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UPIBSBM Reporting


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

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UPIBSBM Reporting

  1. 1. A Report on:1. SEC Registration2. DTI Registration3. Subsidiary vs. Branch4. Regional Headquarters Prepared By: Daniel Ricio LA Villarico Tricia Barba Ferdinand Nica Erguiza Patricia De Guzman Adrianne Tan-Gatue
  2. 2. SEC RegistrationThe Express LaneUnder the express lane system, applications for registration of articles ofincorporation and by-laws and articles of partnership with cashpayment of subscription are processed upon presentation of alldocuments and certificate of registration released after 2 days from thetime 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. 3. SEC Registrationa. 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. 4. SEC RegistrationThe 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. 5. SEC Registration7. Approval by the FAAD Assistant Director.8. The documents together with the FAAD report will beforwarded to Corporate and Partnership Registration Division(CPRD) for processing of the legal aspect of incorporation.9. Papers are assigned to processors10. Businesses requiring a secondary franchise are indorsed to thedepartment/agency concerned for their prior comments.11. Return indorsed documents to CPRD for further action byprocessors.12. The papers are assigned to the clerical pool for typing of thecertificate of incorporation.
  6. 6. SEC Registration13. The papers are returned to the processors forhis review and initial of the certificate ofincorporation.14. The papers are forwarded to the AssistantDirector of CPRD for further review and initial of thecertificate.15. The papers are forwarded to the CRMD directorfor signature of the certificate of incorporation.16. Claim the certificate of incorporation at theReleasing Unit, Records Division (Ground Floor) uponpresentation of receipt of filing fee.
  7. 7. SEC RegistrationNotes: 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% foreignequity are pre-processed first by CRMD before payment of filing fee.
  8. 8. DTI RegistrationPDF File:
  9. 9. Branch Office vs SubsidiaryAs to TaxabilityBranch Subsidiary (Domestic Corporation)1.Subject to income tax only on Philippine source 1.Subject to income tax on worldwide incomeincome 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 treatydepending 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 original3.A branch office is not subject to documentary stamp issuance of shares of stock at the rate of P2.00 for everytax (DST) simply because it does not issue shares of P200.00 or fractional part of the par value of the sharesstock of the outstanding shares of stock4.Subject to certain conditions, overhead expenses of the 4.The Philippine subsidiary is not entitled to theHead Office may be allocated to the Philippine branch allocation of overhead expenses of its parent 5.A subsidiary is liable to pay the 10% improperly5.A branch is not liable to pay the 10% improperly accumulated earnings tax.accumulated earnings tax
  10. 10. Branch Office vs SubsidiaryAs to its NatureBranch Subsidiary (Domestic Corporation)A branch office is merely an extension A subsidiary is a juridical entityof the head office, thus its liabilities separate and distinct from that of itsare considered liabilities of the head parent company, hence its liabilitiesoffice are generally not regarded as the liabilities of the parent company.
  11. 11. Branch Office vs SubsidiaryAs to its CapitalizationBranch Subsidiary (Domestic Corporation)As a 100% foreign-owned entity, a branch A subsidiary with more than 40% foreignmust have a capital of at least US$200,000 equity must also have a minimum paid upunless the branch will be exporting goods or capital of at least US$200,000 unless theservices or generating revenue from abroad company will be exporting goods or servicesamounting to more than 60% of its gross sales or generating revenue from abroadit can be fully foreign owned, as it is amounting to more than 60% of its gross salesconsidered an Export Enterprise under the it can be fully foreign owned, as it isForeign Investments Act. Hence, the branch considered an Export Enterprise under thecan be registered with as little as P5,000 paid Foreign Investments Act. Hence, theup capital. However, most banks require company can be registered with as little asP25,000 - P50,000 to open a corporate bank P5,000 paid up capital. However, mostaccount. banks require P25,000 - P50,000 to open a corporate bank account.
  12. 12. Branch Office vs SubsidiaryAs to the Number of IncorporatorsBranch 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 moreagent than fifteen (15) incorporators/directors (all of whom must be natural persons) majority of whom must be residents of the Philippines.
  13. 13. Branch Office vs SubsidiaryAs to the deposit requirement of securities with SECBranch Subsidiary (Domestic Corporation)A branch is required initially to Subsidiaries are not required todeposit with the SEC for the benefit of deposit securities with the SEC.present and future creditors,acceptable securities with marketvalue equivalent to at least P100,000plus an annual additional deposit of2% of the amount by which the branchoffice’s gross income exceeds five (5)million pesos
  14. 14. Branch Office vs SubsidiaryAs to Registration RequirementsBranch Subsidiary (Domestic Corporation)A branch is required to obtain a license to do For the establishment of a subsidiary in thebusiness here in the Philippines with the Philippines, it must be registered with theSecurities 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 followingrequirements: 1. A corporate name which must not be similar to existing names already registered with the1. Fill up and file the SEC Form 103 (Application SEC.;of a Foreign Corporation) to Establish a BranchOffice in the Philippines). This application may 2. The Articles of Incorporation must providebe signed by any person authorized by the the specific purpose or purposes for which theapplicant’s Board of Directors. If this is signed corporation is being formed.outside of the Philippines, it must beauthenticated by the nearest Philippine Embassyor Consulate. Pay the SEC filing and legalresearch fees.
  15. 15. Branch Office vs SubsidiaryAs to Registration RequirementsBranch Subsidiary (Domestic Corporation)2. Pay the SEC filing and legal research fees. For 3. As to the capital stock requirement and sincethe registration of a branch with a US$200,000 the foreign equity will exceed 40%, it must haveassigned capital, the SEC registration fees shall a minimum paid up capital of US$200,000 asbe calculated on the basis of its converted provided under the Foreign Investments Actequivalent in Philippine pesos. For an initial unless export oriented. For this purpose, theassigned capital of US$200,000, the SEC applicant must submit a Certificate of Inwardregistration fees may be calculated as the peso remittance issued by a Philippine bank on theequivalent 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. 16. Branch Office vs SubsidiaryAs to Registration RequirementsBranch 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. Underfrom the registration fees. The US$200,000 shall the Corporation Code of the Philippines, abe remitted directly to the Treasurer-in-Trustcorporation must have at least five (5) but notaccount opened for and on behalf of the branchmore than fifteen (15) individual incorporatorsoffice; who must own at least one (1) share in the company and majority of whom must be4. Submission of the latest audited financial residents of the Philippines.statements. Such financial statements must beauthenticated by the Philippine Embassy or 6. Provide the name of the Treasurer-in-TrustConsulate 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. 17. Branch Office vs SubsidiaryAs to Registration RequirementsBranch Subsidiary (Domestic Corporation)5. Within sixty (60) days after obtaining the 7. Pay the filing fee for the registration whichlicense to operate, the branch office is required will be approximately 0.2% of the subsidiary’sto deposit marketable securities worth at least authorized capital stock, plus 1% of such SECP100,000 with the SEC which may be withdrawn fee for the SEC legal research fees and P210.00upon cessation of the Philippine branch’s for the registration of the subsidiary’s by-laws.operations
  18. 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. 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 ROHQs 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. 20. Regional HeadquartersFrom Triple I Consulting Firm: Setting-Up your RegionalHeadquarters and Regional Operating Headquarters:• Business Registration• Government Licensing• Office Set-up• Tax Incentive Programs• Business DevelopmentTotal Registration Process is 2-3 months
  21. 21. Regional HeadquartersRequirements 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. 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. 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 Mayors License for city of operation.
  24. 24. Regional HeadquartersProcedure• 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. 25. ReferrencesSEC Registration: Registration: vs Branch Company: Headquarters (RHQ):