requirements for sec registration of non profit organization, representative office

Establishing Presence: Navigating the Requirements for Representative Office Registration in the Philippines

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Requirements for SEC registration of non-profit organization

We aim to explore the various requirements for SEC registration of non profit organization. In accordance with Section 13 of the Corporation Code, non-stock corporations, partnerships, and associations shall register with the Securities and Exchange Commission (SEC). In compliance with this registration requirement, many foreign non-profit organizations have been eager to expand their services in the Philippines. The SEC has been very consistent in requiring all non-stock foreign corporations to be duly registered and obtain a license to do business in the Philippines. Unless the organization is able to submit an opinion from the Office of the Solicitor General verifying that they are not conducting operations in the Philippines which are reserved for Philippine nationals, the corporation will need to seek foreign investment approval from the BOI and verify this approval with the SEC. This is an overwhelming process for many non-profit organizations, but it is important to keep in mind that the Corporation Code has defined a ‘foreign corporation’ as not only one which is organized outside the Philippines but also one which, having been organized in accordance with the laws of any foreign country, whether in the Philippines or not, and is licensed to transact business in the Philippines. Any organization found to be in violation of this provision shall not be permitted to transact business in the Philippines or acquire real property until it has secured a license under the terms provided herein by the following agreement of the President concurred in by the Department of Finance. This basically means that the organization can be any non-profit foreign organization, and the requirements stated in the Corporation Code will apply to all foreign non-profit organizations. This has led to a very common misunderstanding among mainly smaller non-profit foreign organizations trying to establish themselves or who only intend to send representatives to the Philippines.

Requirements for SEC registration of representative office

The RO must submit to SEC Office of the General Counsel the original and 1 copy of the authenticated copy of the following documents:

  1. Certified copy of the articles of incorporation/association or equivalent document of the head office. If the same is not in English, accompanied by an official English translation.
  2. Certificate of authority to the head office by its board of directors or duly authorized officers, to establish a representative office in the Philippines.
  3. Duly authenticated board resolution setting the following: (1) The name of the resident agent who must be a Filipino citizen of good moral character and a member of the Philippine State Bar. In case of the appointment of a new resident agent, a new board resolution must be submitted. (2) Authorizing the establishment of an RO. (3) Designating the resident agent who shall represent the RO in dealings with any government agency for purposes related to its operations. (4) The period of existence of the RO, which shall not exceed the term or existence of the head office.

The registration process for a representative office accreditation first begins with the submission of an application to SEC. The application must be accompanied by a written undertaking that the head of the representative office is authorized to act as such for and on behalf of the RO, and that it shall be bound by its acts. Upon approval, the RO must submit the following requirements to SEC before the issuance of a license to do business in the Philippines.

Understanding the process of establishing a representative office in the Philippines

The representative office, upon receipt of such certificate of registration, shall also register with the BIR by submitting the requirements mentioned under section 3A. Failure to Register. This is for the purpose of acquiring an alien employment permit for its resident foreign nationals and to establish the administrative, accounting, and financial control in the transfer pricing of its net taxable income as prescribed in Executive Order No. 98 and Revenue Regulations No. 2-98. Upon submission of complete documents, the representative office will be issued a BIR Form 2303, which is the Certificate of Registration. This certificate, however, shall be renewed every year prior to January 31.

First, a foreign corporation needs to secure a license to do business in the Philippines from the appropriate government agency, the Philippine Securities and Exchange Commission (SEC). After securing the license, the foreign corporation should register the representative office with the appropriate government agencies, the SEC and the Bureau of Internal Revenue (BIR). The SEC shall register the representative office after submission of the following documents: verification of the name of the representative office, a written application by the agent setting forth the following particulars: the country where the corporation is incorporated, the date and term of its incorporation, the date of the beginning of the corporate term, the powers of the corporation, the names, nationalities, and addresses of the designated resident agent and the officers of the corporation, the address of the corporation, the branch office or offices established or to be established in the Philippines, and the date of the meeting of the board of directors authorizing the establishment of such branch office or offices in the Philippines, certification of the corporate name, the articles of incorporation and bylaws, and the latest audited financial statement of the corporation. After registration, the SEC will issue a certificate of registration.

Establishing a representative office in the Philippines is not that difficult. However, it requires lots of patience and ability in understanding bureaucracy. Each step usually requires at least one month to complete. During the preparation of the application packages, it is crucial to consider whether the business activities of the RO as a defined representative office fall within the restrictions of allowable activities. There have been frequent cases of disapproval where the intended business activity was deemed to be beyond the scope of those allowable to a representative office. In these situations, there may be some flexibility to amend the stated activities of the RO so as to conform with legal restrictions and allow the application to be approved. However, this is not recommended in cases where the business does genuinely require a representative office to engage in activities not generally permissible to representative offices.

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