A Foreign Corporation that intends to invest in an unincorporated consortium in the Philippines must have a license to do transact even if it does not hold a controlling interest in the consortium and not the operator of the said consortium.
This is because an unincorporated consortium is considered as a partnership. Hence, it has to comply with the Foreign Investment Act of 1991 and laws on partnership. The answer would be otherwise, if the investment would be in a domestic corporation.
The exception in the Foreign Investment Act, which would not require acquiring license to transact business are as follows:
1. Mere investment as a shareholder by a foreign entity in domestic corporation duly registered to do business.
2. Having nominee director to represent its interest in such corporation.
Clearly, the exception pertains to domestic corporations and not to a partnership. Considering that the exemption from the doing business rule pertains only to investment in a corporation, investment in any other business organization, firm or entity (e.g. partnership) would not automatically constitute an exemption. In this connection, participating in the management, supervision or control of any domestic business, firm, entity or corporation in the Philippines is considered doing business. Consequently, following the strict interpretation rule, the only automatically exempt management, supervision or control is that of a corporation (i.e. having nominee director or office to represent its interest in such corporation) and not of any other entity, such as partnership. (SEC Opinion 14-01)
CGRLAW & Associates
5F First Global Building, 122 Gamboa Street
corner Salcedo Street, Legaspi Village, Makati City
Tel. No. (+63 2) 985 4322/ (+63 2) 889 5210
Mobile: +63 918 948 6092
email:atty.claudio.g.requino@live.com.ph
claude.requino@cgrlaw.tk
info@cgrlaw.tk
website: http://www.cgrlaw.tk
This email and any files transmitted with it are confidential and intended solely for the use of the individual or entity to whom they are addressed. You are hereby notified that disclosing, copying, distributing or taking any action in reliance on the contents of this information is strictly prohibited.
