Filipino-Foreign Ownership Compliance Guidelines

The 1987 Philippine Constitution, FIA of 1991 (as amended), and other laws mandate minimum Filipino ownership in certain corporations.
Section 15 of the Corporation Code requires corporations in reserved sectors to include ownership provisions preventing the dilution of Filipino ownership below legal thresholds.
Section 17 of the Corporation Code empowers the Securities and Exchange Commission (SEC) to reject or disapprove articles of incorporation or amendments for non-compliance with ownership requirements.
Section 14 of the FIA authorizes the SEC to impose administrative sanctions for FIA violations.
Supreme Court ruling in Heirs of Gamboa v. Teves clarifies "capital" refers only to voting shares entitled to elect directors.
IRR of FIA mandates full beneficial ownership and appropriate voting rights must vest with Filipino nationals.

Filipino ownership compliance applies both to:
- (a) Total outstanding voting shares entitled to elect directors.
- (b) Total outstanding shares, whether voting or non-voting.
Full beneficial ownership and effective control of voting rights must lie with Filipino nationals.

Corporate Secretaries of covered corporations must actively monitor and ensure compliance with ownership requirements under the Constitution, FIA, and related laws.
This responsibility is non-delegable without express Board authority.

The circular takes effect immediately upon publication in two national newspapers.
Existing covered corporations not compliant at effectivity are given one year to comply.
SEC may grant extensions only for meritorious and exceptional cases upon petition.
Failure to comply subjects the corporation, its officers, and responsible persons to administrative sanctions under Section 14 of the FIA.

References:

Certain laws cited include RA 9474 (Lending Company Regulation Act), RA 8556 (Financing Company Act), and PD 129 (Investment Houses Law).