There are three main types of corporate structures available for businesses in the Philippines: sole proprietorships, partnerships, and corporations. Sole proprietorships are owned by an individual who has full control over the business assets and profits but also full liability. Partnerships can be general, with unlimited liability, or limited partnerships with liability capped at contributions. Corporations require a minimum of five shareholders and are regulated by the SEC, providing limited liability for shareholders depending on their share capital. Understanding the different structures is important for foreign investors interested in pursuing business ventures in the Philippines.

1. Understanding the Different Corporate
Structures in the Philippines
Known for its multicultural and ethnically diverse population, the Philippines has become a
competitive business hub in the Asian region. As the country takes pride in its highly skilled
workforce and positive economic growth, a number of foreign investors have expressed interest to
pursue a venture in the country’s dynamic business environment.
Before registering a potential company, it is important to gain a full understanding of the different
business structures available in the country. Triple i Consulting offers an overview of the different
business structures to assist interested foreign businesspeople. These structures can be categorized
into three different types: sole proprietorship, partnership, and corporation.
Sole Proprietorship
The Department of Trade and Industry (DTI) in the Philippines defines a sole proprietorship as “a
business structure owned by an individual who has full control/authority of its own and owns all the
assets, personally owes answers all liabilities or suffers all losses but enjoys all the profits to the
exclusion of others.” Known as the simplest form of business structure, this employs the easiest
processing among the four types available. One risk involved is that the owner has full liability in
case of profit loss or incurred debts.
Partnership
The Civil Code of the Philippines treats partnership as “as juridical person, having a separate legal
personality from that of its members.” This is further categorized into two types: a general
partnership, where business partners have unlimited liability for any debt and financial obligation the
company incurs, or limited partners, wherein the liability will not exceed the amount of their capital
contributions. In case of death or withdrawal from the arrangement, the partnership ceases to exist.
Corporation
A corporation is similar to a limited partnership, as all
the owners or shareholders have limited financial
authority, depending on their share capital. According to
the DTI, a corporation “is composed of juridical persons
established under the Corporation Code and regulated
by the Securities and Exchange Commission (SEC) with
a personality separate and distinct from that of its
stockholders… consists of at least five to 15
incorporators, each of whom must hold at least one
share and must be registered with the SEC.” A
corporation has two sub-types: a stock corporation and
a non-stock corporation.
Sources:
http://dti.gov.ph/dti/index.php?p=478
http://www.doingbusiness.org/data/exploreeconomies/philippines/starting-a-business
http://www.tripleiconsulting.com/