|Carina C. Laforteza||Lito Paolo T. Martin II|
The enactment of Republic Act No. 10881 on August 16 2016 is set to make the Philippines a more attractive destination for foreign investors in the financing industry. This new legislation has lifted certain foreign equity requirements.
The law was enacted to attract and promote investment from foreign nationals in activities that are deemed to significantly contribute to industrialisation, socio-economic development, and sustainable and inclusive growth.
Foreign investors can now wholly own adjustment, lending and financial companies and investment houses. Under the previous legislation, foreign investors were only allowed to own up to 49% in lending companies, up to 60% in financing companies and investment houses, and up to 40% in adjustment companies.
Notwithstanding these significant amendments, constitutional limitations on foreign ownership of land remain in place. In addition, the capitalisation rules for financing companies have not been amended. However, the law now provides that the Securities and Exchange Commission can adjust the minimum paid-up levels if it deems this is warranted by its prudential oversight requirements.
Carina C. Laforteza and Lito Paolo T. Martin II