Iris Gonzales (The Philippine Star) – January 13, 2020 – 12:00am
MANILA, Philippines — The Securities and Exchange Commission (SEC) wants corporations to identify their beneficial owners in their respective General Information Sheets (GIS).
Failure to do so would render their documents insufficient and will, therefore, be rejected by the SEC, regulators warned in a recent notice.
The SEC said beneficial ownership shall be determined as follows: the identity of the natural person who ultimately has controlling interest in the corporation, the identity of the natural persons exercising control over the corporation through other means and the identity of the natural persons composing the board of directors or any similar body or senior managing official of the reporting corporation.
In its notice, the SEC said the identity of the board of directors or similar body – as beneficial owners – could only be used in exceptional circumstances “where no natural person can be identified as ultimately owning or controlling or exercising ultimate effective control over the corporation through controlling ownership interest, controlling voting rights or through other means.”
The SEC has also issued a draft memorandum circular earlier requiring foreign corporations to be more transparent in their ownership structure.
In particular, the proposed memorandum circular covers revisions on the GIS of foreign corporations to include beneficial ownership information.
The SEC said the draft circular shall apply to all SEC registered stock and non-stock foreign corporations which are required to submit the GIS under existing rules and regulations.
In corporate parlance, a beneficial owner of a company is the de facto owner of the shares of a company entitled to all gains and benefits accruing to such shares. A beneficial owner is also sometimes referred to as the real owner even though the documents of the company sometimes list another person’s name.
Aside from providing information on the beneficial ownership, the SEC is also requiring all covered foreign corporations to update the regulator of all relevant changes in the submitted beneficial ownership information as they arise.
“Such change shall be indicated in the Notification Update Form and shall be submitted to the SEC within 30 calendar days after such change occurred or became effective,” the SEC said.
Furthermore, the SEC said that the resident agent and country or regional head of the foreign corporation shall exercise due diligence required in obtaining, keeping, reporting and updating information on its beneficial ownership.
Failure to disclose information on the beneficial ownership shall make the beneficial owner of the corporation liable.
The resident agency, country head or regional head of the foreign corporation shall also be held accountable.