Business Organizations in the Philippines

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Questions and Answers

What is a key characteristic of a sole proprietorship?

The owner has full control and personal liability. (correct)

It is owned by multiple individuals.

It must be registered with the Securities and Exchange Commission.

It offers limited liability to its owner.

What is a primary characteristic of a non-stock corporation?

It is organized for profit distribution among its members.

It is primarily structured for commercial purposes.

Its profits must further the purposes for which it was organized. (correct)

It can distribute its income as dividends to officers.

What type of business organization is treated as a juridical person?

Sole proprietorship

Corporation (correct)

General partnership

Limited partnership

What is required for a foreign corporation operating in a host country?

It requires a minimum paid-up capital of US$200,000.00. Signup and view all the answers

Which of the following is true about partnerships?

A partnership capital must be at least Php 3,000.00 to register. Signup and view all the answers

What is the purpose of a Regional Headquarters (RHQ) or Regional Operating Headquarters (ROHQ)?

To act as a communication and coordinating center for its subsidiaries. Signup and view all the answers

Which requirement is necessary for a corporation in the Philippines?

It must consist of at least five to fifteen incorporators. Signup and view all the answers

Which statement accurately describes a limited partnership?

Limited partners can contribute but do not manage the business. Signup and view all the answers

What distinguishes a foreign corporation that derives income from the host country?

It must put up an initial inward remittance of US$30,000.00. Signup and view all the answers

What determines if a corporation is considered Filipino or foreign-owned?

The ratio of Filipino to foreign share ownership. Signup and view all the answers

Which of the following is NOT a purpose for which a non-stock corporation can be organized?

Distributing profits to shareholders. Signup and view all the answers

What must a foreign corporation NOT do to be recognized in a host country?

Distribute profits to its members. Signup and view all the answers

What is the minimum capital required to start a corporation in the Philippines?

Php 5,000.00 Signup and view all the answers

What are artificial beings created by operation of law often called?

Corporations Signup and view all the answers

Which of the following activities can a Regional Headquarters NOT engage in?

Directly selling products to local customers. Signup and view all the answers

What characterizes the income of a corporation organized principally for public purposes?

It must be reinvested in operational activities. Signup and view all the answers

Study Notes

Business Organizations in the Philippines

The Philippines had 224,540 business establishments in the formal sector of its economy in 2017. This number was lower by 11.2% than 2016.
Sole proprietorships are owned and controlled by one individual who enjoys all profits and personally handles all liabilities and losses. They must be registered with the Department of Trade and Industry (DTI).
Partnerships involve two or more individuals combining money, property, or industry to divide profits amongst themselves. Partnerships can be general or limited. Partnerships with a capital of at least 3,000 PHP must register with the Securities and Exchange Commission (SEC).
Corporations are artificial beings created by law with separate legal personalities from their members. They can be stock or non-stock.
- Stock corporations have a capital stock divided into shares with dividends distributed based on share ownership.
- Non-stock corporations are organized for public purposes (like charitable, religious, educational, etc.) and any profit is used to further their organizational objectives.
Domestic corporations are 60% Filipino-owned.
Domestic foreign-owned corporations are more than 40% foreign-owned.
Foreign corporations are organized under foreign laws and operate in the Philippines.
- Foreign corporations deriving income must invest a minimum of US$200,000.
- Foreign corporations not deriving income must invest a minimum of US$30,000 and be registered with the SEC.
Regional headquarters (RHQ) and regional operating headquarters (ROHQ) can be established by multinational companies existing outside of the Philippines. They act as supervisory, communication, and coordination centers for branches and subsidiaries in the region.
Administrative branches are established by multinational companies to handle international trade. They operate as extensions of the parent companies.

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Description

Explore the various types of business organizations in the Philippines, including sole proprietorships, partnerships, and corporations. This quiz delves into the definitions, requirements, and classifications of these businesses within the formal economy. Test your knowledge on the legal structures and registration processes for each entity.