The Securities and Exchange Commission (SEC) has proposed new guidelines on beneficial ownership of corporations that will require companies to disclose who truly owns and controls them.
The SEC said in a statement that the move is part of its efforts to strengthen transparency and combat financial crime. It also aims to consolidate all existing rules on identifying and declaring beneficial owners who ultimately own or control corporations registered with the commission.
Under the proposed rules, a beneficial owner is defined as any individual who directly or indirectly holds at least 20 percent of a company’s voting rights, shares or capital. This lowers the previous threshold of 25 percent.
The proposed rules will cover all entities under SEC jurisdiction, including domestic and foreign corporations, partnerships, one-person corporations (OPCs) and corporate officers, directors, trustees and shareholders.
Under the guidelines, a covered entity shall disclose the complete name, specific residential address, nationality and the date of when the individual became a beneficial owner, among other details.
The entity must also disclose the specific category of beneficial ownership under which the individual qualifies; the percentage of ownership or voting rights, where applicable; the specific nature and means of control exercised by the beneficial owner; and the date when beneficial ownership was acquired or established.
The SEC may also require covered entities to produce other documents related to their beneficial ownership declaration, as well as the processes on their identification of their beneficial owners.
The beneficial ownership information shall be submitted by newly registered entities at the time of their incorporation or registration. No certificate of incorporation or license to do business shall be issued until such information is provided.
Corporations that fail to comply face escalating fines based on their retained earnings, starting at P50,000 for smaller stock corporations and up to P500,000 for repeated vio-lations. Those found submitting false information may be fined up to P2 million and dissolved.
Directors and officers who fail to ensure compliance may also face fines of up to P1 million for repeated violations.
