I started a company in the Philippines. It is unexpectedly simple and does not cost much.
For this my first challenge, I did not ask the Japanese agency but tried with Leazl, who is a friend of mine and representative of F&R. She had no experience on this kind of matter, however I still asked her for cooperation as I trusted her personality. Also it was to make my new company as rooted in Philippines and grow together with her newly established company F&R, which she had established with her great effort.
It does not mean that I necessarily recommend creating a company, however I will support the people who want to give a challenge in the Philippines.
Establishment Cost of Corporation in the Philippines
The cost and time period spent on company establishment in the Philippines are as follows.
Necessary expenses correspond to the fees such as attestation fee, taxes and fees that is paid to the country or regional offices. We paid agent commission to F&R, as we asked them to proceed all the registration procedure for us.
In below chart, the lowest capital stock is mentioned as from 5k PHP, however it seems to be common to set it as approx. 250k PHP. It will be gone at once anyways. The amount of required payment at the time of establishment is only 25% of the capital stock. (reference)
|Necessary expenses||50k PHP|
|Agent commission||50k PHP|
|Total||100k PHP + capital stock|
Troubles that occurred during registration
I will introduce some of the troubles that I have encountered this time. Consider as trouble often happens, it is important not to expect too much.
1.There is no name that can be used as company name
In the Philippines, unlike Japan, companies with the identical name cannot be registered. Furthermore, since the company name can be secured with a very few cost (only 40 PHP) by name reservation service for enterprises that are preparing for registration, a large number of similar names are booked by existing enterprises. Thus it is very hard to find an available name without contriving once or even twice..
I have decided to name my company as “banana” since I felt attachment to it for being a special product in the Philippines. Also, since I have been called as “gorilla” from a long time ago, I felt that I’ve found a connection. However, such a general noun is of course not free. I was spending my time to contrive new names and being disappointed to see “Already Reserved” error everyday on the online reservation page which server often goes down.
- BANANA – reserved by RED BANANA INC.
- BANANAS – reserved by RED BANANA INC.
- VANANA – reserved by RED BANANA INC.
- VANANAS – reserved by VAMANA INC.
- BANANAZ – reserved by BANANAZ MANNA ENTERPRISES INC.
AfterSeveral days, I finally ended up with “VANANAZ,” which I heard some voices saying it is hard to pronounce. I pushed people to read it as “bananas” and submitted it anyways. However, the official said that it is hardly understandable what my company does with this name, and in the end it became “VANANAZ SYSTEMS INC.” Like this.
2.It is impossible to establish the Philippines’ corporation with 100% foreign
To become an export company that earns over 60% of sales in foreign currency is one of the ways to establish a corporation with 100% foreign capital, especially for IT companies. However, even though it should be possible as above, the Securities and Exchange Commission tells us that it is not possible.
- Search for Japanese information on internet to collect evidences with temporary
- Call or visit the person in charge directly in local Visayan language and ask them to listen
to our claim
- Visit a lawyer for the points which we need to work out details
I confirmed by above methods, and finally I was able to convince officials. By the way, there is a system called PEZA which can receive tax incentives, however I stopped because the application and maintenance procedures are complicated and the office to move in is limited.
Since the system is ambiguous and interpretation is often different depending on the person in charge, it was good for me to have kept confirming to each other with Rizel while proceeding, not just leaving it to her.
3.You have to ask five promoters to sign for 500 times!?
There is a signature culture in the Philippines. In Japan, we also imprint seals over the articles of association pages, however in the Philippines we have to sign instead. Signing an unfamiliar signature for 500 times is painstaking task, but unlike seals, signatures must be signed only by him/herself. Since you cannot ask to someone else, you need to catch busy promoters and collect their signatures.
When I finally made my promoters to engage in signature collection, a notary told me that “actually, you did not need signatures.” My company’s original articles of incorporation are hallway signed and seem very uncomfortable.
By the way, the original signature should be the one on the passport. If your signature is too standard, it might be forged. Therefore, it is said that people who apply for a passport better to sign with peculiar and running characters.
4.Capital stock cannot be transferred
When establishing a company it is necessary to transfer capital stock to the corporation account of the bank and have the certificate issued.
However, the conditions of money transfer varied from the person to person at the bank, I was told to prove that peso was converted from foreign currency. I also considered the way to transfer by overseas cashing certificate or JPY cash, however since I finally needed a remittance from Japanese banks I decided to return to Japan temporarily and send money from there.
Wait for a week for remittance procedures from Japan. However, after all it was just a misunderstanding of the person in charge, and it was able to issue a certification by peso transfer. It means that all hard works we had taken were not needed after all.
By the way, the money I remitted overseas from Japanese bank is still flowing in the air and has not been returned yet.It seems like it won’t be returned unless additional fees are paid at the direct contact of Japanese bank. Overseas remittance is terrible.
5.My credit card got skimmed
Cash was necessary during the establishment process of the company and I was having overseas cash advances at many ATM machines. It seemed that an illegal machine had been installed to the ATM placed outdoors, and I had lost considerable amount of money due to the skimming damage.
In the end, all the money had been returned with full insurance, and it seems like the culprit has also been arrested already, thus I am relieved now.
After that, I have been making sure to use the ATM placed inside only, such as the ones at the bank. I have investigated the the case in detail to prevent recurrence, but since it will be long, I will post it on another occasion.
With this registration, F&R also gained experience. Therefore they should be able to proceed more smoothly from the next time. We are planning to expand coverage of this trust in cooperation with F&R and to develop co-working space and business support service that will become a hub of creators who give a challenge in Asia.
We are looking for the people who are interested in using the office, and entrepreneurs and investors who can become our mentors. I would be pleased if you could introduce anyone nearby.