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Thursday, November 30, 2023

SEC to use data on firms’ owners to curb corruption

The Securities and Exchange Commission (SEC) is teaming up with several agencies to harness the potential of “beneficial ownership” data in curbing corruption and supporting tax enforcement.

It said in a statement it is working with the United Nations Office on Drugs and Crime (UNODC) and Open Ownership (OO) to host a dialog with various government agencies to discuss the application of beneficial ownership in public procurement, with the end view of mitigating corruption and improving the decision-making process.

A beneficial owner is a natural person who ultimately owns or exercises ultimate effective control over a corporation.

Beneficial owners may directly or indirectly have the power to vote or influence transaction decisions of the company, even without them being reported as a stockholder, member, director or officer.

“Beneficial ownership plays an important role in detecting indicators of bid rigging and conflicts of interest during the procurement process,” SEC chairperson Emilio Aquino said.

“As such, it is important that we ensure there are few avenues for corrupt individuals to take advantage of the system,” he said.

The SEC also conducted a focus group discussion with officers of Bureau of Internal Revenue to explore how beneficial ownership data could be used to strengthen tax integrity and transparency.

It noted that tax evasion, often fueled by opaque ownership structures, has negative effect on a country’s economic stability and social development.

“Taxation is an important element of ensuring the economic stability of a nation. Through our cooperation with the UNODC and other government agencies, we hope to find ways to limit tax evasion and aid in the economic development of the nation by maintaining tax integrity,” Aquino said.

SEC-registered firms are required to disclose and submit the beneficial owners in their general information sheet.

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