How to Obtain Majority Foreign Ownership in Finl‑restricted Sectors in the Philippines (2026 Step‑by‑step)

Understanding how to obtain majority foreign ownership in the Philippines in 2026 requires careful navigation of the Foreign Investment Negative List (FINL), a roster of economic activities where foreign equity is either capped or prohibited outright. On April 13, 2026, President Marcos Jr. signed Executive Order No. 113, promulgating the Thirteenth (13th) Regular FINL, which took effect on May 2, 2026, materially reclassifying several sectors and expanding pathways for foreign investors to hold majority or even full ownership. This guide sets out every procedural stage, from initial FINL screening through regulator approvals, corporate registration and ongoing compliance, so that inbound investors, general counsels and transaction teams can map the entire process before committing capital.

It reflects the law and practice as at June 6, 2026.

Overview of the Process and Who It Applies To

Any foreign national or foreign‑incorporated entity planning to hold more than 40 per cent equity in a Philippine enterprise whose business activity appears on the Foreign Investment Negative List 2026 must follow a structured, multi‑regulator approval pathway. The process applies equally to greenfield incorporations, acquisitions of existing Filipino‑majority companies, and corporate restructurings that shift shareholding above the foreign‑equity cap.

At its highest level, the procedure runs through seven stages:

1. Screen the target activity against the 13th FINL under Executive Order No. 113 and the Foreign Investment Act (RA No. 7042, as amended).
2. Select the appropriate investment route, restructure to a Filipino‑majority corporation, apply for a FINL exemption or waiver, or register under the Board of Investments (BOI) or the Philippine Economic Zone Authority (PEZA) for export or incentive‑based entry.
3. Prepare corporate structuring documents, including shareholder agreements and anti‑dummy covenants.
4. File the formal application with the relevant regulator (BOI, SEC, or the competent sectoral agency).
5. Secure any parallel sectoral licences (e.g., from the Department of Energy, the Civil Aviation Authority of the Philippines, the Energy Regulatory Commission, or the National Telecommunications Commission).
6. Complete post‑approval registrations, SEC amendments, beneficial ownership filings under the HARBOR system, BIR tax registration and local government permits.
7. Maintain ongoing compliance through anti‑dummy audits, capital‑infusion reporting and annual beneficial‑ownership declarations.

The process is not linear in every case; sectoral licence applications often run in parallel with BOI or FINL exemption filings. Engaging Philippine counsel at the earliest screening stage is the single most effective way to compress timelines and avoid rejections. For tailored guidance, visit the Philippines, Foreign Investment practice area on this site.

Eligibility and Prerequisites for Majority Foreign Ownership

Statutory Tests Under the FIA and the 13th FINL

The legal baseline is Republic Act No. 7042 (the Foreign Investment Act of 1991, as amended by RA No. 11647). Section 8 of the FIA requires the President to periodically publish a Foreign Investment Negative List enumerating activities where foreign participation is limited or barred. Activities not on the FINL are, by default, open to up to 100 per cent foreign ownership.

The 13th FINL, promulgated through Executive Order No. 113, divides restricted activities into two lists:

• List A, Foreign ownership limited by the Constitution or specific statutes. These include mass media (prohibited), land ownership (prohibited for non‑Filipinos), public utilities (capped at 40 per cent unless covered by the amended Public Service Act), and sectors governed by special laws such as retail trade, mining and private security.
• List B, Foreign ownership limited for reasons of security, defence, risk to health and morals, or protection of small and medium enterprises. Domestic market enterprises with paid‑in equity capital below the statutory threshold fall here.

Before any other step, investors must confirm which list, and which specific entry, applies to their target activity, because the permissible foreign‑equity ceiling, the required approvals and the minimum capitalisation all flow from that classification.

Paid‑in Capital Thresholds and Exemptions

Under the FIA (as amended), a Domestic Market Enterprise is any enterprise that sells goods or services exclusively or predominantly in the Philippine market. Foreign investors who wish to hold more than 40 per cent of such an enterprise must satisfy minimum paid‑in capital requirements. The general threshold under the FIA, as amended, is USD 200,000 for enterprises with foreign equity above 40 per cent. This threshold may be reduced to USD 100,000 where the enterprise involves advanced technology as certified by the Department of Science and Technology, or where it directly employs at least 50 Filipino workers. Investors should verify the activity‑specific threshold against current BOI issuances, as nationality‑specific treaty exceptions may also apply.

When 100 Per Cent Foreign Ownership Is Allowed

The Philippines does permit full foreign ownership in certain circumstances. Export enterprises, those deriving at least 60 per cent of revenue from exports, may be 100 per cent foreign‑owned regardless of the FINL, provided the activity is not constitutionally restricted. Enterprises registered with PEZA or the BOI under the Strategic Investment Priority Plan may also qualify for 100 per cent foreign equity, subject to compliance with registration conditions and reporting obligations. Activities that do not appear on the FINL at all are likewise open to full foreign ownership without a minimum capital requirement for export enterprises.

Step‑by‑Step Procedure to Obtain Majority Foreign Ownership in the Philippines (2026)

The following numbered steps set out the full procedural sequence. The timeline table below summarises who acts at each stage and the typical duration.

Step 1, Conduct Pre‑Deal FINL Screening and Sector Classification

Before any commercial commitment, counsel must map the investor’s intended business activity to the precise FINL entry under Executive Order No. 113. This is not a simple keyword check; many activities straddle multiple entries or have been reclassified in the 13th FINL. The screening also confirms whether the activity falls under List A (constitutional or statutory restriction) or List B (security, defence, health, morals, or SME protection). The output of this step is a written FINL classification opinion that identifies the maximum permissible foreign‑equity ceiling and any available carve‑outs. For investors evaluating multiple sectors, a comparative eligibility matrix is prepared at this stage.

Step 2, Select the Investment Route

Based on the FINL classification, the investor and counsel decide on one of three routes:

• Route A, Filipino‑majority corporation (60/40 structure). Where the FINL caps foreign equity at 40 per cent and no exemption route exists, the investor structures a joint venture with Filipino partners, retaining economic and governance rights through shareholder agreements, convertible instruments or management contracts.
• Route B, FINL exemption or waiver application. Certain activities may qualify for an exemption through a government agency (e.g., under special laws or bilateral investment treaties). Counsel prepares a legal memorandum and economic‑benefit proposal for submission to the competent agency.
• Route C, BOI or PEZA registration (export or incentive route). If the enterprise qualifies as an export enterprise or falls within the Strategic Investment Priority Plan, BOI or PEZA registration may unlock up to 100 per cent foreign equity, along with fiscal incentives. The investor files a BOI application form together with a business plan and financial projections.

Step 3, Prepare Corporate Structuring and Anti‑Dummy Safeguards

This step converts the chosen route into binding legal documents. Counsel drafts or reviews:

• Articles of Incorporation and By‑Laws (or amendments thereto) reflecting the agreed shareholding.
• A shareholders’ agreement covering governance, capital calls, transfer restrictions and deadlock resolution.
• Anti‑dummy covenants, contractual undertakings ensuring that Filipino shareholders are genuine beneficial owners and not mere nominees acting on behalf of foreign principals, in compliance with the Anti‑Dummy Law (Commonwealth Act No. 108, as amended).
• Escrow arrangements for capital infusion, where the regulator or the transaction structure requires proof of committed funds before registration.

The anti‑dummy compliance framework is critical. Philippine regulators and courts actively scrutinise nominee arrangements, and violations carry criminal penalties. Board resolutions, nominee disclaimer letters and management‑contract provisions must all be documented.

Step 4, File the Formal Application with the Relevant Regulator

The filing destination depends on the selected route. For BOI registration, the investor submits the BOI application form, the economic proposal and supporting financials to the BOI’s Industry and Investments Group. For a FINL exemption or waiver under a special law, the application goes to the competent agency identified in the FINL entry. For a straightforward SEC incorporation or amendment (where no exemption is needed), the investor files directly with the Securities and Exchange Commission. Typical processing times range from 15 to 60 business days for BOI registration and 30 to 90 business days where a FINL exemption decision is required.

Step 5, Secure Sectoral Licences and Regulator Approvals in Parallel

Many FINL‑restricted activities also require sector‑specific permits. These should be filed in parallel with the Step 4 application to avoid sequential delays. Examples include:

• Energy: Department of Energy (DOE) service contracts or permits; Energy Regulatory Commission (ERC) licences for power generation or distribution.
• Aviation: Civil Aviation Authority of the Philippines (CAAP) air operator certificates and foreign ownership compliance certificates.
• Telecommunications: National Telecommunications Commission (NTC) legislative franchise confirmations and frequency‑assignment permits.
• Environment: Department of Environment and Natural Resources (DENR) Environmental Compliance Certificates for projects requiring environmental impact assessment.

Each sectoral regulator has its own documentary requirements, technical‑report standards and processing timelines. Coordinating these with the BOI or FINL exemption track requires experienced local counsel.

Step 6, Complete Post‑Approval Registration and Beneficial Ownership Filing

Once regulator approval is secured, the investor completes corporate registration or amends existing registrations at the SEC. This includes filing amended Articles of Incorporation, an updated General Information Sheet reflecting the new shareholding, and the beneficial ownership declaration through the SEC’s HARBOR (Harmonized and Automated Register of Beneficial Ownership Records) system. HARBOR filings require disclosure of all natural persons who ultimately own or control the entity, supported by KYC documents and verified identification. The company must also register with the Bureau of Internal Revenue (BIR) to obtain a Tax Identification Number (TIN) and, where applicable, a VAT registration.

Step 7, Maintain Ongoing Compliance and Reporting

Approval is not the end of the process. The enterprise must sustain compliance through:

• Annual HARBOR beneficial ownership updates filed with the SEC.
• BOI reportorial requirements (if BOI‑registered), including quarterly or annual reports on investment milestones, employment figures and export performance.
• Anti‑dummy audits, periodic internal reviews confirming that Filipino shareholders retain genuine beneficial interest and management participation.
• Capital‑infusion proof, bank certifications or audited financial statements showing that paid‑in capital continues to meet the statutory threshold.
• Shareholder meeting minutes and board resolutions documenting governance decisions in accordance with the shareholders’ agreement.

Required Documents and Information for Majority Foreign Ownership Applications

The table below consolidates the key documents across all stages of the FINL exemption process, BOI/SEC registration and sectoral licensing. Investors should treat this as a master checklist and confirm specific requirements with the relevant regulator before filing.

For applications involving foreign‑issued corporate documents, allow additional lead time for apostille or consularisation. Documents in a language other than English or Filipino must be accompanied by a certified translation.

Timeline and Key Deadlines for Obtaining Majority Foreign Ownership in 2026

Timing is one of the most common investor concerns. The table below sets out the statutory and practical milestones, with mitigation strategies for typical delays.

The most common causes of delay are incomplete documentary submissions, requests for additional technical evidence from sectoral regulators, and anti‑dummy compliance queries from the SEC or BOI. Industry observers expect processing times to tighten as regulators build capacity to handle increased foreign‑investment applications following the 13th FINL reclassifications.

Costs, Fees and Tax Considerations

Investors should budget for statutory filing fees, minimum capital requirements and professional advisory costs. The table below provides typical ranges, all amounts should be verified against the current schedules of the SEC, BOI and relevant sectoral regulators before filing.

From a tax perspective, BOI‑ and PEZA‑registered enterprises may qualify for fiscal incentives under the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act, including income‑tax holidays, special corporate income‑tax rates and duty‑free importation of capital equipment. These incentives can materially affect the economics of the investment and should be modelled during the route‑selection stage (Step 2).

What Changes in 2026: The 13th FINL Under Executive Order No. 113

Executive Order No. 113 was signed by President Marcos Jr. on April 13, 2026, published in a newspaper of general circulation on April 17, 2026, and took effect on May 2, 2026. It supersedes the 12th Regular FINL issued in 2022. The 13th FINL reflects the policy direction of calibrated liberalisation: several sectors have been reclassified to allow higher foreign‑equity ceilings or have been removed from the negative list entirely, while activities mandated by the Constitution or special statutes as Filipino‑restricted remain in place.

Industry observers expect the likely practical effect to be a measurable increase in foreign‑direct‑investment inflows into sectors such as renewable energy, telecommunications value‑added services and certain retail activities. Investors who were previously constrained to 40 per cent equity must now reassess their structures against the updated list, as the 13th FINL may have opened a pathway to majority or full ownership that did not exist under the prior iteration. The full text of Executive Order No. 113 is available through the Official Gazette and Lawphil.

Common Pitfalls and How to Avoid Them

• Incorrect FINL classification. Misidentifying the applicable FINL entry can lead to structuring for the wrong equity cap. Engage counsel to produce a written classification opinion referencing the exact 13th FINL entry before any commercial commitment.
• Anti‑dummy compliance gaps. Nominee arrangements that lack genuine Filipino beneficial ownership violate the Anti‑Dummy Law and can result in criminal prosecution, forfeiture of investment and revocation of licences. Ensure that anti‑dummy covenants, nominee disclaimer letters and board resolutions are documented and regularly audited.
• Missing sectoral technical documents. Sectoral regulators (DOE, CAAP, NTC, ERC) reject applications that lack required technical engineering reports, safety assessments or environmental clearances. Submit complete technical packages from the outset.
• Under‑capitalisation relative to paid‑in thresholds. Falling below the minimum paid‑in capital at any point, including after initial registration, can trigger SEC enforcement action. Maintain bank certifications or audited financial statements as ongoing proof of compliance.
• Failure to coordinate the SEC/BOI/sectoral regulator sequence. Filing with one regulator before securing the prerequisite approval from another causes avoidable delays. Map the inter‑agency sequence with counsel at Step 2 and file sectoral licence applications in parallel with the primary BOI or FINL exemption track.

Sources

1. Official Gazette, Executive Order No. 113 (2026)
2. Lawphil, Executive Orders Series of 2026
3. Supreme Court E‑Library, RA No. 7042 (Foreign Investment Act)
4. Board of Investments (BOI), FAQs and Registration Guidance
5. Securities and Exchange Commission (Philippines), HARBOR / Beneficial Ownership Circulars
6. Lexology, Understanding the New Philippine Foreign Investment Negative List
7. InCorp Philippines, 13th Regular Foreign Investment Negative List Advisory
8. Philippine News Agency, Gov’t Outlines Foreign Ownership Limits
9. Cruz Marcelo, Philippines Issues 13th Foreign Investment Negative List
10. Reyes Tacandong, The 13th FINL Explained