How to Add or Amend Business Activities After Incorporation in the Philippines

February 13, 2026 Posted by ASEAN Briefing Written by Ayman Falak Medina Reading Time: 3 minutes

A Philippine corporation may operate only within the purposes stated in its Articles of Incorporation as registered with the Securities and Exchange Commission under the Revised Corporation Code. Expansion into a materially different activity requires amendment of the purpose clause and triggers a structural review of ownership eligibility, capital classification, and regulatory standing.

Foreign equity constraints under the Foreign Investments Act

Certain industries remain subject to foreign ownership limits, commonly structured under the 60 percent Filipino and 40 percent foreign ownership rule, while others are reserved to Philippine nationals.

Paid-Up Capital Decisions in the Philippines: What CFOs Should Weigh

Retail trade enterprises with foreign participation generally require paid-in capital of US$2.5 million, with a US$250,000 per-store threshold in defined cases. Where the proposed activity falls within a restricted sector, equity restructuring is required before amendment is viable.

Capital reclassification and paid-in threshold exposure

Foreign-owned domestic market enterprises are generally required to maintain paid-in capital of at least US$200,000, reducible to US$100,000 if employment or certified technology criteria are satisfied. Export-oriented enterprises are not subject to this threshold. A change in activity that alters enterprise classification may therefore necessitate capital infusion before regulatory compliance.

When expansion reclassifies the enterprise

A 100 percent foreign-owned IT services company registered as export-oriented decides to establish a domestic logistics arm serving Philippine clients. The shift may reclassify the enterprise as domestic market-oriented, trigger the US$200,000 paid-in capital threshold, and place new revenue outside its existing incentive registration.

For guidance on amending corporate purposes or restructuring your Philippine operations, contact Dezan Shira & Associates

In addition to capital adjustment, the logistics activity may require zoning clearance and local government authorization before operations begin. The investor must determine whether amendment preserves economic efficiency or whether a separate subsidiary avoids reclassification exposure.

Sectoral licensing and pre-operational approval risk

Activities in financial services, insurance, telecommunications, energy, and regulated products may require oversight from the Bangko Sentral ng Pilipinas, the Insurance Commission, the National Telecommunications Commission, the Department of Energy, or the Food and Drug Administration. Entry into regulated sectors may impose minimum capitalization, technical qualification standards, and pre-operational approvals that directly affect time to revenue.

Incentive misalignment and dual corporate income tax treatment

Enterprises registered with the Philippine Economic Zone Authority or the Board of Investments may benefit from income tax holidays of four to seven years and, in certain regimes, a 5 percent tax on gross income earned.

Revenue derived from activities outside the approved project scope may instead be subject to the regular corporate income tax rate of 25 percent, or 20 percent for qualified small domestic corporations, resulting in parallel tax treatment within one juridical entity.

Indirect tax and compliance reclassification

Value-added tax is generally imposed at 12 percent unless exempt. A change in activity may require updates with the Bureau of Internal Revenue and may alter VAT registration status, withholding categories, documentary stamp tax exposure, and transfer pricing documentation obligations.

Local government authorization and land use compatibility

Under the Local Government Code, operations require a mayor’s permit supported by barangay clearance and zoning compliance. Expansion into warehousing, manufacturing, or retail operations may require updated land use authorization or environmental compliance certification before lawful commencement.

Enterprise-wide liability concentration

Adding higher-risk operations to an existing corporation consolidates regulatory penalties, consumer claims, and environmental liabilities within the same juridical entity. Concentrated exposure may increase insurance premiums and place existing assets at risk.

Financing covenants and contractual consent requirements

Loan agreements, shareholder arrangements, and commercial contracts may restrict expansion into new business lines without counterparty consent. Activity expansion may therefore require covenant amendments or lender approval independent of regulatory authorization.

Statutory approval threshold

Amendment of the primary purpose clause requires approval by stockholders representing at least two-thirds of outstanding capital stock under the Revised Corporation Code, followed by filing with the Securities and Exchange Commission.

Amendment versus subsidiary formation

An amendment is structurally efficient when foreign ownership limits, capital thresholds, regulatory oversight, tax treatment, local compliance requirements, liability profile, and contractual permissions remain aligned with the existing entity.

To assess ownership limits, capital requirements, or incentive impact before expansion, reach out to Dezan Shira & Associat...

Where any of these variables materially diverge, establishing a separate subsidiary isolates risk, preserves ownership control, and prevents distortion of incentive economics.

Decision filter for foreign investors

Expansion within the existing company makes sense only if foreign ownership limits do not change, no additional capital is required, new regulatory approvals are limited, tax treatment remains consistent, local permits can be obtained, added risk does not endanger existing operations, and contracts or loan agreements allow the expansion. If any of these conditions change materially, setting up a separate subsidiary may be the safer and more practical option.

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ASEAN Briefing is one of five regional publications under the Asia Briefing brand. It is supported by Dezan Shira & Associates, a pan-Asia, multi-disciplinary professional services firm that assists foreign investors throughout Asia, including through offices in Jakarta, Indonesia; Singapore; Hanoi, Ho Chi Minh City, and Da Nang in Vietnam; and Kuala Lumpur in Malaysia. Dezan Shira & Associates also maintains offices or has alliance partners assisting foreign investors in China, Hong Kong SAR, Mongolia, Dubai (UAE), Japan, South Korea, Nepal, The Philippines, Sri Lanka, Thailand, Italy, Germany, Bangladesh, Australia, United States, and United Kingdom and Ireland.

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