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In the dynamic landscape of foreign investment, the Philippine Securities and Exchange Commission (SEC) plays a pivotal role in defining the operational boundaries of foreign entities. One such landmark clarification is SEC Opinion No. 25-09, which outlines the allowable activities of a representative office—a structure often favored by foreign corporations seeking a foothold in the country without engaging in income-generating operations.

What Is a Representative Office?

A representative office is a business presence established by a foreign corporation in the Philippines, strictly for liaison purposes. It is not allowed to derive income from Philippine sources and is funded entirely by its head office abroad. This structure is ideal for companies that aim to explore the market, coordinate with local partners, or manage regional operations without engaging in commercial transactions.

Key Highlights of SEC Opinion No. 25-09

SEC Opinion No. 25-09 provides critical guidance on what a representative office can—and cannot—do. Here are the core features:

1. Non-Income Generating Activities

• The representative office must not engage in revenue-generating activities.
• It cannot sell goods or services, issue invoices, or enter into contracts that result in income from Philippine sources.

2. Permissible Functions

• Promotional activities for the parent company’s products or services.
• Market research and feasibility studies.
• Coordination and communication with local clients or suppliers.
• Quality control and inspection of goods sourced from the Philippines.
• Reporting to the head office on local developments.

These activities are considered ancillary and supportive, not commercial in nature.

3. Funding and Expenses

• All operational expenses must be remitted from the head office.
• The representative office must not receive payments from Philippine entities, even as reimbursement.

4. Legal and Regulatory Boundaries

• The representative office is not a separate legal entity; it acts solely on behalf of the foreign corporation.
• It must register with the SEC and comply with reporting obligations, including the submission of audited financial statements and General Information Sheets.

Why This Matters

SEC Opinion No. 25-09 serves as a regulatory compass for foreign corporations navigating Philippine business laws. It protects the integrity of the local tax base by ensuring that only duly registered entities engage in commercial activities. At the same time, it provides a low-risk entry point for foreign firms to build relationships, understand the market, and lay the groundwork for future expansion.

Insightful Ending: Strategy Within Structure

For visionary leaders and compliance-driven firms, understanding the nuances of SEC Opinion No. 25-09 is more than a legal exercise—it’s a strategic imperative. The representative office model offers a disciplined pathway to engagement, allowing foreign corporations to build trust, gather intelligence, and prepare for full-scale operations without breaching regulatory thresholds.

In a region where governance and growth must go hand in hand, clarity is power. And in the Philippines, that clarity begins with knowing where liaison ends—and commerce begins.

Disclaimer: The below document is shared for informational purposes only. All rights and authority remain with the Securities and Exchange Commission.

Opinion No. 25-09 Re: Allowable Activities of a Representative Office

In an era where cross-border collaboration fuels innovation and growth, the Philippine Securities and Exchange Commission (SEC) Opinion No. 25-10 stands as a crucial interpretive guide for corporations navigating the delicate balance between foreign investment and national interest. This opinion addresses a recurring question in corporate governance: Can foreign nationals serve as directors in Philippine corporations?

The answer is nuanced—and strategically important.

No Absolute Ban, But Clear Boundaries

The Revised Corporation Code does not impose a blanket prohibition on foreigners serving as directors. However, their eligibility is not unconditional. It is subject to constitutional provisions, the Anti-Dummy Law, and industry-specific regulations that safeguard Filipino control in key sectors.

Proportional Representation Based on Equity

Foreign nationals may be elected to the board only in proportion to their allowable equity share. If a corporation is subject to a 40% foreign ownership cap, then only 40% of its board may be composed of foreign directors. This principle ensures that governance power mirrors ownership rights.

Sector-Specific Restrictions

Certain industries—such as mass media, public utilities, and land ownership—are constitutionally reserved for Filipinos. Even indirect control through board representation is restricted, reinforcing the country’s commitment to economic sovereignty.

Anti-Dummy Law Enforcement

The SEC reiterates that nominee arrangements or proxy schemes designed to circumvent nationality restrictions are prohibited. Genuine control must reflect actual ownership and legal entitlement.

Documentation Integrity

Corporations must ensure that board composition is accurately reflected in equity records and official filings, such as the General Information Sheet. Transparency and consistency are non-negotiable.

Insightful Ending: Governance as a Mirror of Integrity

SEC Opinion No. 25-10 is more than a legal clarification—it’s a governance compass. It reminds us that board composition is not just a matter of corporate strategy but a reflection of national values. For firms seeking to integrate foreign expertise, the challenge lies not in exclusion, but in structuring participation within the bounds of law and principle.

In the Philippine context, governance is not merely about who leads—it’s about how leadership honors both opportunity and accountability. And in that balance, true resilience is found. 

Disclaimer: The below document is shared for informational purposes only. All rights and authority remain with the Securities and Exchange Commission.

Opinion No. 25-10 Re: Participation of Foreigners in the Board of Directors 

In the dynamic landscape of corporate restructuring, SEC Opinion No. 25-11 offers critical guidance on the legal and operational implications of a merger under Philippine law. This opinion clarifies how mergers take effect and what obligations arise for the entities involved.

Key Features of the Opinion

Effectivity Date of Merger

The merger becomes effective upon issuance of the Certificate of Merger by the Securities and Exchange Commission (SEC). This certificate serves as the formal recognition of the merger’s legal consummation.

Stipulated Effective Date

While the Revised Corporation Code prescribes the SEC’s certificate as the trigger for effectivity, the parties may stipulate a different effective date in their merger agreement. This is allowed provided no party is prejudiced and public policy considerations are observed.

Binding Nature of Agreement

Once approved by the SEC, the stipulated date becomes binding on the parties, even if the certificate is issued on a later date. This flexibility allows businesses to align legal effectivity with operational timelines.

Tax and Compliance Implications

The absorbed corporation must file a short-period income tax return covering the period from the start of the taxable year up to the effective date of the merger. This ensures proper closure of its tax obligations.

Why It Matters

For business owners, accountants, and legal professionals, Opinion No. 25-11 underscores the importance of precise documentation and strategic planning in merger transactions. It empowers parties to manage timing with clarity while remaining compliant with SEC and BIR requirements.

Disclaimer: The below document is shared for informational purposes only. All rights and authority remain with the Securities and Exchange Commission.

Opinion No. 25-11 Re: Effect of Merger