The Securities and Exchange Commission (SEC) has issued a directive, covering both stock and non-stock DOMESTIC corporations, that the beneficial ownership of corporations must be reflected in the General Information Sheet (GIS), which is one of the reportorial requirements that must be submitted every year. This requirement is contained SEC Memorandum Circular No. 17, series of 2018 (dated 27 November 2018), on the “Revision of the General Information Sheet (GIS) to Include Beneficial Ownership Information“.
ANNUAL FILING OF GIS; INFORMATION REQUIRED
To ensure timely access to adequate, accurate and current information on the beneficial ownership and control of SEC-registered corporations, all SEC registered corporations are required to disclose their beneficial owners. The following information on the beneficial owner shall be provided:
- 1. Complete name, which shall include the surname, given name, middle name, and name extension (i.e., Jr., Sr., III);
- 2. Specific residential address;
- 3. Nationality;
- 4. Tax identification number TIN); and
- 5. Percentage of ownership, if applicable.
Where a corporation is owned through multiple layers, any intermediate layers of the company’s ownership structures should be fully identified. Such information shall be declared in the GIS and illustrated in an ownership chart to be attached thereto clearly showing the intermediate layers with their respective ownership amounts. [See Reportorial requirements]
BENEFICIAL OWNER; ULTIMATE EFFECTIVE CONTROL
A “beneficial owner” refers to any natural person who: (a) ultimately owns or controls the corporation; or (b) has ultimate effective control over the corporation.
On the other hand, “ultimate effective control” refers to any situation in which ownership/control is exercised through actual or a chain of ownership or by means other than direct control. This may be achieved through, but not limited to, any of the following situations:
(a) direct or indirect ownership of at least 25% of any category of voting shares or capital of a legal person, arrangement, understanding, relationship or otherwise has or shares voting power, which includes the power to vote, or to direct the voting of, such security; and/or investment returns or power, which includes power to dispose of, or to direct, the disposition of such security. A person shall be deemed to have an indirect beneficial ownership interest in any security which is:
- (i) held by members of his/her immediate family sharing the same household;
- (ii) held by a partnership in which he/she is a general partner;
- (v) subject to any contract, arrangement or understanding which gives him/her voting power or investment power with respect to such securities. However, a person shall not be deemed to be a beneficial owner of securities held by him/her for the benefit of third parties or in customer or fiduciary accounts in the ordinary course of business, so long as such shares were acquired by such person without the purpose or effect of changing or influencing control of the issuer.
(b) the ability to elect a majority of the board of directors (or any similar body) of a legal person or arrangement; or
(c) any situation which:
- (i) a person has the ability in fact to exert a dominant influence over the management or policies of a legal person or arrangement; or
- (ii) a majority of the members of the board of directors (or any equivalent body) of such legal person or arrangement are accustomed or under an obligation (whether formal or informal) to act in accordance with a given person’s directions, instructions or wishes in conducting the affairs of the legal person or arrangement.
UPDATES AND VALIDATION
The SEC shall be timely apprised of all relevant changes in the submitted beneficial ownership information contained in the GIS as they arise. An updated GIS shall be submitted to the SEC within seven (7) days after such change occurred or became effective.
The SEC shall validate the beneficial ownership information provided in the GIS through on-site inspection of the books and records of the corporation and/or through other means available.