Philippine SEC Requires Disclosure Of Beneficial Ownership Of Domestic Corporations.

Legal News & Analysis - Asia Pacific - Philippines - Regulatory & Compliance

14 January, 2019

 

The Philippine Securities and Exchange Commission (“SEC”) has revised the format of the General Information Sheet (“GIS”) regularly submitted by SEC-registered stock and non-stock domestic corporations. Through Memorandum Circular (“MC”) No. 17 (s. 2018), the SEC intends to implement the Anti-Money Laundering Act of the Philippines and ensure timely access to adequate, accurate and current information on the beneficial ownership and control of SEC-registered corporations, with the end goal of preventing abuse of and by corporations for money laundering and terrorist financing purposes.

 

MC No. 17 has revised the GIS format to include the following information:

 

  • complete name, including the surname, given name, middle name and name extension;
  • specific residential address;
  • nationality;
  • tax identification number; and
  • percentage of ownership, if applicable.

 

Any updates to the information contained in the updated GIS should be submitted to the SEC within 7 days after such change occurred or became effective.

 

Further, the GIS now requires the disclosure of beneficial ownership information of shares of domestic corporations. The regulation defines a beneficial owner as any natural person who (i) ultimately owns or controls the corporation; or (ii) has ultimate effective control over the corporation. In line with this, “ultimate effective control” refers to any situation in which ownership or control is exercised through actual or a chain of ownership or by means other than direct control. The following are non-exclusive examples of “ultimate effective control”:

 

  • direct or indirect ownership of at least 25% of any category of voting shares or capital of a legal person, arrangement, understanding, relationship, or otherwise has or shares voting power, which includes the power to vote, or to direct the voting of, such security; and/or investment returns or power to dispose or direct the disposition of such security;
  • possession of ability to elect a majority of the board of directors, or any similar body, of a legal person or arrangement;
  • any situation in which a person has the ability in fact to exert a dominant influence over the management or policies of a legal person or arrangement; or
  • any situation in which a majority of the members of the board of directors of such legal person or arrangement, or any equivalent body, are accustomed or under an obligation, whether formal or informal, to act according to a given person’s directions, instructions or wishes in conducting the affairs of the legal person or arrangement.

 

Where a corporation is owned through multiple layers, any intermediate layers of the company’s ownership structure should be fully identified. Such information should also be declared in the GIS and illustrated in an ownership chart to be attached to the GIS, clearly showing the intermediate layers with their respective ownership amounts.

 

The SEC will be conducting measures to validate the beneficial ownership information provided in the GIS through on-site inspection of books and records of the corporation and/or through other means available.

 

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For more information, please contact:

 

Felix T Sy, Partner, Insights Abodago Philippines (a member of ZICO Law)

felix.sy@insights-law.com