Buying a Philippine Company: How to Check Foreign Staff 9G Visas and AEPs Before Signing, and Who Carries the Risk

The short answer: check every foreign employee's papers before signing, and write down who carries the risk

When buying a Philippine company, check each foreign national's work visa (such as a 9G) and labor department work permit (AEP) individually before signing. Put what you find into the deal documents, either as items the seller must fix before closing or as risk allocated through price, warranties and indemnities. Do not rely on a single staff list from the seller, and do not plan to "sort it out after closing".

Why this deserves its own workstream: problems with foreign staff permits attach to the company itself. After a share purchase the company is the same legal entity, so past issues travel with it to you. That includes people working without a permit, people still working on expired papers, and declared positions or salaries that do not match reality. If violations are confirmed, the company's ability to sponsor foreign employees in future can also be affected; see a company restricted from sponsoring after a violation.

If you have already closed and found widespread expired papers, see discovering expired permits after taking over a company. For how the seller prepares, see share sale versus asset sale and what buyers check. This guide is written from the buyer's side and covers only the checks before signing and how to handle what you find in the transaction, so that the problem is priced and assigned while you still have negotiating leverage rather than inherited quietly the day after closing.

Start the permit review at the same time as the financial and tax review, not at the end. Findings here often affect price and timing, and they take longer to verify than people expect because each answer depends on documents held by the seller, its agent and sometimes the employees themselves.

What to ask the seller for: one list, checked person by person

The heart of the review is making four things match for every individual: the person, the papers, the position and the pay. Ask the seller in writing for the following, and have the seller represent in the deal documents that the materials are true and complete:

1. A list of all foreign nationals: not only employees on the payroll, but directors, officers, consultants, secondees, and anyone who works from the office long-term without appearing on payroll.
2. Each person's documents: passport data page, the work visa or other visa approval and its validity, the alien registration card, and the work permit with its validity.
3. Each person's position and pay: the position and salary declared in the permit and visa applications, compared line by line with the actual employment contract, payroll and income tax filings.
4. Pending matters: renewals, conversions or cancellations in process, and any agency inquiry, notice or inspection record.
5. History: past denials, penalties, complaints, deportations or watch-list entries, and anything the seller knows about but has not resolved.

Then build a table with one row per person: document type, expiry date, declared position, actual position, declared salary, actual salary, and pending matters. Once the table exists, the problems tend to show themselves. Ask for the underlying documents, not summaries, because the gaps that matter usually sit in the difference between what was filed and what the company actually does day to day.

Set a deadline for the seller's responses and track every request in a simple log: what you asked, when, what came back, and what is still missing. An item the seller never answers is a finding in itself, and the log shows your lawyer exactly which representations need to be strongest in the final agreement.

The five most common problems, and how much each weighs

Not every finding is equally serious. Rank them during the review and decide which must be resolved before closing and which can be followed up afterwards.

1. Working without a work permit or work visa. This is the heaviest category because it involves unauthorized employment, with exposure for both the company and the individual; see the risks of employing without a permit. As a rule, require the seller to resolve it before closing.
2. Still working on expired papers. What matters is how long they have been expired and whether a renewal was filed in time. Holding a filing receipt or not makes a large difference.
3. Declared position or salary not matching reality. The permit names one role while the person does another, or the declared salary disagrees with payroll and tax filings. This surfaces at renewal and in audits and pulls in tax issues too.
4. Foreign headcount or the role itself is a problem. Some positions cannot be held by foreign nationals; see positions closed to foreign nationals. A high foreign ratio can block renewals; see renewals blocked by the foreign staff ratio.
5. The sponsoring entity differs from the real employer. The visa sits under another group company while the person works at the target, so sponsorship must be rearranged after the deal.

For each category, the exact test and consequences follow the current position of the labor department and the Bureau of Immigration. For significant findings, ask a licensed lawyer for a written opinion before you decide how to treat them in the deal.

Record the source for every finding, such as the document, the date and who provided it, so the ranking can be defended later if the seller disputes it.

Once you find problems: four ways to put them into the deal

Whatever you find should either be fixed by the seller before closing or allocated clearly in the deal documents. A verbal "we will handle it later" is not enough. The usual tools:

1. Conditions precedent. Make "permits and visas for named employees regularized" or "named unauthorized workers lawfully separated and their papers cancelled" a condition that must be met before closing.
2. Price adjustment or holdback. Where the expected cost of fixing, penalties and handling is significant, reduce the price or hold part of it in escrow until the issue is resolved.
3. Warranties and indemnities. Have the seller warrant the compliance status of foreign staff papers and indemnify the buyer for penalties or losses after closing that arise from facts before closing, with a stated period and cap.
4. Post-closing covenants. For items that can be handled after closing, set out the seller's duty to cooperate: handing over original files, assisting with agency inquiries, and making the former handlers available.

A share purchase and an asset purchase affect employees and their papers very differently. In a share deal the company stays the same and inherits its history. In an asset deal employment and sponsorship usually have to be set up again; see what happens to employees when a company is sold. For the seller's continuing exposure, see liability after selling a company. Have a licensed lawyer draft the actual clauses, and make sure the lawyer sees the person-by-person table rather than a summary, since the clauses are only as precise as the findings behind them.

Whatever you choose, tie each clause back to a named row in the table so nothing is lost between diligence and drafting.

Handover around closing: take control of the permit files

Closing is not only a share transfer. The accounts, files and handlers connected with foreign staff permits must be handed over too, or you will own a company that does not know where its own foreign employees' papers are.

Put these on the closing checklist:

1. Originals and files. All application papers, approvals, receipts and cancellation records for foreign staff, as originals or certified copies, handed to a person named by the new management.
2. Online accounts. The company's accounts on labor department and Bureau of Immigration systems, with login details, linked email and phone number moved under the new management's control. If a former HR officer or agent holds them, see agency online accounts held by former HR.
3. Authorizations and agents. Either re-engage the seller's agent under the new management or revoke the old authorization in writing. Do not leave an old authority attached to the company's files.
4. An expiry calendar. Visa, permit, alien registration card and annual report dates for every foreign employee, in one calendar that takes effect on closing day.

If the company's name, address or shareholders change, assess whether changes must be reported to the Bureau of Immigration and the labor department; see whether a 9G must be redone after a name, address or ownership change.

Assign one named person to own this handover from signing through the first renewal cycle. Permit files tend to fall between legal, HR and finance during an integration, and a single owner is the simplest way to stop that from happening.

Ask the seller to confirm in writing, at closing, that the handover list is complete, so gaps found later are clearly the seller's to explain.

How Yixing can help

The value of a foreign staff permit review is turning "there may be issues" into a named, dated table both sides can negotiate on. Package the results as three things: a person-by-person status table, a list of issues ranked by severity, and a recommended treatment for each (fix before closing, price holdback, or follow up after closing).

The first months after closing are when permit issues are most often missed. New management is busy integrating the business and expiry dates pass quietly. Giving one person the expiry calendar and a monthly check costs far less than fixing lapses afterwards, and it also gives you a clean record to show if an agency ever asks how the company has managed its foreign staff since the change of ownership.

What Yixing can do: before the deal, check for the buyer whether the target's foreign staff work visas, work permits and declared details agree; prepare the issue list and regularization routes; work with your lawyer so the necessary items reach the deal documents; and after closing, take over renewals, corrections and cancellations. We hold SEC registration (CS202009551) and Bureau of Immigration accreditation (BI Accreditation No. CA-202624381-1, valid until 30 June 2027), plus DOLE accreditation; see our compliance and retainer services and our visa and HR services. What we cannot do: replace a lawyer's legal opinion or draft the transaction agreements, or guarantee any agency's decision.

This is a process overview, not legal advice. For your specific case, consult a licensed Philippine lawyer. Yixing is a private consultancy with no affiliation to the Bureau of Immigration or the labor department; current agency practice always governs.