Foreign Ownership in the Philippines: What the Law Allows Under the 13th Foreign Investment Negative List

By Starlight Business Consulting Services | Information current as of October 30, 2026

Can a foreigner own 100% of a company in the Philippines? In most industries, yes. But the answer changes once the business touches a reserved activity, a regulated service, a retail operation, or land. The activities reserved to Filipinos are listed in the Foreign Investment Negative List, which the President reissues by executive order. The current edition, the 13th Regular Foreign Investment Negative List, was promulgated through Executive Order No. 113 on April 13, 2026.

This guide explains the general rule, the capital requirements that apply to foreign-owned businesses, how the law treats telecommunications, public utilities and retail, and where land and property fit in.

The Short Answer

Under the Foreign Investments Act of 1991, as amended by Republic Act No. 11647, a non-Philippine national may register with the Securities and Exchange Commission (SEC), or the Department of Trade and Industry (DTI) for a single proprietorship, and then do business or invest in a domestic enterprise up to 100% of its capital. No prior approval is required. The exceptions are enterprises where foreign participation is prohibited or limited by another law, the Constitution, or the Negative List. The SEC and DTI cannot add ownership limits beyond those the law provides.

In practice:

•         Most activities are open to full foreign ownership, subject to the capital requirements below.

•         Listed activities are closed or capped. Your exact activity decides your maximum foreign equity.

•         Land cannot be owned by a company with more than 40% foreign equity, although long-term leases are possible.

What Counts as a "Philippine National"

The Foreign Investments Act defines a Philippine national as a Filipino citizen, a domestic partnership or association wholly owned by Filipino citizens, or a Philippine corporation in which at least 60% of the outstanding capital stock entitled to vote is owned and held by Filipino citizens. Where an activity is reserved to Philippine nationals or capped at 40% foreign equity, this is the threshold the business must meet.

The Foreign Investment Negative List: List A and List B

The Negative List has two parts:

•         List A covers activities where foreign ownership is limited by mandate of the Constitution and specific laws. It can be amended at any time to reflect changes in those laws.

•         List B covers activities where foreign ownership is regulated for reasons of security, defense, risk to health and morals, and protection of small and medium-scale enterprises. It cannot be amended more often than once every two years.

Executive Order No. 113 provides that only the activities listed in the attached 13th Negative List are reserved to Philippine nationals, subject to the exceptions and conditions stated there. It takes effect fifteen days after publication. It was posted in the Official Gazette on April 16, 2026, which places its effectivity on May 1, 2026. The list notes that foreign equity limits are subject to any applicable treaty or international or executive agreement.

What the 13th Negative List Contains

The table below summarizes the activities listed in the annex to Executive Order No. 113. Some entries carry exceptions and conditions, so check the full annex before relying on a summary.

The Foreign Investments Act does not apply to banks and other financial institutions regulated under the General Banking Law or supervised by the Bangko Sentral ng Pilipinas, nor to professions governed by their own laws or reciprocity agreements.

Capital Requirements for Foreign-Owned Businesses

Being legally open to foreign ownership does not mean a business can be set up with any amount of capital.

Domestic market enterprises. A domestic market enterprise sells goods or services to the local market, or exports less than 60% of its output on a consistent basis. Micro and small enterprises of this type with paid-in equity capital below the equivalent of US$200,000 are reserved to Philippine nationals. Foreign participation is allowed at a minimum paid-in capital of US$100,000 if the enterprise:

1.       involves advanced technology as determined by the Department of Science and Technology;

2.       is endorsed as a startup or startup enabler under the Innovative Startup Act; or

3.       has a majority of Filipino direct employees, and no fewer than 15.

Export enterprises. An export enterprise exports at least 60% of its output (or, for a trader, 60% of its domestic purchases). Foreign investment of up to 100% is allowed if its products and services do not fall within List A or List B. Foreign-owned export enterprises must register with the Board of Investments and report on their export performance.

Retail trade. Under the Retail Trade Liberalization Act as amended by Republic Act No. 11595, a foreign retailer must:

•         maintain minimum paid-up capital of PHP 25 million at all times, unless it has notified the SEC or DTI that it will repatriate its capital and cease operations;

•         come from a country that does not prohibit the entry of Filipino retailers; and

•         if it operates more than one physical store, invest at least PHP 10 million per store.

Foreign retailers must also submit proof of remittance of their capital investment when registering with the SEC or DTI. Retail trade enterprises with paid-up capital below PHP 25 million appear in the Negative List at up to 40% foreign equity.

Public Services, Public Utilities and Telecommunications

The Constitution limits foreign ownership of public utilities to 40%. Article XII, Section 11 also limits foreign participation in a public utility's governing body to the foreign share of its capital and requires all its executive and managing officers to be Philippine citizens. Republic Act No. 11659, which amended the Public Service Act, defines a public utility as a public service that operates, manages or controls for public use any of the following:

1.       distribution of electricity;

2.       transmission of electricity;

3.       petroleum and petroleum products pipeline transmission systems;

4.       water pipeline distribution systems and wastewater pipeline systems, including sewerage;

5.       seaports; and

6.       public utility vehicles.

The law provides that nationality requirements shall not be imposed on any public service that is not classified as a public utility. Telecommunications is no longer a public utility, but it is treated as critical infrastructure. For critical infrastructure, foreign nationals cannot own more than 50% of capital unless their country grants reciprocity to Philippine nationals. The 13th Negative List reflects this: up to 100% foreign equity in telecommunications operation and management where reciprocity exists, and up to 50% where it does not.

How the 60-40 Rule Is Measured

In Heirs of Gamboa v. Teves (G.R. No. 176579; decision of June 28, 2011, with motions for reconsideration denied with finality on October 9, 2012), the Supreme Court ruled that "capital" in Section 11, Article XII of the Constitution, which governs public utilities, refers to shares entitled to vote in the election of directors. The Court held that mere legal title is insufficient: full beneficial ownership of 60% of the outstanding capital stock, coupled with 60% of the voting rights, must rest with Filipinos. It added that where a corporation in a partially nationalized industry issues both common and non-voting preferred shares, at least 60% of each class must be owned by Filipinos.

SEC Memorandum Circular No. 8, series of 2013, applies this to corporations engaged in nationalized and partly nationalized activities. It requires the required Filipino percentage to be met against both the total outstanding shares entitled to vote in the election of directors and the total outstanding shares, whether or not they are entitled to vote.

The practical lesson: do not assume a foreign equity cap can be worked around with non-voting preferred shares or by placing shares in Filipino nominees' names.

Land and Property

The Constitution allows private land to be transferred only to individuals, corporations or associations qualified to hold lands of the public domain, except by hereditary succession. In practice, this means Filipino citizens and corporations at least 60% Filipino-owned. A company with foreign equity above 40% therefore cannot own land. Foreign businesses typically use one of these routes instead:

•         Long-term lease. Republic Act No. 12252, signed on September 3, 2025, amended the Investors' Lease Act. A foreign investor investing in the Philippines may lease private land for an aggregate period of up to 99 years, provided it has an approved and registered investment under the Foreign Investments Act or another applicable investment law. The leased area may be used only for the approved investment, and the lease must be registered with the Registry of Deeds.

•         Condominium units. Foreigners may own condominium units under the Condominium Act, but foreign interest in the condominium corporation that holds the land and common areas cannot exceed the limit set by law, which the Negative List places at 40%. Under the Condominium Act, a transfer that would push alien interest in that corporation past the legal limit is not valid.

•         A genuinely Filipino-controlled land-holding entity. Arrangements in which foreigners hold the beneficial ownership the Constitution reserves for Filipinos can be challenged.

What This Means for Your Business

Start with classification, not structure. Identify the precise activity your company will carry out and test it against the full 13th Negative List and any specific law that governs it, such as the Public Service Act or the Retail Trade Liberalization Act.

Confirm requirements for the vehicle you intend to use. The Foreign Investments Act covers both doing business and investing in a domestic enterprise. Rules that apply to a domestic corporation do not automatically apply to other foreign structures, so confirm the requirements for each.

Common Mistakes to Avoid

•         Assuming every Philippine business is capped at 40% foreign ownership. Most are not.

•         Assuming 100% foreign ownership is available in every industry. It is not.

•         Overlooking the US$200,000 or US$100,000 capital requirement for foreign-owned domestic market enterprises.

•         Overlooking the PHP 25 million paid-up capital and reciprocity requirements for foreign retailers.

•         Treating a land lease as land ownership, or using nominees to hold land.

Conclusion

Foreign ownership in the Philippines is broadly open, with defined limits. The deciding factors are your exact activity, the capital you commit, and the legal vehicle you use. Before signing agreements or incorporating, confirm which restriction, if any, applies to your activity and whether your intended ownership structure meets it.

How Starlight Can Help

Starlight Business Consulting Services assists local and foreign businesses with company registration and ongoing compliance in the Philippines. If you are planning to set up or expand a business with foreign ownership, you may contact Starlight to discuss your intended activity, ownership structure, and registration requirements.

This article is for general educational purposes and does not constitute legal, tax, or accounting advice. Requirements depend on your specific facts, and laws and regulations may change.