Philippines client case studies
Crypto System LLC Establishes Philippines Branch
- Our existing Client is a USA-based company specializing in cryptocurrency;
- Crypto Systems LLC offers i) customized market-making services to digital asset platforms to guarantee liquidity ii) risk management and pricing consulting services and iii) execution;
- The Client approached Healy Consultants with a view to setting up a branch office in the Philippines to provide its Clients with access to over 30 high volume cryptocurrency exchanges worldwide;
- After an initial phone call discussion regarding branch registration in Philippines, our Client settled our total engagement fees to initiate the engagement, and supplied complete due diligence documents.
- After a detailed discussion between Healy Consultants’ country expert and our Client, our Client decided to register the branch with the following corporate structure: i) four US citizen shareholders and ii) two US citizen directors;
- Based on our Client’s corporate structure, Healy Consultants Group PLC prepared a detailed project plan outlining engagement steps and estimated completion timelines to i) complete branch registration ii) secure Philippines multi-currency corporate bank account numbers and iii) register the branch with local tax authorities to comply with VAT and tax obligations.
Securing a capital bank account
- Within two weeks, Healy Consultants Group PLC’s incorporation team drafted a quality company constitution and detailed business plan explaining i) the company’s business activities ii) expected turnover and banking transactions and iii) the company’s management background. Thereafter, we sent the company constitution and business plan to our Client for approval;
- Once the above documents were confirmed, our corporate banking team approached multiple Philippines banks to gauge their interest in onboarding our Client’s company;
- Healy Consultants Group PLC closely liaised with the bank officers and our Client to provide required documents in a timely manner. Healy Consultants Group PLC also liaised with legal professionals to secure a legal opinion required by the Banks to advance the capital account opening process;
- Having secured the bank’s formal interest to open a capital account, Healy Consultants Group PLC arranged an online bank meeting with the relationship manager at a well-known Philippines bank. The bank accepted our Client’s application and opened the capital account. Our Client immediately injected the capital;
- Within one week of the bank meeting and the injection of paid-up capital, the bank issued a certificate of deposit required to register the branch.
Registration of Philippines Branch
- Within six business weeks, Healy Consultants Group PLC’s incorporation team completed the Philippines branch office registration and supplied our Client with an extract of commercial records confirming the same;
- Within two weeks of branch registration, Healy Consultants Group PLC registered the entity with the Philippines tax authority;
- Thereafter, Healy Consultants Group PLC assisted our Client to convert the capital account into a trading corporate bank account. Internet banking and cheque books were couriered to the Client’s USA address.
- Healy Consultants Group PLC completed the Philippines branch registration engagement within 10 business weeks. Thereafter, we mailed the Client a company kit including i) complete Client file ii) corporate documents iii) Client feedback survey. We also iv) arranged a separate courier of corporate bank account e-banking tokens to the US.
International operator on the luggage wrapping market, establishes Joint Stock Corporation in the Philippines
- Our Client is an operator in the luggage wrapping market, specializing in luggage wrapping services, luggage storage, luggage protection and travel accessories sales. Since 2015 our Client has begun an active expansion in European and Asian markets. Today, the company operates in more than 24 airports in 6 countries: Estonia, Latvia, Lithuania, Kyrgyzstan, Thailand and Russia;
- In March, our Client decided to establish the company’s presence in the Cebu International Airport, the second busiest international airport in the Philippines. Having found Healy Consultants Group PLC through Google and going through our Philippines web-page, our Client sent us an email seeking to establish a new entity in Philippines for his international luggage wrapping business;
- Following discussions with our Client regarding his intended business, Healy Consultants Group PLC recommended our Client incorporate a Joint Stock Corporation in the Philippines to operate in the Cebu airport.
- Healy Consultants Group PLC prepared and emailed our Client an engagement advancement proposal including a formal invoice, engagement letter, due diligence checklist and a list of our existing and past client for professional reference;
- Our Client promptly provided us with the due diligence documents, attended a Skype call with our compliance department and settled our complete invoice. Thereafter, Healy Consultants Group PLC prepared i) a detailed engagement project plan mapping out by step plan to engagement completion and ii) a quality business plan to assist with corporate bank account opening.
- Within one day Healy Consultants Group PLC reserved a company name with the Securities and Exchange Commission. Thereafter, Healy Consultants Group PLC and our Client agreed on the optimum corporate structure with 61% local shareholder for the Philippines entity;
- As per our Client request, Healy Consultants Group PLC provided our three professional, passive resident directors and shareholders;
- To ensure smooth incorporation process, it was recommended to include US$10,000 as the paid-up share capital. To include the retail of accessories as business activity, the paid-up share capital of US$2,500,000 is required by law, therefore our Client decided to register only a luggage wrapping services as the business activity;
- In Philippines, it is important for companies to provide the lease agreement for office premises at the time of processing of the company registration application. To satisfy this requirement, Healy Consultants Group PLC arranged for the Client to sign a temporary 6 months lease agreement until they are able to rent a permanent airport stand.
- Healy Consultants Group PLC prepared the documents required for company incorporation, including nominee shareholder and director agreements and the nominees’ signatures for our client’s signature and email return to Healy Consultants Philippines company secretary;
- Since it is a time-consuming task to notarize the documents in Russia, our Client decided to fly to the Philippines and signed the required documents in front of a Public Notary. For the same, our Client had to change the corporate structure and appoint a new director (who was able to travel on short notice), this process delayed our engagement up to 2 weeks;
- Healy Consultants Group PLC submitted the signed company incorporation documents to the Philippines SEC through the Company Registration System;
- Within one month from the application submission SEC has issued a Certificate of Incorporation and a preliminary Taxpayer Identification Number (TIN). Healy Consultants Group PLC immediately emailed our Client a scan copy of the same;
- Within 1 week thereafter, Healy Consultants Group PLC successfully completed the registration with the Bureau of Internal Revenue (BIR) including i) Barangay clearance ii) Community Tax and iii) Business Tax assessment;
- Following the above Healy Consultants Group PLC submitted SEC certificate of registration together with the full set of documents to the local authorities to secure i) Business permit and ii) BIR Certificate of Registration. It was a time-consuming part of the engagement, which took almost 6 weeks for a local authority to approve a business permit for our Client.
Corporate bank account opening
- With the company registration, Healy Consultants Group PLC submitted the business plan and the initial set of due diligence documents to a well-known Philippines bank to secure a Treasurer In Trust (TIT) account opening;
- Within 2 weeks our Client transferred the paid-up share capital of US$10,000 to his TIT account. Within another following week Healy Consultants Group PLC secured a Certificate of Deposit from the local bank;
- While the company registration was under process, Healy Consultants Group PLC emailed our Client the bank account forms to convert the Treasurer-in trust account into a permanent account for his signature and email return. To avoid the bank forms notarization at the Embassy of the Philippines in Russia, our Client decided to appoint a new bank signatory, who presented in the Philippines at that time and signed all the documents in front of bank officer;
- Within 2 weeks after signing the bank forms, Healy Consultants Group PLC secured a permanent multi-currency corporate bank account with a reputed local bank in the Philippines. Thereafter our Client signed the online banking forms in the Philippines.
- To comply with the Philippines Government legal requirements, Healy Consultants Group PLC emailed our Client a sample tax invoice for their convenience;
- Lastly, Healy Consultants Group PLC couriered our Client a company kit, including i) company incorporation documents; ii) unopened bank correspondences; and iii) a Client feedback survey.
Global call centre set up in Legaspi
Our Client is a successful businessman who wished to set up a global call centre in the Philippines. His objectives were to set up a company and open an office in Legaspi, a city south of the capital Manila. The call centre’s Client is a medium-sized UK financial services company with customers around the world.
Healy Consultants was able to complete the Philippines company formation for our Client in a timely and efficient manner, and also provided a range of post-incorporation support services. Areas of support for this Philippines incorporation included:
- Healy Consultants opened a corporate bank account for the company at the Philippine branch of an international bank in Manila;
- Healy Consultants incorporated a limited liability company (Sociedade por Quotas de Responsabilidade Limitada (LDA)) at the Securities and Exchange Commission of the Philippines in Manila;
- Healy Consultants applied for a Legaspi Barangay (district) clearance for the LDA;
- Healy Consultants registered the company for value added tax (VAT) at the Bureau of Internal Revenue;
- Following incorporation, Healy Consultants assisted our Client to recruit 30 Filipino staff members, including assistance with placing adverts in local newspapers and conducting interviews on behalf of our Client;
- Following incorporation, Healy Consultants assisted our Client to prepare a submit an annual return to the Bureau of Internal Revenue;
- Following incorporation, Healy Consultants has been assisting our Client with his payroll functions.
Furniture exporter establishes Philippines company
Our Client Martin is a semi-retired Hong Kong-based ex-banker who wanted to set up a company in the Philippines to export rattan and wicker furniture to Clients around the world.
Since Martin contacted Healy Consultants, our staff in Manila and Singapore have worked hard to establish a viable corporate structure for him to enable him to conduct business around the world. Healy Consultants has assisted several international entrepreneurs to establish legal entities in the Philippines, and they value our capabilities in this area.
Martin approached Healy Consultants’ Hong Kong office by telephone, having come across our business website following an Internet search for an Asia-based corporate consultant. He was impressed with our detailed cost proposal for Philippines company setup based on his requirements, and decided to pursue the matter further with us.
His principal requirements were that the new company should be able to do business without restriction with countries in Eastern Europe, where demand for rattan and other exotic furniture is strong. Although Martin preferred to have the option of 100% foreign ownership for the company, he did not want to pursue this option if it meant setting up the facility in a remote Special Economic Zone.
Following a referral from our Hong Kong office, our Philippines Incorporation Team advised Martin of the legal, tax and accounting obligations of incorporating in the Philippines, as well as the potential challenges which lay ahead. Many international surveys rank the Philippines as one of the world’s most difficult places to set up a business, with a weak judicial system and excessive bureaucracy. However, Healy Consultants seeks to minimise inconvenience to Clients during the company setup process.
Martin was anxious to get the company incorporated as quickly as possible, because he had already verbally agreed a large order of rattan furniture for a hotel in Gothenburg, Sweden, but was unable to invoice the Client until the company had been legally established.
With this in mind, Martin settled our engagement fees, signed our standard Client Engagement Letter and provided the due diligence required for our internal records, which he supplied to our Hong Kong office. With this step completed within one day, our Manila Incorporation Team was ready to start the incorporation process. In the Client Engagement Letter, Martin had confirmed the corporate structure, which included himself and nominee Filipino majority shareholders provided by Healy Consultants, to meet legal requirements.
The first task was for May in our Manila office to pay at a local bank the minimum capital for a limited company of 5,000 pesos (US$110). Healy Consultants normally uses the famous local bank for this purpose, since our staff find the service more efficient than many other retail banks in Manila, and we have a dedicated officer who is able to issue the deposit confirmation certificate on the spot.
With the certificate obtained, May then prepared an application pack to be submitted to the Securities and Exchange Commission (SEC), which would include the following:
- A company name check request slip;
- A draft of the company’s Articles of Incorporation and bylaws;
- A statement of assets and liabilities;
- The bank certificate of deposit;
- A registration data sheet containing personal information on directors and shareholders;
Although it is possible to submit the application online, in our experience the process is more efficient if done in person at the SEC office at Mandaluyong City in Metro Manila, and so May visited the office to hand in the documents and pay the filing fees. In return, although she was required to queue at the SEC for four hours, May received a receipt for the filing fees and documents, which she e-mailed to Martin as proof upon her return to the office.
With this stage of the process complete, it was next necessary to obtain clearance from the municipality in Cebu City, where the company would operate. This so-called barangay clearance requires a nominal fee to be paid of 500 pesos, and took one week to achieve, since our Manila-based staff sent the documents by courier to Cebu. Again, May updated Martin by e-mail on the status of the engagement to date, and advising him of the steps still to come.
Having received barangay clearance, May prepared further documents to be submitted to the Licensing Section of the Office of the Mayor in Cebu City. At this stage, Martin decided to visit the Philippines to look for a suitable business premises and sign a lease agreement, which would be required by the Mayor’s Office.
While Martin was viewing premises, May had completed the documents for submission, which required Martin’s signature. These included:
- An application for business permits and licenses;
- A certification issued by the company secretary (in this case Healy Consultants) confirming the company is authorised to engage in business;
- The Certificate of Registration from the SEC;
- The bank certificate confirming the paid-up capital deposit;
- Receipts of payment of due fees;
- Lease agreement for the company premises (Martin had agreed upon a premises within one week and had signed a lease agreement to this effect);
- Barangay Clearance/Permit.
Martin visited Healy Consultants’ Manila office to sign the above documents where required, and then May sealed the pack and couriered it to the Mayor’s Office in Cebu City. Clearance was obtained from the Mayor’s Office within two weeks, confirmation of which was forwarded to Martin, who was back in Hong Kong.
Accounting and tax support
The next step was to register the company for value added tax (VAT), obtain a tax identification number (TIN) and pay a stamp tax at the Revenue District Office in Cebu. This step took five days and required our agent in Cebu to visit the Revenue District Office in person to collect the necessary receipts, including the VAT registration certificate.
Following this, our Manila staff were required (by law) to arrange for the company’s invoices and receipts to be printed and stamped by the Bureau of Internal Revenue (BIR). The BIR requested that the following documents be submitted:
- VAT registration certificate;
- SEC registration certificate;
- BIR Form W-5.
Company setup was complete two weeks after submitting the documents to the BIR when Healy Consultants received confirmation that the company had been formally registered in the Philippine Social Security System (SSS), allowing Martin to hire staff if required.
However, although the company was now a legal entity, it was still unable to make or receive payments. Our Banking Team in Manila therefore prepared an application for a foreign currency bank account at an international bank in Makati, Manila.
At the same time, our Singapore-based Marketing Team prepared a detailed Business Plan for the company, explaining its core activities, its Clients and suppliers, as well as providing a financial forecast and information on the shareholders and directors. The application form and Business Plan were then couriered to Martin for his signature and return to us, which he was able to do within one week.
Our Banking Team submitted a complete application pack to the bank in person, including the application form and Business Plan, as well as corporate due diligence such as the SEC registration certificate and due diligence on the bank signatories (as provided at the beginning of the engagement). Our staff then attended a brief bank interview on Martin’s behalf, explaining why the company required a corporate bank account in the Philippines.
Martin was able to begin receiving payments from his customer in Sweden ten days after the bank application had been submitted, when we received account opening approval from the bank, along with a corporate bank account number. This was followed by ATM cards and PIN numbers, which our Banking Team kept securely in our Manila office for Martin’s collection during a subsequent visit to the Philippines.