Question & AnswerQ&A (SEC MEMORANDUM CIRCULAR NO. 8, S. 2013)
The primary purpose is to provide guidelines on compliance with the Filipino-foreign ownership requirements prescribed in the Constitution and existing laws by corporations engaged in nationalized and partly nationalized activities.
The Constitution, the Foreign Investments Act of 1991 (FIA) as amended, and other existing laws mandate the Filipino ownership requirements.
Section 15 requires that corporations engaged in businesses reserved for Filipino citizens include a provision in their Articles of Incorporation that no transfer of stock or interest reducing Filipino ownership below the required percentage shall be allowed.
The SEC has the authority to reject or disapprove articles of incorporation or amendments if the required Filipino ownership percentage is not complied with.
Section 14 of the FIA empowers the SEC to impose administrative sanctions provided under the FIA and its IRR for violations.
It refers only to shares of stock entitled to vote in the election of directors.
It requires the existence of full beneficial ownership of the stocks and appropriate voting rights in determining whether stocks are owned and held by Philippine nationals.
They apply to all corporations engaged in identified areas specifically reserved wholly or partly to Philippine nationals by the Constitution, FIA, and other laws, except as otherwise provided.
By applying the required Filipino ownership percentage to both the total number of outstanding voting shares and the total number of outstanding shares, whether voting or non-voting.
The Corporate Secretary must monitor and ensure compliance with the ownership provisions and cannot delegate this responsibility without express authority from the Board of Directors or Trustees.
They are given one year from the effectivity of the Circular to comply, with possible extensions granted only in meritorious and exceptional cases upon proper petition.
Failure to comply may subject the juridical entity, any person, and responsible corporate officers to sanctions under Section 14 of the Foreign Investments Act of 1991, as amended.
These sections empower the SEC to promulgate guidelines, rules, and regulations needed to implement the provisions and purposes of the laws it enforces, including ownership requirements.
Yes, corporations governed by special laws (e.g., Lending Company Regulation Act, Financing Company Act) must comply with the specific citizenship requirements laid out in those laws.