Other BriefingsShould Investors Use Nominee Structures or Direct Shareholding in the Philippines?
Foreign investors should generally hold shares directly in a Philippine company up to the percentage allowed for its business activity. A nominee arrangement is not a lawful way to get around Filipino ownership requirements by putting shares in Filipino names while the foreign investor remains the real owner or holds rights that the law does not allow.
When can a foreign investor own a Philippine company directly?
How much of a Philippine company a foreign investor can own depends on what the company does. The Philippines’ 13th Regular Foreign Investment Negative List (RFINL), issued under Executive Order No. 113 in April 2026, applies different ownership limits depending on the activity.
|
Business activity |
Maximum foreign ownership |
What it means for the investor |
|
Activities not subject to a Philippine nationality restriction |
Up to 100 percent |
Full direct foreign ownership may be permitted |
|
Advertising |
30 percent |
At least 70 percent Filipino ownership is required |
|
Exploration, development, and use of certain natural resources |
40 percent |
At least 60 percent Filipino ownership is generally required |
|
Activities reserved entirely for Philippine nationals |
0 percent |
Foreign equity is not permitted |
Foreign ownership and minimum capital requirements are separate issues. Foreign-owned retail businesses, for example, are subject to a minimum paid-up capital of PHP 25 million (US$405,000). Where a foreign retailer operates more than one physical store, a minimum investment of PHP 10 million (US$162,000) applies to each store.
When does Filipino shareholding become an anti-dummy law problem?
Filipino shareholding becomes a legal problem when Filipino investors own shares on paper, but the foreign investor holds rights that Philippine law requires the Filipino shareholders to keep.
Consider a business that must be at least 60 percent Filipino-owned. The foreign investor holds the permitted 40 percent, while Filipino shareholders register the remaining 60 percent in their names. Separate agreements then require the Filipino shareholders to vote according to the foreign investor’s instructions or return the economic benefits from their shares to the foreign investor.
Showing a 60/40 split in the company’s records does not automatically make the arrangement legal. The Filipino shareholders must genuinely own their shares and hold the rights attached to them.
The Anti-Dummy Law can apply when an arrangement makes a company appear to meet Filipino ownership requirements while giving a foreign investor ownership, control, or other rights that it is not legally allowed to have.
This does not mean a foreign investor cannot participate on the company’s board. In a business subject to Philippine nationality restrictions, foreign nationals may serve on the board in proportion to their permitted share in the company’s capital. A foreign investor legally holding 40 percent of the company, for example, can have corresponding board representation.
What must the company disclose about its real owners?
Philippine companies must report beneficial ownership information to the Securities and Exchange Commission (SEC). These rules allow the SEC to look beyond the name registered as the shareholder and identify the individuals who ultimately own or control the company.
In 2026, the SEC moved beneficial ownership reporting to its Hierarchical and Applicable Relations and Beneficial Ownership Registry (HARBOR). This is particularly relevant where voting agreements, indirect ownership, or other arrangements separate the registered shareholder from the person who actually owns or controls the investment.
This disclosure obligation is separate from the Anti-Dummy Law: beneficial ownership reporting identifies who ultimately owns or controls the company, while the Anti-Dummy Law addresses arrangements that illegally get around Philippine foreign ownership restrictions.
What can a foreign investor do when the activity is restricted?
The foreign investor can take the equity Philippine law permits, with Filipino investors genuinely owning the required balance.
A larger investment may contain both restricted and unrestricted business activities. Where Philippine law allows the activities to be separated, a company meeting the required Filipino ownership level can conduct the restricted activity while another entity conducts activities open to greater foreign ownership. Each company must perform the activities assigned to it; dividing them only on paper does not remove the foreign ownership restriction.
Commercial agreements with Philippine companies can also be used without acquiring restricted equity, but they cannot give the foreign investor ownership, voting rights, or control that Philippine law requires Filipino shareholders to hold.
Structure your Philippine investment with Dezan Shira & Associates
Foreign ownership restrictions can determine how a Philippine investment needs to be structured before the company is established. Contact Dezan Shira & Associates to establish the right shareholding structure for your Philippine investment.
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