Security and Exchange Commission FAQs

What's the difference between a partnership and a corporation?

A partnership and a corporation differ in terms of creation, management, and liability.


A partnership can be formed by at least 2 people who consent into entering a contract of partnership. Each partner can act for the company, and his acts and contracts are binding unless otherwise provided in the Articles of Partnership. Each is also personally liable for the full extent of the debts the company may acquire.


A corporation needs at least 5 people to be formed, and the State has to provide authorization for it to be recognized as a legal entity.


In a corporation, the management of corporate affairs is vested in a board of directors or trustees. Stockholders can't be made personally liable for the debts of the company beyond the amount of their subscriptions.

What should be included in the Articles of Incorporation?

The principal contents of the Articles of Partnerships are the following:


  • The partnership name
  • The names, nationalities, and residences of the partners (for limited partnerships, the kind of partner, whether general or limited, should be indicated)
  • Principal office
  • Purpose/s of the partnership
  • Duration or term of existence
  • Capital
  • Transfer clause
  • Undertaking to change partnership name
  • Other provisions, conditions, terms, and stipulations
  • Signatures of the partners
  • Notarial page

What's the difference between a general partnership and a limited partnership?

In a general partnership, all partners are liable for the contracts and obligations of the company pro-rata with their individual private or personal property after the exhaustion of partnership assets. A general partnership will never have a limited partner.


A limited partnership has one or more general partners, and one or more limited partners. The limited partner is only liable to the extent of the capital he contributed for the contracts and obligations of the partnership.


A limited partnership should always have one or more general partners, and its partnership name must contain the word "Limited "or "Ltd".

What's a partnership at will?

A partnership at will has an indefinite term of existence. It may be dissolved at will by any partner, at any time he pleases and at a moment's notice.

What's a general professional partnership?

A limited partnership is formed for the exercise of a profession, such as law, accounting, engineering or architecture.

Are corporations allowed to enter into a partnership?

As a general rule, a corporation can't enter into a partnership with another entity or individual. However, if a company's Articles of Incorporation expressly authorizes it to enter into a contract of partnership with an entity, then it becomes permissible.


Meanwhile, a foreign corporation may enter into a contract of partnership, provided it's authorized to do so by its charter or statute.

What's the difference between a partnership and a corporation?

A partnership and a corporation differ in terms of creation, management, and liability.


A partnership can be formed by at least 2 people who consent into entering a contract of partnership. Each partner can act for the company, and his acts and contracts are binding unless otherwise provided in the Articles of Partnership. Each is also personally liable for the full extent of the debts the company may acquire.


A corporation needs at least 5 people to be formed, and the State has to provide authorization for it to be recognized as a legal entity.


In a corporation, the management of corporate affairs is vested in a board of directors or trustees. Stockholders can't be made personally liable for the debts of the company beyond the amount of their subscriptions.

What should be included in the Articles of Incorporation?

The principal contents of the Articles of Incorporation are the following:


  • Name of the corporation
  • Specific purpose/s for which the corporation is being incorporated
  • Principal office, which must be within the Philippines
  • The term of which the corporation is to exist
  • The names, nationalities, and residences of the incorporators
  • The number of directors or trustees, which shall not be less than 5 nor more than 15
  • The names, nationalities, and residences of persons who shall act as directors or trustees until the first regular directors or trustees are duly elected and qualified
  • For stock corporations: The amount of its authorized capital stock in lawful Philippine money, the number of shares into which it's divided, and in case the share are par value shares, the par value of each; the names, nationalities, and residences of the original subscribers, and the amount subscribed and paid by each on his subscription, and if some or all of the shares are without par value, such fact must be stated
  • For non-stock corporation: The amount of its capital, the names and nationalities of the contributors, and the amount contributed by each
  • The name of the treasurer-in-trust
  • Transfer clause
  • Other matters not inconsistent with law that the incorporators may deem necessary and convenient
  • Notarial page

What should be included in the by-laws?

A corporation's by-laws should include the:


  • Time, place, and manner of calling and conducting regular or special meetings of the directors or trustees
  • Time and manner of calling and conducting regular or special meetings of the stockholders or members
  • Required quorum in the meetings and the manner of voting
  • Form for proxies of stockholders and members, and the manner of voting them
  • Qualifications, duties, and compensation of directors or trustees, officers, and employees Time for holding the annual election of directors or trustees, and the manner of giving notice
  • Manner of election or appointment, and the term of office of all officers other than directors or trustees
  • Penalties for violation of the by-laws
  • Manner of issuing stock certificates (for stock corporations)
  • Other matters as may be necessary for the proper or convenient transactions of corporate business and affairs


What's the difference between a stock corporation and a non-stock corporation?

A stock corporation has authorized capital stock divided into shares of stock either with or without par value. It's engaged in income-generating activities and authorized to declare dividends.


A non-stock corporation has no authorized capital stock. It's organized for charitable, religious, educational, professional, cultural, fraternal, literary, scientific, social civil service, or similar purposes.

What's the difference between authorized capital stock and subscribed capital stock?

The authorized capital stock is the total amount of shares a corporation is allowed to issue if the shares have a par value. If the shares don't have a par value, the corporation doesn't have authorized capital stock, but it has an authorized number of shares it may issue.


The subscribed capital stock is the total number of shares issued or subscribed by the stockholders.

What does pre-incorporation subscription mean?

This refers to the required number of shares to be subscribed for purposes of incorporation. The pre-incorporation subscription should be stated in the Articles of Incorporation.

What's the difference between the incorporators and the Board of Directors?

Incorporators are the owners of the company and the signatories in the Articles of Incorporation.


The Board of Directors are responsible for governing the corporation and are usually elected for a period of 1 year.

Are there any requirements to be an incorporator or a member of the Board of Directors?

All incorporators and board members must be natural persons of legal age. Every incorporator should subscribe to at least 1 share, and majority of the incorporators need to be residents of the Philippines.


The total number of incorporators and board members should be at least 5 but not more than 15.

Are foreigners allowed to become incorporators or board members?

Yes, provided that all requirements for incorporators are complied with and that the business activity of the corporation is identified as not fully reserved for Filipino ownership, as indicated in the Articles of Incorporation.

What are the other guidelines regarding foreign ownership?

The allowable percentage of foreign ownership depends on the nature of the business.


Up to 25% foreign ownership is allowed for:


  • Private radio communications network
  • Private recruitment, whether for local or overseas jobs
  • Contracts for the construction and repair of locally funded public works
  • Contracts for the construction of defense-related structures


Up to thirty percent 30% foreign ownership is allowed for advertising companies.


Up to 40% foreign ownership is allowed for:


  • Exploration, development and utilization of natural resources
  • Ownership of private lands
  • Operation of public utilities
  • Educational institutions other than those established by religious groups and mission boards
  • Culture, production, milling, processing, trading (except retailing) of rice and corn; and acquiring, by barter, purchase or otherwise, rice and corn and the by-products thereof
  • Contracts for the supply of materials, goods and commodities to government-owned or controlled corporation, company, agency or municipality
  • Facility operator of an infrastructure or a development facility requiring a public utility franchise
  • Operation of deep-sea commercial fishing vessel
  • Adjustment companies
  • Ownership of condominium units
  • Manufacture, repair, storage, and/or distribution of products and/or ingredients requiring Philippine National Police (PNP) Clearance
  • Manufacture, repair, storage and/or distribution of products requiring Deparment of National Defense (DND) clearance
  • Manufacture and distribution of dangerous drugs
  • Sauna and steam bathhouses, massage clinics, and other activities regulated by law because of risks posed to public health and morals
  • Domestic market enterprises with paid-in equity capital of less than the equivalent of US$200,000
  • Domestic market enterprises, which involve advanced technology or employ at least 50 direct employees with paid-in equity capital or less than the equivalent of US$100,000


More than 40% foreign ownership is allowed for:


  • Export enterprises
  • Domestic market enterprises with paid-in equity capital of at least the equivalent of US$200,000
  • Domestic market enterprises, which involve advanced technology or employ at least 50 direct employees, with paid-in equity capital of at least the equivalent of US$100,000

What businesses can't have foreign ownership?

Business activities that are fully reserved for Filipino citizens are:


  • Mass media
  • Practice of professions
  • Retail trade enterprises with paid-up capital of less than US$2.5 million
  • Private security agencies
  • Small-scale mining
  • Utilization of marine resources in archipelagic waters, territorial sea, and exclusive eonomic zones as well as small-scale utilization of natural resources in rivers, lakes, bays, and lagoons
  • Ownership, operation, and management of cockpits
  • Manufacture of firecrackers and other pryrotechnic devices

Does SEC have restrictions on business names?

SEC can disapprove a business name if it's identical, or deceptively or confusingly similar to that of any existing corporation or to any other name already protected by law. It can also disapprove of a business name that's patently deceptive, confusing or contrary to existing laws.

How long does it take to register a company with SEC?

Registration can take 2 to 4 weeks, depending on the completeness of the requirements and the SEC processor's assessment.

How much is the SEC registration fee?

The registration fee has 3 components:


  • Filing Fee: Equivalent to 1/5 of 1% of the authorized capital stock or the subscription price of the subscribed capital stock, whichever is higher, but not less than P2,000.
  • Legal Research Fee: Equivalent to 1% of the filing fee, but not less than P10.
  • By-laws: Fixed fee of P1,010.


For an estimate of your registration fee, you can use the online registration calculator on the SEC website at http://www.sec.gov.ph/online-services/registration-calculator-2/

Can I file my SEC application in satellite offices?

Applications are only processed in the main office. The satellite offices are only allowed to receive documents for compliance or amendments to existing registrations.

How long is my SEC registration valid?

For partnerships, the validity depends on what's indicated in the Articles of Partnership. A company may exist indefinitely under a "Partnership at Will".


For corporations, the SEC registration can be valid for 50 years.

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