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April 23, 1982

GUIDELINES FOR THE INVESTMENT REQUIREMENT OF FOREIGN


CORPORATIONS UNDER SECTION 126 OF THE CORPORATION CODE OF THE
PHILIPPINES
The following guidelines are hereby promulgated for the information and guidance
of all foreign corporations duly licensed to do business in the Philippines pursuant to
Section 126 in relation to Section 148 of the Corporation Code of the Philippines.
SECTION 1. Scope of applicability. Presently existing foreign corporations duly
licensed to do business in the Philippines as of May 1, 1980 shall deposit securities
satisfactory to the Philippine Security and Exchange Commission with an actual
market value of P100,000.00 by May 1, 1982. Other foreign corporations duly
licensed after May 1, 1980 and such foreign corporations as may be heretofore be
licensed in the future shall also deposit similar securities with an actual market
value of P100,000.00 within sixty (60) days from the issuance of license to do
business in the Philippines.
However, the following corporations need not comply with the investment
requirement prescribed in Section 126 of the Corporation Code of the Philippines:
1.

Foreign banking corporations including offshore banking units;

2.

Foreign insurance corporations;

3.

Foreign non-stock corporations including foreign religious corporations;

4.
Foreign corporations which have established representative offices in the
Philippines;
5.
Regional or area headquarters of multinational companies registered under
PD 218.
SECTION 2. Purpose of investment requirement. The deposit shall not only
be for the benefit of present and future creditors of the licensee foreign corporations
but also to compel said foreign corporations to invest in or buy Philippine securities
in order to foster the social and economic development of the country, (CF
Explanatory Note of BP Blg. 68). As such, the prescribed deposit is separate and
distinct from the BOI requirement under PD 1789 to bring assets in the Philippines
so as to constitute the capital of such foreign corporation.
SECTION 3. Types of acceptable Securities. The following securities are
acceptable as deposit to the Securities and Exchange Commission:
A.

Government Debt Instruments:

1.
Bonds or any evidence of indebtedness of the Government of the Philippines,
its political subdivisions and instrumentalities, such as but not limited to the
following:
a)

Central Bank Certificates of Indebtedness (CBCIs)

b)

Cultural Center of the Philippines

c)

Premyo Savings Bond

d)

Treasury Savings Bond

e)

Treasury Notes

2.
Any evidence of indebtedness of government-owned or controlled
corporations and entities, such as
a)

National Power Corporation Capital Bonds

B.

Equity Instruments:

1.
Shares of stock in "registered enterprises" under the Omnibus Investments
Code (PD 1789);
2.

Shares of stock in domestic corporations registered in the stock exchange;

3.
Shares of stock in domestic insurance corporations under the supervision and
regulation of the Office of the Insurance Commission;
4.

Shares of stock in banks licensed by the Central Bank of the Philippines;

5.
Or any combination of these kinds of securities. Cash, money market
placement, time deposits and bank guaranty or standby letter of credit and similar
instruments other than those falling in the foregoing enumeration shall not be
acceptable as deposit.

SECTION 4. Mechanics in the acceptance of deposit.


A.
A written application to deposit securities mandated by law shall be filed with
the Commission, signed under oath by the resident agent or a duly authorized
representative of the licensee-foreign corporation.
B.
A custodian fee of P1,000.00 per year shall be charged by the Commission
upon filing of said application to cover payment of space in the vault of the bank,
inter alia.

C.
The Commission shall determine whether or not the securities deposited are
acceptable, and the prices of such securities shall likewise be examined and verified
if the actual market value of such securities is at least P100,000.00.
D.

The securities submitted to the Commission shall be indorsed in blank.

E.
The Commission shall thereby issue a Certificate of Acceptance of Deposit
containing an Inventory of such securities.
F.
The securities accepted by the Commission shall remain unchanged and
unimpaired during the period that the foreign corporation engages/transacts
business in the Philippines, subject however to the succeeding paragraphs of the
instant guidelines.
SECTION 5. Substitution of securities. Upon proper application therefor and
payment of the same fee prescribed in the preceding paragraph, the Commission
may allow the licensee-foreign corporation to substitute other securities for those
already on deposit as long as the licensee is solvent. Upon compliance with the
requirements of the preceding paragraph, the Commission shall issue a Certificate
of Substitution of Securities on Deposit.
SECTION 6. Additional Securities Required. Within six (6) months after each
fiscal year of licensee-foreign corporation, the Commission shall require the deposit
of additional securities under the following conditions:
A.
If the licensee's gross income within the Philippines for that fiscal year
exceeds five million (P5M) pesos, then an additional securities equivalent in actual
market value to two (2) percent of the increase in said gross income shall be
required.
B.
If the actual market value of the securities on deposit has decreased by at
least ten (10%) percent of their actual market value at the time they were
deposited.
The Commission shall thereby issue a certificate of Release of additional Securities.
SECTION 7. Release of Additional Securities. At its discretion, and upon
proper application therefor, the Commission may release part of the additional
securities deposited with it, under the following circumstances:
A.
If the gross income in excess of P5M of the licensee-foreign corporation has
decreased; or
B.
If the actual market value of the total securities on deposit has increased by
more than ten (10%) percent of the actual market value of the securities at the time
they were deposited.
The Commission shall thereby issue a Certificate of Release of Additional Securities.

SECTION 8. Who shall be entitled to interest or dividends. During the


period of time that the securities are on deposit with the Securities and Exchange
Commission, the licensee shall be entitled to collect the interest or dividends on the
said securities.
SECTION 9. Return of Securities. Whenever a foreign corporation decides to
withdraw from business in the Philippines, the Commission may return the securities
deposited by such foreign corporation, subject to the following conditions:
A.
A written application must be made therefor and signed under oath by its
resident agent or by a duly authorized representative, upon payment of the
aforementioned fee.
B.
It has ceased to do business in the Philippines by submitting a resolution of
the Board of Directors of the foreign corporation to the effect that they desire to
withdraw the license to do business in the Philippines and that said company has
the liabilities to the Government of the Republic of the Philippines, to the Public or
private corporations, Philippine residents and/or citizens.
C.

Thereafter, the Commission shall issue a Certificate of Return of Deposits.

For strict compliance.


(SGD.) MANUEL G. ABELLO
Chairman