20th Sep 2016
Not long ago, the Philippines adhered to a protectionist policy, implementing numerous restrictions on foreign ownerships of businesses in the Philippines.
In the past, the Philippine retail business was reserved exclusively for Filipino citizens. However, this changed with the legislation of the Trade Liberalization Act of 2000, now allowing the entry of foreign capital in the Philippine retail trade industry.
Today, the tides have changed once again for foreigners seeking to invest in Philippine businesses. Just a few years from the passing of Republic Act 9474 and the recent adoption by the Securities and Exchange Commission of implementing regulations, both of which reserve to Filipinos majority ownership of corporations engaged in the lending business, a new law was passed during the latter part of August 2016, which forever changed the course of Philippine commerce and industry.
Republic Act No. 10881 is an act amending investment restrictions in specific laws governing adjustment companies (insurance companies), lending companies, financing companies, and investment houses.
Through the law, the nationality requirements for adjustment companies under Presidential Decree No. 612 has been repealed. The nationality requirements under Presidential Decree No. 129 for investment houses, Republic Act No. 9474 for lending companies, and Republic Act No. 8556 for financing companies have likewise been repealed by Republic Act No. 10881. The repealed laws allow foreign nationals, in unison, to own up to one hundred percent (100%) of companies engaged in financing, lending, insurance, and investment houses.
Of course, while the companies themselves can be owned by foreign nationals, Republic Act No. 10881 is still subject to the constitutional proscription that foreigners cannot own real estate in the Philippines. Thus, while these new 100% foreign-minted companies may engage in business, they will have to contend with the constitutional proscription on ownership of real property.
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