Beginning 31 July 2019, all General Information Sheet (GIS) due for submission by corporations shall include a Beneficial Ownership Declaration in the form prescribed by SEC Memorandum Circular No. 15-2019.
Corporations are now required to disclose in the Declaration the beneficial owner/s of their corporate shareholders. Previously, corporations were only required to disclose their direct shareholders regardless of whether or not these consisted of natural or corporate persons.
A “beneficial owner” is defined under the SEC Circular as the NATURAL PERSON/S who ultimately own/s or control/s, or exercise/s ultimate effective control over the corporation.
The Circular also provides for categories of beneficial owners arranged in order of priority for determining the beneficial owners of corporations. At the top of the list are the beneficial owners who directly and/or indirectly own at least twenty-five percent (25%) of the shares in the corporation. For corporations with multiple layers of corporate shareholders, this will entail tracing both the direct and indirect ownership of shares. If the beneficial owners cannot be determined based on the first category, the next category will apply and so forth.
Only after exhausting all the categories can the members of the board of directors or trustees be declared as the beneficial owners of the corporation.
Non-compliance with the beneficial ownership disclosure rules will expose not only the reporting corporation but also the directors or trustees to liability.