Mon. Aug 2nd, 2021

The Securities and Exchange Commission (SEC) is instituting new protocols of transparency as part of its efforts in combatting money laundering and terrorist financing and to keep the country off the gray list of the Financial Action Task Force.
 
SEC Memorandum Circular No. 1, issued on January 27, 2021, provides the Guidelines in Preventing the Misuse of Corporations for Illicit Activities through Measures designed to Promote Transparency of Beneficial Ownership (BO Transparency Guidelines).
 
The measure includes the disclosure of the identity of the beneficial owner or the person or persons who ultimately owns or has ultimate effective control of the corporation.
 
“There are arrangements that allow individuals to assume a management or ownership position in behalf of their principals and in turn hide the identity of the beneficial owner. We can see that this is not ideal because it exposes the corporations to the risk of being misused for illegal activities,” SEC-Cebu Extension Office Counsel I Lawyer Giness Marie R. Teves said.
The guidelines provide that no corporation or entity shall issue, sell or offer for sale or distribution bearer shares, as well as bearer share warrants, where the name of owners are not reflected on the physical stock certificate or recorded in the Stock and Transfer Book of the issuing corporation.

“This is to ensure greater transparency in the ownership of corporations and also consistent with the country’s commitment to implement international standards and best practices in combatting money laundering and terrorist financing,” Teves said.

The guidelines require corporations other than publicly listed companies to disclose and record in their Stock and Transfer Book the alienation, sale or transfer of shares of stock, the date thereof, by whom and to whom made, within 30 days from the time of alienation, sale or transfer. Otherwise, the transaction shall not be binding to the issuer.

Further, no dividends shall be paid to any person or entity unless his or her name appears in the records of the corporation as the owners of the shares of stocks, except for dividend payments made publicly listed companies to the PCD Nominee or any similar entity authorized to act as depository and custodian of shares for purposes of trading in the stock exchange and operating under the same rules. SOVEREIGNPH

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