RULE IV : PREQUALIFICATION OF FOREIGN RETAILERS

Section 1. Prequalification Requirements. - Before a foreign retailer is allowed to engage in the retail trade business or invest in an existing retail store in the Philippines, it must possess all of the following qualifications:

(a) A minimum of Two hundred million US dollars (US$200,000,000.00) net worth in its parent corporation for Categories B and C, and Fifty million US dollars (US$50,000,000.00) net worth in its parent corporation for Category D;

(b) Five (5) retailing branches or franchises in operation anywhere around the world unless such retailer has at least one (1) store capitalized at a minimum of Twenty-five million US dollars (US$25,000,000.00):

(c) Five (5)-year track record in retailing; and

For purposes of determining compliance with the above requirements, the net worth, track record and existence of branches and franchises of the parent company, its branches and subsidiaries and of its affiliate companies, as well as their predecessors, which substantially owns, controls or administers the operations of the applicant shall be considered.

(d) Only nationals from, or juridical entities formed or incorporated in countries which allow the entry of Filipino retailers shall be allowed to engage in retail trade in the Philippines.

Sec. 2. Application for Pre-Qualification. - A request for pre-qualification by the aforementioned foreign retailer must be submitted to the Board of Investments before filing a formal application to engage in the retail business or invest in an existing retail store. Said request for pre-qualification must be accompanied by the following documents:

(a) Latest Annual Financial Statement showing the net worth of the applicant;

(b) Certification by a responsible officer of the applicant-foreign retailer duly authenticated by the Philippine Embassy/Consulate stating that:
i. it has been engaged in retailing for the past five years; and

ii. has at least five (5) retailing branches anywhere in the world, or at least one branch is capitalized at a minimum of Twenty-five million US dollars (US$25,000,000.00);

(c) Copies of franchise or licensing agreements between the applicant and its franchisee/licensee if the applicant fails to meet the preceding requirement of at least five (5) retailing branches; and

(d) Certification by the proper official of the home state of the applicant-foreign retailer to the effect that the laws of such state allows or permits reciprocal rights to Philippine citizens and enterprises together with the extent of participation allowed.

Sec. 3. Enterprises composed of Two (2) or More Stockholders/Partners. - If a single retailing corporation/partnership to be formed and organized under Philippine laws will be owned by several foreign retailers and foreign investors, an application for all of the stockholders/partners for pre-qualification must be filed with the BOI. The foreign retailer-stockholder/partner with the highest equity in said company should satisfy the conditions mentioned under Rule IV, Sections 1 and 2.

However, In cases where all or two or more of the foreign stockholders/partners have equal shares, the prequalification condition shall be deemed complied with if the stockholders/partners owning or controlling at least majority of the stocks or interests meet the aforementioned conditions.

Sec. 4. Issuance of Certificate of Compliance with Prequalification. - The Board of Investments (BOI), shall issue, within twenty (20) working days from submission of all necessary documents, after evaluation and verification, a Certification that the foreign retailer meets the qualifications prescribed by the law.

Sec. 5. List of Qualified Foreign Retailers. - The DTI through the Board of Investments (BOI) shall keep a record of foreign retailers who have been pre-qualified to establish retail stores in the Philippines. It shall ensure that the parent retail trading company of the foreign investor complies with the qualifications on capitalization and track record.