Philippines client case studies
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 Standard Chartered 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 Philippine National 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 Standard Chartered 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.