Limits on Stockholdings in a Single Bank (Subsection X126.1)
- Stockholdings by individuals, corporations, family groups, or same groups of persons are subject to limits in various Republic Acts (R.A. Nos. 8791, 7906, 7353, 7721).
- Foreign individuals and non-bank corporations can own/control up to 40% of voting stock of a domestic bank; aggregate foreign ownership capped at 40%.
- Qualified foreign banks can own/control up to 60% of voting stock; aggregate foreign ownership including individuals and non-bank corporations capped at 60%.
- Filipino individuals and domestic non-bank corporations may each own up to 40%, with no aggregate ceiling.
- Combined ownership by an individual and wholly- or majority-owned corporation limited to 40%.
- Qualified Philippine corporations retain rights under R.A. No. 7721.
- Family groups related within the fourth degree of consanguinity or affinity are considered related interests and each may own up to 40%, with full relationship disclosure required.
- Multiple corporations controlled by the same family group are related interests, each allowed up to 40% ownership with disclosure.
- Cooperative equity investment in Coop Banks is capped at 40% of subscribed capital stock.
- Citizenship for foreign ownership is determined by stockholders’ citizenship; corporate citizenship is based on controlling stockholders owning more than 50%.
- Relationships of stockholders are governed by Civil Code provisions (Articles 963 to 966).
Transactions Involving Voting Shares of Stock (Subsection X126.2)
- Applies to subscription, purchase, sale, transfer, conversion of preferred stock or debt instruments into voting shares, and any acquisition of voting rights or control.
- Transactions exceeding prescribed ceilings under laws are unlawful and void.
- Ownership ceilings under various laws:
- Filipino individuals or Philippine non-bank corporations: max 40%
- Foreign individuals/non-bank corporations: max 40% for universal/kindred banks, none for rural banks
- Qualified foreign banks: up to 60%
- Combined holdings of related individuals: up to 40%
- Proxy, voting trusts, or similar arrangements resulting in ownership/control beyond ceilings are void.
Prior Monetary Board Approval Requirement
- Required for transactions leading to:
- Ownership or control of more than 20% voting shares by any person/group enabling election as director.
- Change in majority ownership/control from one group to another.
- Bank must comply with minimum capital requirements immediately if ownership change occurs.
- Requests for approval submitted jointly by transferor and transferee with necessary documents.
- Funds for share subscriptions pending approval placed in escrow.
- Delay or failure to seek approval or submit documents sanctions include penalties and possible invalidation of transaction; directors/officers may face administrative or criminal charges.
Duties of Corporate Secretary
- Ascertain identity and citizenship of parties involved in stock transactions.
- Require disclosure of related persons within fourth degree of consanguinity/affinity and corporations with controlling interests.
- Ensure affidavit of bona fide ownership is executed.
- Deny registration if transaction breaches ownership ceilings or lacks required approvals.
- Inform stockholders when ceilings are reached or approval is required.
- Report beneficial owners of shares held in nominee name to BSP regularly; delays incur penalties.
- Potential sanctions on corporate secretaries for false certifications or violations.
Requirements for Newly Established Banks
- Must submit:
- Alphabetical list of stockholders with number and percentage of voting shares.
- List of related stockholders within fourth degree of consanguinity/affinity and majority-owned corporations.
- Affidavit attesting bonafide ownership and non-agency or proxy status.
Convertibility of Preferred Stock to Common Stock (Subsection X126.4)
- Conversion to voting/common shares must not exceed prescribed ownership ceilings.
- Prior Monetary Board approval required if conversion results in significant ownership change.
- Certification of this provision required in preferred stock certificates.
Amendments to Reporting and Affidavit Requirements
- Updated format for affidavit on transfer of stock as attached in annex.
- Consolidated list of stockholders reclassified to Category A-2 report, subject to stricter submission deadlines.
Effectivity
- Circular takes effect 15 calendar days after publication in the Official Gazette or newspaper of general circulation.