SEC wants companies to reveal beneficial owners, control ties

The Securities and Exchange Commission (SEC) wants companies to disclose controls that owners exercise, as the agency seeks to promote transparency and address gaps that enable corruption and financial crime in the Philippines.

Under draft guidelines, the SEC said all entities under its jurisdiction to disclose their beneficial owners and their contractual control, board election power, dominant influence, direction of the board, property stewardship, nominee arrangements, other control mechanisms, and senior management.

They will have to report the complete name of beneficial owners, specific residential address, nationality, and the date when they became a beneficial owner.

They must also disclose the specific category of beneficial ownership applicable — the percentage of ownership of voting rights, the specific nature and means of control exercised, and the date when the beneficial ownership was established.

The SEC said it may also require entities to submit other documents related to the beneficial ownership declaration, as well as the processes on their identification of their beneficial owners.

“By strengthening beneficial ownership information disclosure, we are addressing critical gaps that enable corruption and financial crime in the country, complementing broader government efforts to combat corruption and illicit financial activities,” SEC chairperson Francis Lim said in a statement.

“This policy underscores our unwavering commitment to transparency and accountability in the corporate sector, aligning the Philippines with global standards in combating money laundering and countering the financing of terrorism,” he added.

The SEC said the draft guidelines were developed in collaboration with Open Ownership and the United Nations Office on Drugs and Crime, in line with efforts of the Financial Action Task Force of beneficial ownership disclosure.

Should they be implemented, the rules cover all entities under the SEC jurisdiction, including domestic stock and non-stock corporations, partnerships, foreign corporations, one-person corporations (OPCs), and incorporators, directors, trustees, officers, and shareholders among others.

Beneficial owners are natural persons who directly or indirectly own at least 20% of voting rights, voting shares, or capital of the reporting corporation.

In the case of OPCs with trusts as their single stockholder, beneficial owners include all beneficiaries with defined interests in the trust, all settlers or grantors who established the trust, any other natural persons who exercise effective control over the trust, and all trustees or administrators exercising control over the trust.

OPCs with estates as the single stockholder are also mandated to disclose all heirs and legatees with beneficial interests in the estate, individuals who exercise effective control over the estate, and the executor or administrator of the estate.

The information will be made available to authorized personnel within the SEC and law enforcement agencies, and other government agencies, as well as media organizations whose members and/or employees adhere to a journalistic code.

The draft rules indicate that corporations that file to comply will be penalized based on their retained earnings or fund balance.

Stock corporations with retained earnings of less than P500,000 who violate will be fined P50,000 for the first offense, and up to P500,000 for the fourth violation. Non-stock corporations with the same fund balance will be fined P25,000 for the first offense, and up to P250,000 for the fourth.

Submission of false beneficial ownership information will also subject corporations to a fine of up to P2 million.

Directors, trustees, and officers of the reporting corporation who fail to comply will also be fined P50,000 for the first violation, and up to P1 million for the fourth violation.

Comments on the draft rules may be sent to the SEC until November 9, 2025. — RSJ, GMA Integrated News