Rules on Foreign Investments

A. Inward Investments by Non-residents

For purposes of registration, foreign investments may be in the form of:

a) foreign direct investments in Philippine firms or enterprises;

b) Investments in peso-denominated certificates of indebtedness issued by public sector entities;
c) Investments in securities listed in the PSE;
d) Investments in peso-denominated money market instruments 2/; and
e) Investments in peso time deposits with maturity of at least 90 days

2. Items (a) and (d) above shall be registered directly with the BSP while the registration of other portfolio
investments (items b, c and e) may be made thru a local custodian bank [an AAB or an offshore banking
unit (OBU)].

3. As a general rule, inward remittance of FX funding foreign direct investments (item a) need not be
converted to pesos while inward remittance of FX funding portfolio investments (items b,c,d and e)
requires conversion to pesos.

4. A Bangko Sentral Registration Document (BSRD) is issued for each investment directly registered with
the BSP. However, for investments registered by custodian banks on behalf of the BSP, only one BSRD
is issued per investor.

5. Documentary requirements for BSP registration of foreign investments are as follows:

I. For applications for registration to be filed directly with the BSP

A. For Cash Investments

i. Certificate of inward remittance (CIR) of foreign exchange through an AAB in the prescribed format
[Sample CIR and Guide/Instructions for Filling-Out CIR Form is under Appendix 10.1 and Appendix 10.2
of the Manual of Regulations on Foreign Exchange Transactions (FX Manual), respectively]; and

ii. Sworn certification of the officer of the investee firm concerned attesting to the number of shares and
amount paid for the investment [Suggested format is under Appendix 10.3A (for Stock Corporations) and
Appendix 10.3B of the FX Manual (for Branches/Representative Offices/Regional Headquarters/Regional
Operating Headquarters)].

B. For Investment in Kind

i. Shipping documents;
ii. Bureau of Customs Import Entry and Internal Revenue Declaration (IEIRD); and
iii. Sworn certification of the officer of the investee firm concerned attesting to the number of shares and
amount paid for the investment [Suggested format is under Appendix 10.3A (for Stock Corporations) and
Appendix 10.3B (for Branches/Representative Offices/Regional Headquarters/Regional Operating
Headquarters) of the FX Manual].

The value of investments in kind shall be assessed and appraised by the BSP before their registration.
C. For investment in financial institutions which are governed and regulated by the BSP:

Clearance from the Supervision and Examination Sector of the BSP shall be required in addition to the
documentary requirements for investments in cash or in kind.

D. Registration as foreign investments of capitalized oil/gas/geothermal exploration expenditures

i. Government-approved service contract/other contract; and

ii. Copy of the Department of Energy (DOE)/National Power Corporation (NPC) letter-validation of
expenditures showing, among others, the distribution of validated expenditures among the partners under
the service contract/other contract.

E. Investments funded by foreign loan/s and other payables converted into equity

i. Original CIR of FX through an AAB in the prescribed format (Appendix 10.1 of the FX Manual) for
foreign loans not registered with the BSP; or
ii. Copy of BSP registration for foreign loans registered with the BSP;
iii. Sworn certification from investee firm’s authorized officer attesting to the number of shares and amount
paid for the investment remittable outward and that such are funded from foreign loans/payables
converted to equity;
iv. Deed of Assignment of foreign loan or other payables;
v. Latest audited financial statements of investee firm; and

F. Stock and/or property dividends accruing on BSP-registered investments in non-PSE-listed firms

i. Copy of BSRD; and

ii. Sworn certification signed by the investee firm’s authorized officer on the declaration of the stock and/or
property dividend, to include relevant excerpts of the covering Board Resolution

G. Stock splits/reverse stock splits on BSP-registered investments in non-PSE-listed firms

i. Copy of BSRD; and

ii. Sworn certification signed by the investee firm’s authorized officer declaring the stock split/reverse
stock split, to include relevant excerpts of the covering Board Resolution

H. Investments in Peso-denominated Money Market Instruments

Registration of Investments in money market instruments, which refer to all peso-denominated debt
instruments, such as but not limited to bonds, bills payables, promissory notes (PNs), and non-
participating preferred shares, issued onshore by private resident firms, not included in Section 23 of the
FX Manual, shall be supported by the following documents:

i. Original CIR of foreign exchange and its conversion to pesos through an AAB in the prescribed form
(Appendix 10.1 of the FX Manual); and
ii. Contract/Certificate of investment

For bonds or PNs issued by private domestic firms that were purchased from local creditor banks, the
following additional documents shall be required:

i. Copies of bonds or PNs;

ii. Purchase Price Letter/Agreement;
iii. Deed of Assignment of the loan;
iv. Notice of Assignment of the loan; and
v. Acknowledgment by debtor of the Notice of Assignment

For foreign investments in non-participating preferred shares of Philippine investee enterprises, the
following additional document/s shall be required:

Purchase invoice, or subscription agreement and/or proof of listing in the local stock exchange for
new/additional

II. For application for registration to be filed with Custodian Banks

Foreign investments in peso-denominated government securities, PSE-listed securities, and peso time
deposits with tenor of at least 90 days as described in Items 1, 2, and 4 under Section 35 of the FX
Manual shall be registered with custodian banks designated by the foreign investors. Custodian banks
are authorized to issue on behalf of the BSP the BSRD for such investments. The original copy of the
BSRD shall remain in the custody of the issuing custodian bank. The duplicate copy of the new BSRD
issued by custodian banks together with the following requisite supporting documents shall be submitted
to the BSP within two (2) banking days from date of registration for post audit purposes:

A. Investments in peso-denominated government securities (GS)

i. Accredited dealer’s Confirmation of Sale (COS);

ii. Original CIR of foreign exchange and its conversion to pesos through an AAB in the prescribed format
(Appendix 10.1 of the FX Manual);
iii. “Authority to Disclose Information” in the prescribed format (Appendix 10.4 of the FX Manual)

B. Investments in PSE-listed securities

i. For new investments:

a. Purchase invoice, or subscription agreement and/or proof of listing in the local stock exchange for
new/additional issues/stock rights: and
b. Original CIR of foreign exchange and its conversion to pesos through an AAB in the prescribed format
(Appendix 10.1 of the FX Manual).

ii. For annotation in the BSRD of stock dividends which accrued to duly registered investments:

PSE Notice (Circular for Brokers) announcing the issuance of Stock Dividend

iii. For annotation in the BSRD of stock splits/reverse stock splits

PSE Notice (Circular for Brokers) announcing the issuance of Stock Splits/Reverse Stock Splits

C. Investments in peso time deposits with tenor of at least 90 days

i. Bank certification of peso time deposit;

ii. Original Certificate of Inward Remittance (CIR) of foreign exchange and its conversion to pesos through
an AAB in the prescribed format (Appendix 10.1 of the FX Manual); and
iii. “Authority to Disclose Information” in the prescribed format (Appendix 10.4 of the FX Manual)

B. Outward Investments by Residents

1. Residents are allowed to purchase FX from AABs and/or AAB-forex corporations for investments
abroad up to US$60 million or its equivalent per investor a year, or per fund a year for qualified investors
(QIs). Purchases to fund outward investments exceeding the limit require BSP approval. Application to
purchase FX for outward investments shall be supported by documents prescribed under Item C.4 of
Appendix 1 of the FX Manual.

2. Residents may also purchase FX from AABs and/or AAB-forex corporations without prior BSP approval
for investments in bonds/notes of the Republic of the Philippines or other Philippine resident entities
requiring settlement in foreign currency, provided such purchases when aggregated with the
aforementioned outward investments will not exceed $60 million per investor per year.

3. QIs may apply with the BSP for a higher annual outward investment limit. For this purpose, QIs shall be
limited to the following: insurance and pre-need companies; collective/pooled funds, whether in a
corporate or contractual structure, such as mutual funds, unit investment trust funds and variable
insurance; public or private pension or retirement or provident funds and such other entities and funds as
the BSP may determine as QIs on the basis of such factors as financial sophistication, size and regularity
of financial transactions, net worth and size of assets being managed. The application of collective/pooled
funds and pension, retirement and provident funds for a higher annual outward investment limit may be
effected through its governing board or through its trustee.

4. FX received by residents as dividends/earnings or divestment proceeds from outward investments and

investments in bonds/notes issued by residents offshore that were funded with FX purchased from AABs
or AAB-forex corps, need not be inwardly remitted and sold for pesos.

1/
AABs shall refer to all categories of banks except Offshore Banking Units (OBUs) duly licensed by the
BSP.

2/Refer to all peso-denominated debt instruments, such as but not limited to bonds, bills payables,
promissory notes, and non-participating preferred shares, issued onshore by private firms, not included in
Section 23 of the FX Manual

3/Forexisting unregistered foreign direct investments that are recorded in the investee firm’s books and
whose foreign exchange funding were inwardly remitted/assets were transferred more than 5 years prior
to 15 December 2011, the BSP is providing a grace period from 15 December 2011 to 14 December
2012 to register these investments. After said period the BSP will no longer register such investments.