Philippines 2026 M&A Playbook: EO No.113 (13th FINL), Foreign‑ownership Limits, Deal Structuring & Regulator Checklist

Last reviewed: 14 June 2026

Executive Summary & Action Memo

Executive Order No. 113, signed on 13 April 2026 and effective 2 May 2026, promulgates the 13th Regular Foreign Investment Negative List Philippines (FINL‑13). It recalibrates foreign‑ownership ceilings across dozens of sectors, opens previously restricted industries to higher foreign equity participation, and tightens reservations in a handful of sensitive areas. For M&A practitioners, private‑equity deal teams and in‑house counsel evaluating Philippine targets, the order triggers immediate structuring, regulatory filing and covenant‑drafting workstreams. This Philippines M&A regulatory update is the most consequential shift in inbound investment rules since the Public Services Act amendments took effect in 2022, and every live or pipeline transaction touching a FINL‑regulated sector should be reassessed against the new list before signing.

The five actions every deal team should take right now:

1. Map every target and portfolio company to the updated FINL List A and List B classifications to confirm whether current or proposed foreign‑equity levels remain compliant.
2. Re‑run ownership‑cap analyses on any convertible instruments, options or warrants that could push aggregate foreign ownership above the new ceilings.
3. Check Philippine Competition Commission (PCC) merger‑notification thresholds, deals that now become structurally feasible under relaxed caps may still require competition clearance.
4. Update SPA representations, warranties and condition‑precedent clauses to reference EO No.113 and the applicable FINL schedule.
5. Engage sectoral regulators early (e.g., the National Telecommunications Commission, Department of Energy, or the Bangko Sentral ng Pilipinas) whenever the target operates in a sector subject to separate licensing or pre‑approval requirements beyond the FINL itself.

What Is EO No.113 (13th FINL)? Legal Authority & Timeline

The foreign investment negative list Philippines is the mechanism through which the President, exercising authority under Republic Act No. 7042 (the Foreign Investments Act of 1991, as amended by RA 11647), enumerates the sectors where foreign equity participation is limited or prohibited. The Constitution reserves certain activities exclusively to Filipino citizens or corporations with minimum Filipino ownership, and the FINL translates those constitutional and statutory mandates into a consolidated, regularly updated schedule that investors can reference during due diligence.

EO No.113 supersedes the 12th Regular FINL (EO No. 175, series of 2022). It retains the two‑list architecture established by the Foreign Investments Act: List A covers activities reserved by the Constitution or specific statutes, while List B covers activities where foreign participation is limited for reasons of security, defence, public health, morals, or protection of small and medium enterprises. The order was published in the Official Gazette on 17 April 2026 and, per its own terms, took effect fifteen days after publication, making 2 May 2026 the operative compliance date.

Effective Date & Transitional Rules

Transactions signed but not yet closed before 2 May 2026 should be reviewed against the new ceilings. Industry observers expect the Securities and Exchange Commission (SEC) to apply the FINL in effect at the time of actual share transfer or registration rather than at signing, which means pending deals in sectors where ceilings have tightened face immediate restructuring risk. Where ceilings have been relaxed, buyers may accelerate closing to lock in newly available majority foreign ownership positions.

Key Changes Under EO No.113: Sectoral Ceilings, Additions and Removals

The 13th FINL recalibrates foreign ownership limits Philippines‑wide across both List A and List B. The most material movements affect sectors where deal flow has been historically constrained, public utilities (now governed by the expanded definition under the Public Services Act), retail trade, education and specific natural‑resource activities. The table below summarises the sectors that M&A teams should prioritise during the current review cycle.

Top Sectors M&A Teams Must Review Under the Foreign Investment Negative List Philippines

Sectoral Reservations Creating Immediate Deal Risk

Deal teams should pay particular attention to the following scenarios where the FINL‑13 creates immediate structuring pressure:

• Reclassified public services. Where a target’s activities have been reclassified from “public utility” to “public service” under the Public Services Act, the foreign‑ownership ceiling may have shifted from 40% to 100%. Buyers should confirm the target’s classification with the relevant sectoral regulator before submitting an indicative offer, because misclassification can void share transfers at the SEC.
• Conglomerate targets with mixed‑sector subsidiaries. A group holding that includes both unrestricted and FINL‑reserved subsidiaries requires a tiered ownership structure, the buyer cannot simply acquire 100% of the parent if any subsidiary operates in a capped sector.
• Convertible‑instrument overhang. Existing convertible notes, SAFEs or warrants that, if exercised, would breach a FINL ceiling must be addressed pre‑close through cap‑table modelling and, where necessary, conversion‑price adjustments or anti‑dilution waivers.

Deal Structuring Playbook, Pre‑Deal to Post‑Close

Structuring cross‑border deals Philippines under the updated FINL requires a disciplined, phase‑gated approach. The playbook below walks through target screening, SPA drafting, and the principal structuring options available to foreign acquirers.

Target Screening & Bid Strategy Under the Foreign Investment Negative List Philippines

Before issuing a letter of intent, the acquiring team should complete the following screening steps:

1. FINL classification check. Confirm the target’s primary and secondary business activities against List A and List B of EO No.113. Cross‑reference the 13th FINL detailed summary and the SEC’s Articles of Incorporation records for the target.
2. Existing ownership audit. Verify the current percentage of foreign ownership in the target (including shares held by dual citizens and corporate shareholders with foreign beneficial owners). The SEC’s beneficial ownership declaration filings are the primary verification source.
3. Headroom calculation. Determine the remaining foreign‑equity headroom, i.e., the difference between the FINL ceiling and the target’s current aggregate foreign shareholding, to size the maximum stake the buyer can acquire without triggering a breach.
4. Reciprocity and treaty check. Certain FINL caps may be adjusted upward where the buyer’s home jurisdiction grants reciprocal rights to Philippine nationals. Counsel should review applicable bilateral investment treaties and free‑trade agreements.

SPA Drafting & Protective Covenants

Every share‑purchase agreement for a FINL‑sensitive target should incorporate, at a minimum, the following protective provisions:

• FINL representation and warranty. The seller represents that, immediately following completion, the aggregate foreign equity in the target will not exceed the ceiling prescribed by EO No.113 for each of the target’s registered business activities.
• Regulatory condition precedent. Completion is conditional upon receipt of all required approvals from the SEC, the PCC (if merger‑notification thresholds are met), and any applicable sectoral regulator, each in form and substance satisfactory to the buyer.
• Ownership‑maintenance covenant. For the duration of any post‑close earn‑out or lock‑up period, the parties covenant to maintain aggregate foreign ownership within FINL limits and to notify each other promptly of any transfer, conversion or issuance that could cause a breach.
• Restructuring undertaking. If any post‑close event (including exercise of options or share conversions) would cause a FINL breach, the parties shall use best efforts to restructure within 90 days, including by way of selective share buyback or transfer to a qualifying Filipino holder.
• Indemnity and escrow. A portion of the purchase price (typically 5–15%) is held in escrow pending confirmation that all regulatory filings have been completed and no FINL‑related enforcement action has been commenced.

Structuring Options, Share Purchase, Asset Purchase, JV, Convertible Instruments and Nominee Risk

Deal teams pursuing majority foreign ownership Philippines should evaluate the following structures against the specific FINL ceiling applicable to the target’s sector:

• Direct share purchase (majority or full acquisition). Available where the FINL permits 100% foreign ownership (e.g., large‑format retail, certain reclassified public services, BPO and IT enterprises). This is the cleanest structure and should be the default wherever the cap allows.
• Minority share purchase with governance control. In sectors capped at 40% foreign equity, the buyer can acquire up to the ceiling and negotiate board‑appointment rights, veto provisions, and supermajority approval thresholds in a shareholders’ agreement to achieve de facto operational control without breaching the FINL.
• Asset purchase. Acquiring specific assets (contracts, permits, equipment, IP) rather than shares avoids the FINL ownership‑cap issue entirely but introduces transfer‑tax inefficiency and requires individual consent or novation of each material contract. This structure is common in the natural‑resources sector where project‑level assets can be ring‑fenced.
• Joint venture with a Filipino partner. The buyer contributes capital and technology; the Filipino partner contributes the licence or concession. Governance is addressed through a detailed JV agreement with tag‑along, drag‑along and deadlock‑resolution mechanisms.
• Convertible instruments. Structuring the investment initially as a convertible note or SAFE, converting into equity only once a regulatory pathway (e.g., reclassification of the target’s activities under the PSA) opens up the required headroom, can bridge timing gaps. Cap‑table modelling at conversion is essential to avoid inadvertent FINL breaches.
• Nominee arrangements, risk warning. Using Filipino nominees to hold shares on behalf of a foreign beneficial owner in order to circumvent FINL limits is illegal under Philippine law. The Anti‑Dummy Law (Commonwealth Act No. 108, as amended) imposes criminal penalties on both the foreign principal and the Filipino nominee. The SEC has stepped up enforcement of beneficial ownership disclosures, and nominee structures discovered during regulatory review can unwind an entire transaction.

Regulator Checklist & Integrated Timeline (SEC, PCC, Sectoral Agencies)

Completing a FINL‑sensitive M&A transaction in the Philippines requires coordinated filings with multiple regulators. The checklist below maps the key agencies, filings and realistic timelines from signing (T0) to full regulatory clearance.

PCC Thresholds & Practical Timing

The Philippine Competition Commission requires mandatory notification of mergers and acquisitions where the transaction meets statutory size‑of‑party and size‑of‑transaction thresholds. These thresholds are adjusted annually by the PCC. Deal teams should confirm the applicable threshold figures on the PCC website at the time of signing, as they are expressed in terms of gross revenues and total asset values. Transactions that fall below the thresholds may still be reviewed by the PCC on its own initiative within one year of closing, so a voluntary notification is sometimes advisable for borderline deals.

Phase 1 review ordinarily concludes within 30 days of the PCC acknowledging a complete filing. If the PCC extends review into Phase 2, which occurs in deals raising horizontal‑overlap or vertical‑foreclosure concerns, the additional review period can extend the total clearance timeline to 90–120 days. During Phase 2, the parties should expect detailed information requests and potentially remedy negotiations.

SEC Filings & Beneficial Owner Declaration Timing

The SEC Philippines requires multiple filings in connection with a change of ownership. The most critical for FINL compliance are:

• Amended General Information Sheet (GIS). Must reflect the new stockholder structure within 30 days of the annual meeting or whenever a reportable change occurs. The foreign ownership requirements Philippines page provides additional context on these obligations.
• Beneficial Ownership Declaration. The SEC’s beneficial ownership transparency framework requires corporations to disclose natural persons who ultimately own or control the company. Any change in beneficial ownership resulting from a share acquisition must be declared promptly.
• Amended Articles of Incorporation. Required if the transaction involves an increase in authorised capital stock, a change in the corporate name, or a modification of the primary purpose clause.

Tender Offers, Mandatory Takeover and Shareholder Remedies

Philippine securities law imposes mandatory tender‑offer obligations when an acquisition results in ownership of a specified percentage of a listed company’s outstanding shares. Under the Securities Regulation Code (SRC) and its implementing rules, any person or group acquiring shares that would result in ownership of 35% or more of the outstanding voting shares of a listed company is generally required to make a tender offer to all remaining shareholders at a price not less than the highest price paid during the acquisition.

The interaction between tender‑offer rules and the FINL creates unique structuring challenges. A foreign buyer who wishes to acquire a controlling stake in a listed company operating in a sector with a 40% foreign‑equity ceiling must calibrate its tender offer to avoid breaching the FINL, even if the tender is oversubscribed. Deal teams typically address this through:

• Pro‑rata acceptance mechanisms that cap the total foreign‑held shares at the FINL ceiling.
• Coordination with the selling shareholder group to ensure that post‑tender ownership percentages remain within the permitted range.
• SEC confirmation letters obtained pre‑launch to confirm that the proposed tender structure is compliant.

Example Scenarios for Private Deals

For private (unlisted) companies, mandatory tender‑offer rules do not apply. However, pre‑emptive rights under the Corporation Code and any existing shareholders’ agreement may give existing Filipino shareholders the right to acquire shares before they are transferred to a foreign buyer. Deal teams should review the target’s Articles of Incorporation and shareholder agreements for any pre‑emptive right, right of first refusal, or anti‑foreign‑ownership transfer restriction that could delay or block a proposed acquisition.

Tax, Land and Foreign Ownership Friction Points

Beyond the FINL itself, several structural friction points affect deal economics when structuring cross‑border deals Philippines:

• Capital gains tax. Sales of shares in a domestic corporation not traded on the stock exchange are subject to a capital gains tax. The applicable rate is imposed on the net capital gain, and the seller (whether Filipino or foreign) is responsible for filing and payment.
• Documentary stamp tax (DST). Share transfers trigger DST, which is computed based on the par value of the shares transferred. DST planning is particularly important in high‑value restructurings.
• Private land ownership. The Philippine Constitution limits ownership of private land to Filipino citizens and corporations that are at least 60% Filipino‑owned. A foreign acquirer taking a majority stake in a company that owns private land must either (a) ensure the company retains at least 60% Filipino ownership, (b) cause the company to divest the land into a qualifying entity, or (c) convert land ownership into a long‑term lease (up to 75 years under certain investment‑promotion regimes).
• Withholding tax on dividends. Dividends paid by a Philippine corporation to a non‑resident foreign shareholder are subject to withholding tax, which may be reduced under an applicable tax treaty. Post‑close dividend repatriation modelling should factor in the treaty rate applicable to the buyer’s jurisdiction.

Post‑Close Compliance & Covenants

Closing the deal is not the end of the FINL compliance obligation. The following post‑close actions must be completed and maintained on an ongoing basis:

• File updated GIS and beneficial ownership declarations with the SEC within the required deadlines to reflect the new ownership structure.
• Monitor aggregate foreign ownership continuously, particularly if the target is publicly listed and shares may be traded by foreign investors on the secondary market.
• Maintain board composition requirements. In sectors with Filipino‑ownership floors, a proportionate number of board seats must be held by Filipino directors. The shareholders’ agreement should include a covenant requiring the Filipino partner to nominate qualifying directors.
• Establish a breach‑remediation protocol, if foreign ownership inadvertently exceeds the FINL ceiling (e.g., due to share buybacks reducing the total share count), the company must promptly transfer excess shares to a qualifying Filipino holder or cancel shares to restore compliance.
• Renew sectoral permits and licences with updated ownership disclosures as required by the applicable regulator.

Quick Model Clause Bank: SPA, Shareholder Covenants & Regulator Condition Precedents

The following model clause excerpts are intended as starting points for negotiation. Each must be tailored to the specific transaction and reviewed by Philippine counsel.

• FINL Representation & Warranty. “The Seller represents and warrants that, as at the Completion Date and immediately following the transfer of the Sale Shares, the aggregate foreign equity in the Company shall not exceed [●]%, being the maximum permitted under List [A/B], Item [●] of Executive Order No. 113, Series of 2026 (the 13th Regular Foreign Investment Negative List).”
• Regulatory Condition Precedent. “Completion is conditional upon: (a) the Philippine Competition Commission having issued a decision clearing the Transaction or the applicable waiting period having expired without the PCC issuing a challenge; (b) the Securities and Exchange Commission having approved the amended Articles of Incorporation (if required); and (c) receipt of all sectoral approvals listed in Schedule [●], each in form and substance satisfactory to the Buyer, acting reasonably.”
• Ownership‑Maintenance Covenant. “Each Party covenants that, for so long as it holds Shares, it shall not transfer, encumber or otherwise dispose of any Shares if such action would cause the aggregate foreign ownership in the Company to exceed the applicable FINL ceiling. The Company shall maintain a foreign‑ownership monitoring register and shall notify each shareholder within five (5) business days of becoming aware of any actual or anticipated breach.”
• Restructuring Undertaking. “In the event that any issuance, conversion or transfer of Shares results in the aggregate foreign equity exceeding the FINL ceiling, the Parties shall cooperate in good faith to restore compliance within ninety (90) days, including by way of selective share buyback, transfer of excess shares to a Qualifying Filipino Holder, or such other restructuring as the Parties may agree.”
• Indemnity & Escrow. “The Seller shall indemnify the Buyer against all losses arising from any breach of the FINL Representation. An amount equal to [●]% of the Purchase Price shall be deposited into the Escrow Account and released to the Seller upon confirmation by the SEC that the post‑Completion shareholding structure is compliant with EO No.113.”
• Anti‑Dummy Compliance. “Each Party represents that no nominee arrangement, voting trust or other device has been or will be employed to circumvent the foreign‑ownership limits prescribed by law, including the Anti‑Dummy Law (Commonwealth Act No. 108, as amended) and the Foreign Investments Act (RA 7042, as amended by RA 11647).”

Conclusion & Next Steps

The 13th Regular Foreign Investment Negative List Philippines, embodied in Executive Order No. 113, is now the controlling framework for every inbound M&A transaction touching a sector‑regulated Philippine target. Deal teams that move quickly to reclassify targets, update SPA covenants, and engage regulators will be best positioned to capture newly opened opportunities and avoid compliance pitfalls. The integrated playbook set out above, covering target screening, structuring options, regulator timelines, tender‑offer mechanics, model clauses and post‑close monitoring, is designed to be used as a working checklist from first‑round bids through to final closing.

For a continuously updated tracker of the foreign investment negative list Philippines and deeper analysis of specific sectoral reservations, consult the Global Law Experts lawyer directory to connect with practitioners who specialise in Philippines M&A.

Sources

1. Executive Order No. 113 (13th FINL), Supreme Court E‑Library
2. Philippine News Agency, EO 113 coverage
3. Cruz Marcelo & Tenefrancia, advisory on the 13th FINL
4. Lexology, practitioner note on EO No.113
5. Forvis Mazars, FINL background and sector notes
6. Reyes Tacandong, the 13th FINL explained
7. InCorp Philippines, 13th Regular FINL advisory
8. Supreme Court E‑Library, EO 175 (12th FINL, historical reference)
9. Philippine Competition Commission, official guidance
10. Securities and Exchange Commission Philippines, filing guidance