QuestionsQuestions (PRESIDENTIAL DECREE NO. 715)
PD 715 amends Section 2-A of Commonwealth Act No. 108 (the Anti-Dummy Law) to address conflicting interpretations regarding whether aliens may be elected to the board/governing body of corporations or associations engaged in partially nationalized activities, and it clarifies that such election may be allowed in proportion to aliens’ allowable equity participation.
It further amends Section 2-A by adding a final proviso stating that the election of aliens as members of the board of directors or governing body of corporations or associations engaging in partially nationalized activities shall be allowed in proportion to their allowable participation or share in the capital of such entities.
Acts include permitting or allowing the use, exploitation, or enjoyment of constitutionally or statutorily reserved rights/franchises/privileges/property/business by unqualified persons or entities; leasing/transferring/conveying such interests to unqualified persons or entities; and allowing unqualified persons to intervene in management/control as officers, employees, or laborers, except technical personnel as specifically authorized by the Secretary of Justice.
The prohibition on unqualified persons intervening in management/operation does not apply to technical personnel whose employment may be specifically authorized by the Secretary of Justice.
The proviso states that the president, managers, or persons in charge of corporations, associations, or partnerships violating the provisions of Section 2-A shall be criminally liable in lieu thereof.
Imprisonment of not less than five (5) nor more than fifteen (15) years, and a fine of not less than the value of the right, franchise, or privilege enjoyed or acquired in violation, but in no case less than Five Thousand Pesos.
The violator must forfeit the right, franchise, privilege, and the property or business enjoyed or acquired in violation of the Act.
Aliens may be elected to the board of directors or governing body of corporations/associations engaged in partially nationalized activities only in proportion to their allowable participation or share in the entity’s capital.
It implies that some equity/participation is allowed to foreigners under the Constitution/laws, and the proviso allows alien board representation only to the extent of their allowable equity participation.
It is the benchmark for the maximum permitted alien board membership: alien directors/governing-body members must be in proportion to the foreign equity share allowed by applicable constitutional or statutory restrictions.
Alien board membership would exceed the proportion of their allowable equity participation, violating the final proviso and potentially triggering liability under the Anti-Dummy Law framework.
No. The allowance is limited to corporations or associations engaging in partially nationalized activities and only to the extent of the alien’s allowable participation/share in the entity’s capital.
PD 715 states it is aligned with the constitutional policy that permits foreign investors limited representation in governing boards in proportion to their allowable equity participation in entities engaged in partially nationalized activities.
It takes effect immediately upon issuance, as stated in Section 2 of the decree.