| Wanting to start a business in an exotic tropical | | | | corporation is formed to purchase land, your sole other |
| environment, either to supplement a part-time or | | | | shareholder is your spouse, and she dies. Under this |
| full-time retirement, regardless of your age? | | | | arrangement, as the heir to you deceased spouse, you |
| Retirement is not a matter of age, it is a matter of | | | | are able to retain 100% ownership of the property. |
| money - having enough ongoing money coming in to | | | | Now, assuming that either (i) you are married to a |
| give one the freedom of shedding a job. If this has | | | | Filipina, or (ii) the business will be a real estate |
| been a hunger and passion of yours, having your own | | | | investment, the question then becomes what should be |
| business, and especially a business located in | | | | the form of ownership. The options are: |
| Southeast Asia, then you are looking in the right place | | | | 1. Sole proprietorship - this is a business structure |
| in the Philippines. | | | | owned by you spouse who has full authority in her |
| I have personally started six businesses in the | | | | own name and owns all the assets. However, she also |
| Philippines over the past 20 years, and find it exciting | | | | will owe and answer personally to all liabilities or suffer |
| each time. Over the years three of these businesses | | | | all losses, but enjoys all the profits. It is easy to form |
| were sold or closed down, as I moved away from | | | | and simple to register with the government. |
| asset based businesses towards distribution based | | | | 2. Partnership - this is a business structure owned by |
| businesses, both online and offline. | | | | two or more partners. One with more than Pesos |
| I have operated some of these as a proprietor, but I | | | | 3,000 capital has to register with the Securities and |
| found the preferable way to operate from a tax, | | | | Exchange Commission. All the partners have unlimited |
| security and foreign ownership standpoint is to operate | | | | personal liability for the affairs of the business. There is |
| with a corporation. | | | | no benefit to you as a foreigner with this form of |
| What are the main points to consider? | | | | ownership by your spouse. |
| 1. A foreigner cannot form a solely owned business | | | | 3. Corporation - this is my preferred form of ownership |
| without a heavy investment (for a corporation, you are | | | | if the business is going to be anything larger than a |
| looking at USD$200,000). | | | | small hobby type business. For a small business, you |
| 2. A foreigner can have up to 40% ownership in a | | | | are best off just being in a sole proprietorship - due to |
| corporation - minimum capital to start a corporation is | | | | the low cost and ease of formation, and its relative |
| only Pesos 5,000 (approximately USD $1,000). | | | | freedom from regulation by the government. However, |
| 3. So essentially the only way to be in business is to | | | | for a business of any significance (a real estate |
| be married to a Filipina who holds ownership of the | | | | ownership business, a franchise, a significant |
| proprietorship, or form a corporation with a Filipina | | | | manufacturing or export business, etc), this is definitely |
| spouse with you owning 40% and she owning 60%. | | | | the preferred form of ownership, and you as the |
| 4. Of course, you can always enter into a corporation | | | | foreigner can retain up to 40% ownership. Minimum |
| with 40% ownership with a Filipina girlfriend or a Filipino | | | | paid up capital requirement is Pesos 5,000 and it is |
| friend - but consider the huge risk of having no control | | | | regulated by the Securities and Exchange Commission. |
| over your fellow majority stock owner(s). | | | | The shareholders/owners liability is simply limited to |
| 5. Yet, depending on the purpose of the corporation | | | | their amount of the share capital. There must be at |
| (such as purchase of a real estate - land or house), it | | | | least five (5) incorporators, each of which must hold at |
| might still make sense, in that when the property is sold | | | | least one share. So what you do, for example, is issue |
| you would be entitled to your share of the proceeds. | | | | 56 shares to your spouse, 4 shares to her relatives, |
| 6. There is one exception whereby you CAN become | | | | and 40 shares to yourself. |
| a 100% owner of a corporation and that is if the | | | | |