incorporators. Under
from the registration fees. The US$200,000 shall
the Corporation Code of the Philippines, a
be remitted directly to the Treasurer-in-Trustcorporation must have at least five (5) but not
account opened for and on behalf of the branchmore than fifteen (15) individual incorporators
office; who must own at least one (1) share in the
company and majority of whom must be
4. Submission of the latest audited financial residents of the Philippines.
statements. Such financial statements must be
authenticated by the Philippine Embassy or 6. Provide the name of the Treasurer-in-Trust
Consulate of the place of execution thereof. appointed by the subscribers.
Submission of the Articles of
Incorporation, by-laws or similar
document authenticated by the
Philippine Embassy or Philippine
Consulate.

17. Branch Office vs
Subsidiary
As to Registration Requirements
Branch Subsidiary (Domestic Corporation)
5. Within sixty (60) days after obtaining the 7. Pay the filing fee for the registration which
license to operate, the branch office is required will be approximately 0.2% of the subsidiary’s
to deposit marketable securities worth at least authorized capital stock, plus 1% of such SEC
P100,000 with the SEC which may be withdrawn fee for the SEC legal research fees and P210.00
upon cessation of the Philippine branch’s for the registration of the subsidiary’s by-laws.
operations

18. Regional Headquarters
• Regional Headquarters/Regional Operating
Headquarters(RHQs/ROHQs) are owned and operated
by a multinational company. The RHQ or ROHQ can
register in the Philippines as long as a company or
corporation is existing under laws other than the
Philippines. Should have branches, affiliates, customers
and subsidiaries in the Asia Pacific Region.
• An RHQ undertakes activities that are limited to acting
as coordinating center for its subsidiaries, affiliates and
branches in the Asia-Pacific region. It operates as the
administrative branch of a foreign company engaged in
trade in the region. It does not manage the Philippines
subsidiary branches and cannot derive income from
sources within the Philippines.

19. Regional Headquarters
• A ROHQ performs the general administration business
planning, and coordination of the Asia Pacific Region. It
may source raw materials or market products, train
employees and conduct research and development. It
may derives its income from Philippines operations.
• RHQ and ROHQ's are usually used by multi-national
companies interested in seperating their operations
within the Philippines for tax and legal purposes.
Regional Operating Headquarters can receive special
benefits from the Philippines. Check out all the benefits
given to Regional Operating Headquarters.

20. Regional Headquarters
From Triple I Consulting Firm: Setting-Up your Regional
Headquarters and Regional Operating Headquarters:
• Business Registration
• Government Licensing
• Office Set-up
• Tax Incentive Programs
• Business Development
Total Registration Process is 2-3 months

21. Regional Headquarters
Requirements for RHQ/ROHQ
• Name Verification to be completed by Dept of Trade
and Industry DTI.
• Submission of Board Resolution authorizing the creation
and establishment of the branch office in the Philippines.
The board resolution must be translated into English and
approved by the Philippines Embassy in the home
country of the foreign corporation.
• Submission of financial statements of the parent
company certified by a CPA and approved by the
Philippines Embassy in the home country of the foreign
corporation.

22. Regional Headquarters
• Authenticated copy of the Articles of Incorporation and By-Laws approved by
the Philippines Embassy in the home country of the foreign corporation
submitted to Philippines Securities and Exchange Commission (SEC).
• Certification from the Philippine Embassy in the applicant’s home country that
the foreign company is an entity engaged in international trade with affiliates,
subsidiaries or branch offices in the Asia Pacific and other foreign markets.
• Registration with Board of Investments BoI.
• Certification of inward remittance for minimum paid-up capital.
• - 50,000 USD annually for RHQ
• - 200,000 USD one time remittance for ROHQ.

23. Regional Headquarters
• Licenses and clearance from necessary
government offices
• Filing of Tax Identification Number TIN with Bureau of
Internal Revenue BIR.
• If employing individuals must register with
government offices.
• Business permit and Mayor's License for city of
operation.

24. Regional Headquarters
Procedure
• Secure endorsement from Board of Investments BOI
• Secure reserved name for branch office from DTI
• Present accomplished forms/docs for pre-processing at SEC
• Present Verification from local bank of minimum paid up capital in trust
account
• Present BoI Endorsement
• Pay filing fees to cashier
• Claim Registration from records division from Records Division
• Complete licensing with all applicable government agencies.

25. Referrences
SEC Registration:
http://www.sec.gov.ph/STEPS_IN_REGISTRATION.htm
DTI Registration:
http://www.dti.gov.ph/dti/uploads/file/BRR-
Learning%20Center.pdf
Subsidiary vs Branch Company:
http://www.kittelsoncarpo.com/philippines-business-
registration/branch-vs-subsidiary-corporation
Regional Headquarters (RHQ):
http://www.tripleiconsulting.com/main/philippines-business-
registration/business-organized-under-foreign-law/register-
regional-headquarters