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Philippines: Beneficial ownership disclosure required

Beginning January 1 2019, all corporations registered with the Philippine Securities and Exchange Commission (SEC) are required to disclose their beneficial owners in their annual reports to the SEC. Under SEC Memorandum Circular Number 17 of 2018 (MC 17-2018), all SEC-registered corporations have to reflect in their general information sheets the following information on their beneficial owners: (1) complete names; (2) specific residential addresses; (3) nationalities; (4) tax identification numbers; and, (5) percentages of ownership, if applicable.

In MC 17-2018, the term 'beneficial owner' refers to any natural person who ultimately owns or controls, or has ultimate effective control over, the subject corporation. 'Ultimate effective control', in turn, refers to 'any situation in which ownership/control is exercised through actual or a chain of ownership or by means other than direct control.' The MC 17-2018 provides the following examples of situations where 'ultimate effective control' will be deemed to be present:

(a) direct or indirect ownership of at least 25% of any category of voting shares; provided, that a person is deemed to have an indirect beneficial ownership interest in any security which is held by (i) members of his/her immediate family sharing the same household, (ii) a partnership in which he/she is a general partner, or (iii) a corporation of which he/she is the controlling shareholder;

(b) a person has the ability to exert a dominant influence over the management or policies of the subject corporation; or

(c) a majority of the board of directors of the subject corporation are accustomed to, or are under an obligation to act in accordance with a given person's directions in conducting the affairs of the subject corporation.

The MC 17-2018 was issued by the SEC as part of its mandate to assist in the implementation of the Anti-Money Laundering Act, as amended, and to prevent the misuse of corporate entities for money laundering and terrorist financing purposes. Before the issuance of MC 17-2018, SEC-registered corporations were required to disclose in their respective general information sheets only the details of their registered stockholders (or those in whose names shares of the corporation were actually recorded).

The MC 17-2018 was published on November 28 2018 and became effective on the same date.

Aaron Roi B Riturban

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