Foreign Branch Office vs. Representative Office vs. Ordinary Stock Corporation vs. One Person Corporation

This article is prepared by and a product of Atty. Kerwin K. Tan, managing partner of TAN HASSANI & COUNSELS Law Offices, and is not to be construed as legal advice or create an attorney-client relationship. Copyright ©2014-2022 Kerwin K. Tan. All rights reserved. No portion of this work may be reproduced without our written consent.

A foreign investor (whether a foreign individual or a foreign company) may establish any of the following:

1. Branch office;

2. Representative office; or

3. Corporation

3.1  Ordinary Stock Corporation (or “OSC”) of which the foreign investor, whether a foreign company or foreign person are the stockholders (through incorporation process);

3.2  One Person Corporation (or “OPC”), where a foreign person is the sole stockholder and director

Quick Differentiation:

In the Philippines, there are several types of business registrations allowed for foreigners by the Philippine Securities & Exchange Commission (SEC). Below is a write up on modes of doing business in the Philippines which includes a comprehensive description of the requirements of each. Basically, in the write up you will read about:

Branch Office — this means your foreign company will be directly licensed SEC to do business in the Philippines, and can earn and invoice from the Philippines (meaning the Branch Office can bill local and foreign clients). This means you do not have to form a new and separate company in the Philippines.

Representative Office — this is similar to a Branch Office, i.e. your foreign company is licensed to do business in the Philippines, but the major difference is that a Rep Office cannot invoice from the Philippines and cannot earn income from the Philippines. Also, the types of activities that a Representative Office can do in the Philippines are limited (read more below)

Corporation (whether OSC or OPC) — this means you incorporate a new corporation in the Philippines. You (in your personal capacity) or your foreign company can own shares of this corporation (some would then call it a subsidiary).

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