Key Prudential Regulations

Rules on Foreign Investments

A. Inward Investments

1. Only foreign investments registered with the Bangko Sentral ng Pilipinas (BSP) are entitled to full repatriation of capital and remittance of dividends/profits using foreign exchange sourced/purchased from the local banking system.
    
2. For portfolio investments in PSE-listed securities, BSP registration may be made thru a local custodian bank [an authorized agent bank (AAB) or an offshore banking unit (OBU)].
    
3. A Bangko Sentral Registration Document (BSRD) is issued for each investment directly registered with the BSP. However, for investments in listed shares registered by custodian banks on behalf of the BSP, only one BSRD is issued per investor.
    
4. Supporting documents required for BSP registration:

a.  For cash investments:

i)   AAB’s Certificate of Inward Remittance (CIR) of foreign exchange and its conversion to pesos thru an AAB;

ii)  investee’s sworn certification of receipt of the investment or broker’s invoice (in the case investments in PSE-listed securities), or confirmation of sale (in the case of investments in government securities), or certificate of investment (in the case of investments in money market instruments) or certificate of deposit (in the case of investments in peso bank time deposits).

b.  For investments in kind:

i)   proof of transfer of asset to the Philippines/shipping documents;

ii)  Bureau of Customs (BOC) Import Entry and Internal Revenue Declaration (IEIRD); and

iii) investee-firm’s sworn certification of receipt of the investment.

c.  For investments in non-PSE listed corporations/partnerships with no previous inward foreign investment registered with the BSP: SEC-approved Articles of Incorporation/Partnership.

d.  For direct investments:
- in banks: clearance from the BSP – Supervision and Examination Department (BSP-SED) in charge of supervising the investee bank;
- capitalized expenditures in oil/natural gas/geothermal exploration:

i)   Government-approved service contract; and

ii)  copy of the Department of Energy (DOE) letter-validation of expenditures showing, among others, the distribution of validated expenditures among the partners under service contract.

e.  Additional required documents:
For shares of stock of Filipino nominees of foreign investors:

i)   Deed of Assignment transferring the specific number of shares to each Filipino nominee from foreign investor-transferor;

ii)  covering certificate of stock issued in the name of each nominee with annotation that he is merely a nominee of the foreign investor; and

iii) sworn certification of investee’s corporate secretary that the said Filipino nominees appear in investee’s corporate books only as nominees of foreign investor and that their said shares are recorded in the books of investee as part of the foreign equity of the foreign investor.

5. AABs are authorized to sell without prior BSP approval and to remit the equivalent foreign exchange representing sales/divestment proceeds or dividends/profits or earnings of duly registered investments upon presentation of the following documents:

a.  For direct equity investments:

i)   original covering BSRD;

ii)  proof of sale/dividend declaration;

iii) clearance from BSP-SES (in the case of investments in banks), or Insurance Commission (in the case of investments in insurance companies) or Department of Energy (in the case of investments in oil companies);

iv)  detailed computation of the amount involved in the prescribed format; and

v)   pertinent audited financial statements.

b.  For investments in PSE-listed securities:

i)   original covering BSRD/BSRD Letter-Advice; and

ii)  broker’s sales invoice.

c.  For investments in peso government securities, money market instruments or 90- day peso time deposits:

i)   original covering BSRD;

ii)  confirmation of purchase or matured confirmation of sale (in the case of investments in government securities) or matured certificate of investment (in the case of investments in money market instruments) or matured certificate of time deposit (in the case of investments in 90-day peso time deposits); and

iii) dividend notice (in the case of remittance of dividends for investments in PSE-listed securities).

B. Outward Foreign Investments by Residents

1. Outward investments exceeding US$6 million per investor per year that are funded with foreign exchange sourced or purchased from the local banking system are subject to prior BSP approval and subsequent registration with the BSP.
    
2. Applications to purchase foreign exchange from the local banking system for outward investments shall be supported by the following documents:

a.  copy of the applicant’s latest income tax return;

b.  project feasibility study, investment proposal/subscription agreement and other documents showing the nature and place of the investment; and

c.  written undertaking to inwardly remit and sell for pesos to AABs the dividends/earnings/divestment proceeds from the investments.

3. Foreign exchange received as dividends/divestment proceeds from outward investments funded by foreign exchange purchased from AABs shall be inwardly remitted within 15 banking days from receipt and sold for pesos to AABs within three (3) banking days from receipt in the Philippines.
    
4. Eligible outward investments exclude foreign currency-denominated bonds/notes of the Republic of the Philippines (ROP) or other Philippine entities, whether issued onshore or offshore, that are acquired by Philippine residents and, therefore, may not be funded with foreign exchange sourced from the Philippine banking system and bank-affiliated forex corporations, via spot purchases, derivatives transactions or any other means.