Paid-Up Capital Requirements in the Philippines: What Sets the Threshold, How to Prove It, and Five Myths

Three Different Things: Authorised, Subscribed and Paid-Up Capital

Conflating these three terms is the source of nearly every misunderstanding. Authorised capital stock is the ceiling written into your articles — the maximum share capital the company may issue. Subscribed capital is what shareholders have committed in writing to take up. Paid-up capital is money actually inside the company and capable of being verified. When a regulator, a bank, the immigration authorities or a counterparty asks about capital, they almost always mean the third one.

Why the distinction matters:

• Authorised capital is a ceiling, not an investment. Setting it high means you will not need to amend the articles when you later increase capital — but official charges at incorporation and on capital increases, and the related documentary tax, are typically scaled to capital. Setting it high has a price, and you pay it before the business has earned anything.
• Subscribed capital is a real obligation. Whatever you sign up for and have not paid is, in law, money you owe the company. If the company runs into trouble, unpaid subscriptions can be called to satisfy creditors. Founders arriving from jurisdictions where you can “subscribe a big number and never fund it” carry a dangerous habit into this system.
• Paid-up capital is how every threshold is measured. Minimum-capital rules point at paid-up capital, and you must be able to evidence it.

One structural change worth knowing: the Revised Corporation Code removed the general minimum capital stock requirement for stock corporations and did away with the old rule that fixed percentages of authorised capital had to be subscribed and paid in. So for a company with purely local shareholders in a non-regulated sector, “what is the minimum capital in the Philippines” often has no statutory answer at all. The numbers come from the layers described in the sections below. To get the structure right the first time, see what to check when hiring a company registration agent.

What Sets the Threshold: Four Variables, Asked in Order

Work through these four in order and the answer usually falls out: how much foreign equity, does the sector have its own statute, who do you sell to, and is there an export arrangement. Skip one and any quote you receive will be off by a wide margin.

1. Foreign equity share. This is the first and biggest variable. A company with purely Filipino shareholders and a company with foreign participation run on different logics. Once foreign equity crosses the statutory 40% dividing line, the minimum paid-in capital requirements under the Foreign Investments Act framework come into view — and whether foreign capital is allowed at all in your sector, and up to what percentage, is governed by the current Foreign Investment Negative List, which is periodically updated. Only the edition in force counts.
2. Whether the industry has its own statute. Banking, insurance, financing and lending, securities, manpower and seafarer deployment, travel agencies, parts of education and healthcare, and public utilities are each governed by their own laws or regulators, which set their own minimum and ongoing capital requirements. These are typically stricter than the general rule and often continuing obligations, not one-off tests at incorporation.
3. Who you sell to: domestic market or export. This is the central divide in Philippine foreign investment policy. A foreign-owned enterprise selling mainly into the Philippine domestic market and one selling mainly abroad face entirely different positions on minimum paid-in capital; the latter generally is not bound by the same threshold.
4. Whether an export ratio applies. Following from the above, export-enterprise status turns on whether exports reach a prescribed share of output or sales. Read the applicable percentage from the Foreign Investments Act and its implementing rules as currently in force — not from numbers repeated on forums.

Two situations that can lower the threshold are worth knowing about: enterprises recognised as employing advanced technology or endorsed as innovative by a designated body, and enterprises meeting a prescribed level of direct local employment. Statutory relief exists for both, but the qualifying criteria and supporting evidence must be taken from the responsible agency’s current rules — you cannot self-certify as “high technology.” To see how the four variables land on your specific project, have Yixing’s company setup advisers run it against your shareholding and sales structure.

Foreign Ownership Plus Domestic Sales: Why This Combination Costs Most

The most expensive combination is foreign control plus selling mainly to Philippine customers, because that is precisely what the foreign-capital threshold regime exists to regulate. Once you grasp that legislative intent, a lot of scattered rules snap into place.

The policy logic is straightforward: the Philippines welcomes foreign capital that brings capacity, technology, exports and jobs, but imposes a capital threshold where foreign capital enters to compete directly for the local market, so that thinly capitalised entrants do not crowd out local operators. Hence the pattern:

• Foreign-owned export enterprises — least threshold pressure, because they do not compete for the domestic market and they bring in foreign exchange.
• Foreign-owned domestic market enterprises — this is where minimum paid-in capital genuinely bites.
• Locally controlled companies (foreign equity below the dividing line) — back to the general rules, generally without this foreign-specific threshold.
• Regulated or restricted sectors — check the Negative List and the sector statute first; capital is only one of several gates.

A warning about an extremely common workaround: recruiting a Filipino friend or employee to hold shares in name only, to manufacture the local ownership ratio. In the Philippines this raises anti-dummy exposure — a criminal matter, not an accepted industry practice. And practically, a nominee structure gives you almost nothing enforceable the day the relationship sours: the company is nominally someone else’s, and the side agreement you rely on may itself be unenforceable because its purpose is unlawful. What you save on the threshold, you wager on the whole company.

If your business genuinely needs a local shareholder, source and vet a real partner and paper the relationship properly rather than treating them as a name to fill a quota. Also, do not conflate foreign ownership ceilings with eligibility for tax incentives — two entirely separate rulebooks, and confusing them corrupts the structure from day one; the relationship is explained in how PEZA and BOI eligibility differ. For any question about the legality of a shareholding structure, consult a licensed Philippine lawyer; this article is not legal advice.

Sector Statutes: An Entirely Separate Set of Capital Rules

Where your sector is separately regulated, the sector statute’s capital requirement overrides or stacks on the general rule — and it is frequently a continuing requirement rather than a one-time test at incorporation. The point of this section is not to list figures but to tell you which regulator to ask.

Areas that typically carry their own capital rules include:

• Financial services: banks and quasi-banks, insurance and reinsurance, financing and lending companies, and securities brokers, with minimum and ongoing capital adequacy requirements set by the central bank, the insurance regulator or the securities commission, usually alongside fit-and-proper vetting of shareholders.
• Manpower and deployment: local recruitment agencies and overseas employment and seafarer deployment agencies face capital and bond requirements from the labour and overseas employment authorities, plus continuing accreditation obligations — how the model works is covered in how Philippine manpower and dispatch agencies operate.
• Tourism: travel agencies and related operators face thresholds and accreditation requirements set by the tourism authority; the route is described in opening a travel agency and obtaining tourism accreditation.
• Retail trade: foreign entry into retail is governed by dedicated legislation, revised in recent years, with separate rules on branches and per-store investment.
• Public utilities, infrastructure, education and healthcare: each with its own statute and regulator.

Pay particular attention to continuing requirements. Many licensed sectors require the business to maintain a capital or net-worth level throughout its operating life, evidenced by audited financial statements at renewal. Capital in these sectors is not something you park temporarily and withdraw — withdrawing it directly threatens the licence.

If you simply want the lightest possible way to test the market, your business is not foreign-restricted and the scale is small, a sole proprietorship is an alternative — but only for Filipino individuals; see how DTI sole proprietorship registration works. Foreign investors generally must use a corporation. For the current capital requirement in your specific sector, take it from that regulator’s current issuances rather than from an article written several years ago.

Proving the Money Is There: Affidavits, Bank Certificates and Inward Registration

The Philippines has no capital verification report of the kind used in mainland China. In its place sits a combination of a treasurer’s sworn statement, a bank certificate, and — for foreign capital — evidence that the funds entered the country. Get this step wrong and money can be in the account yet not count.

In practice the pieces are:

• Treasurer’s affidavit. The designated treasurer swears to the subscription and payment position, and it is filed with the registration documents. It carries legal responsibility; it is not a form to be waved through.
• Bank certificate of deposit. Evidence that the paid-in funds sit in an account in the company’s name. Note the sequencing problem: before incorporation there is no company account, so in practice there is an arrangement involving a pre-incorporation or in-process account, or another agreed method of holding the funds. Bank policies differ, so confirm with your bank early.
• Evidence of inward funds (for foreign shareholders). Foreign shareholder contributions should arrive through traceable channels, with remittance and conversion records retained in full.
• Registration of the foreign investment. If you intend to buy foreign exchange through the banking system to repatriate dividends or capital in future, the corresponding registration with the central bank system is generally required. This is the step most often skipped, and it determines whether money can lawfully leave later. Discovering years afterwards, at first dividend, that it was never done is painful to remedy.

Two practical notes. First, capital does not have to sit untouched in the account — paid-up capital is meant to be deployed in the business, and spending it on equipment, rent and payroll is its purpose. Continuing capital requirements in licensed sectors are a separate matter; do not confuse the two. Second, your registered address has to survive scrutiny: bank account opening, tax registration and later renewals all look at it, and a pure mail-drop can be rejected in some contexts — the boundaries are in how far a virtual office or registered address can take you. Foreign-owned entities should also settle who carries local representative duties; see who a Philippine resident agent is and what they can do.

Five Myths, Dismantled

Each of these has caused real rework on real projects. Ordered by how often we see them.

Myth one: a big authorised capital makes the company look substantial. It has a real cost — official charges at incorporation and on increases, and the related documentary tax, are typically scaled to capital. More importantly, subscribed-but-unpaid capital is a debt shareholders owe the company and can be called if things go wrong. Size the capital to actual business need and regulatory threshold, not to impress.

Myth two: you can subscribe capital without funding it. Not here. Philippine thresholds are measured against paid-up capital and must be supported by bank and sworn documentation. Importing the habit of nominal subscription from another jurisdiction is the most expensive mental shortcut on this topic.

Myth three: money that came in can go out whenever you like. Whether you can buy foreign exchange through the banking system to repatriate dividends or capital depends on whether the foreign investment was registered as required and whether the inward remittance records were kept. This has to be arranged as the money comes in, not reconstructed later.

Myth four: there is a capital figure required for a work visa. There is no universal capital test. What gets examined is whether the company genuinely operates, whether the position is justified, whether the role and pay are consistent, and whether the work is open to foreign nationals at all. Which roles are closed is covered in what jobs foreigners can do in the Philippines, and the pay dimension in how the 9G salary expectation actually works. Capital is one piece of evidence of substance, not a password.

Myth five: register small now, top it up later. Increasing capital is technically possible but requires amending the articles and filing, with added cost and time — and if your sector carries a threshold, operating below it means operating out of compliance in the meantime. Getting it right once is cheaper than fixing it afterwards.

A closing note of realism: most of the “the Philippines requires X dollars” claims circulating online take the rule for one specific situation — foreign-owned domestic market enterprises — and present it as universal. Establish which category you are in first; only then does a number mean anything. If you are unsure, give Yixing’s company setup team your shareholding structure, target customers and sector rather than matching yourself to a forum post.