What structuring options exist for a foreign private equity fund to acquire a controlling stake in a Philippine company without triggering land ownership issues?

What percentage of the outstanding shares of the target company are you planning to buy into? The outstanding shares of Philippine landholding company may be directly owned by foreigners up to 40%. If owning land is not a priority, the foreigner may enter into a long-term lease with the landholding company and separately set up a 100% foreign-owned operating company. Whether the operating company may be 100% foreign-owned will also depend on its business purpose. Foreign equity limits apply on a per industry basis. You may also consider setting up a holding company that will own shares in the landholding company. Note, however, that ownership of Philippine landholding companies are generally subject to the control test, and in case of doubt, may be further subjected to the grandfather rule. The grandfather rule is applied by reviewing not only the direct shareholding, but also the indirect shareholding and/or subsequent tiers of ownership in the company engaged in a nationalized/partly-nationalized industry to determine compliance with the foreign equity limits. The structure of the deal, approvals required, and timelines to consider will depend on the industry of the target company and size of the deal.