N O T I C E

Request for Comments

The Commission hereby requests all interested parties to comment on the

following:

AMENDMENTS TO SEC MEMORANDUM CIRCULAR NO. 17, SERIES OF 2018

ON THE REVISION OF THE GENERAL INFORMATION SHEET (GIS) TO

INCLUDE BENEFICIAL OWNERSHIP INFORMATION

You may submit your comments on the exposure draft of the Amendments

to the Enforcement and Investor Protection Department (EIPD) of the Commission

on or before 14 JUNE 2019, addressed to EIPD Director Jose P. Aquino at the

following email address:

Email

eipd-amld@sec.gov.ph epd@sec.gov.ph

Issued on 30 May 2019. Pasay City.

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SEC MEMORANDUM CIRCULAR NO. _____ Series of 2019

TO: ALL SEC REGISTERED DOMESTIC CORPORATIONS

SUBJECT: AMENDMENTS TO SEC MEMORANDUM CIRCULAR NO. 17, SERIES OF

2018 ON THE REVISION OF THE GENERAL INFORMATION SHEET (GIS) TO INCLUDE BENEFICIAL OWNERSHIP INFORMATION

______________________________________________________________________________________________________________ By the authority vested in the Securities and Exchange Commission (SEC) under Republic Act No. 11232 otherwise known as the Revised Corporation Code of the Philippines (RCC) and pursuant to its mandate to assist in the implementation of the Anti-Money Laundering Act (AMLA), as amended, and the Terrorist Financing Prevention and Suppression Act (TFPSA) and their respective Implementing Rules and Regulations, the Commission En Banc in its Resolution No. _________ dated _____________ approved the amendment of SEC Memorandum Circular No. 17, Series of 2018 on the Revision of the General Information Sheet (GIS) to Include Beneficial Ownership Information.

SECTION 1. Coverage. This Memorandum Circular shall apply to all SEC registered stock and non-stock domestic corporations required to submit the GIS under existing rules and regulations. SECTION 2. Definition of Terms. –

2.1. “Beneficial Owner” refers to any natural person who ultimately owns or controls the corporation or has ultimate effective control over the corporation.

2.2. “Beneficial Ownership Information” refers to the identification documents

and/or information of the beneficial owner of the corporation. 2.3. “Direct Ownership” refers to the ownership by a natural person through

ownership of shares of the corporation in question and not through another corporate shareholder nor any intermediate layers of corporate shareholders.

2.4. “Dominant Influence” refers to a situation in which the instructions or directions

given by any natural person, who may or may not be a stockholder of the reporting corporation, on the management or policies of the corporation, are always or almost always followed or carried out.

2.5. “GIS” refers to the General Information Sheet.

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2.6. “Grandfather Rule” refers to the "method by which the percentage of Filipino

equity in a corporation engaged in nationalized and/or partly nationalized areas of activities, provided for under the Constitution and other nationalization laws, is computed, in cases where corporate shareholders are present, by attributing the nationality of the second or even subsequent tier of ownership to determine the nationality of the corporate shareholder." 1

2.7. “Indirect Ownership” refers to the type of ownership by a natural person through

percentage of ownership in a corporate shareholder of said corporation or through layers of corporate shareholders.

2.8. “Legal Owners” refers to the natural or legal person who owns at least twenty

percent (20%) of the corporation. 2.9. “Multiple Layers” refers to the layers of corporations comprising the ownership

structure of the reporting corporation. A corporation with more than one (1) layer of ownership shall be deemed to be owned through multiple layers.

2.10. “Reporting Corporation” refers to the corporation submitting the GIS to the

Commission. 2.11. “Senior Managing Official” refers to the natural person who exercises executive

control over the daily or regular affairs of the legal person through a senior management position, such as a chief executive officer (CEO), chief financial officer (CFO), managing or executive director, or president.

2.12. “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 twenty percent (20%) 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 the power to dispose of, or to direct, the disposition of such security; Provided, that 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;

(iii) held by a corporation of which he/she is the controlling shareholder; or

1 Villanueva, Cesar Lapuz, Philippine Corporate Law p. 54, cited in Narra Mining and Development Corp., et al. vs. Redmont Consolidated Mines Corp., G.R. No. 195580, January 28, 2015.

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(iv) subject to any contract, arrangement or understanding which gives him/her voting power or investment power with respect to such securities: Provided, however, that 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 in 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 of a such legal person or arrangement, or any equivalent body, 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.

SECTION 3. Disclosure of Beneficial Ownership Information. – 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 as defined herein. Accordingly, the GIS is hereby revised to include such information. The following information on the beneficial owner shall be provided, to wit:

a. Complete name which shall include the surname, given name, middle name and name extension (i.e., Jr., Sr., III);

b. Specific residential address; c. Nationality; d. Tax identification number; and e. Percentage of ownership, if applicable.

SECTION 4. Identification of Beneficial Owner. The following guide shall be used in determining the beneficial owner of a corporation.

A. Natural person who owns, directly or indirectly or through a chain of

ownership, at least twenty percent (20%) of the voting shares or capital of

the corporation.

B. Natural person who has the ability to elect a majority of the board of

directors/trustees, or any similar body, of the corporation.

C. Natural person who has the ability to exert a dominant influence over the

management or policies of the corporation.

D. Natural person whose directions, instructions or wishes in conducting the

affairs of the corporation are carried out by majority of the members of the

board of directors of such corporation who are accustomed or under an

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obligation to act in accordance with such person’s directions, instructions

or wishes.

E. Natural person who exercises control through positions held within a

corporation (i.e., responsible for strategic decisions that fundamentally

affect the business practices or general direction of the corporation such as

the members of the board of directors or trustees or similar body within the

corporation; or exercises executive control over the daily or regular affairs

of the corporation through a senior management position).

F. Natural person who ultimately owns or controls or has ultimate effective

control over the corporation in any other manner.

SECTION 5. Determination of Beneficial Owner of Corporation with Multiple Layers. Where a corporation is owned through multiple layers, any intermediate layers of the company’s ownership structure 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. In determining the Beneficial Owner of the corporation owned through multiple layers, the percentage of ownership shall be computed using the methodology applied in the “Grandfather Rule”. The natural person who ultimately owns at least twenty percent (20%) of the voting shares or capital of the reporting corporation shall be considered as its Beneficial Owner. Should the reporting corporation have reliable information indicating that the authority to vote such shares belongs to another person and not to the legal owner, such person shall likewise be considered as the Beneficial Owner. To guide reporting corporations in determining ownership through multiple layers, an example is attached to this Circular as Annex “A.” SECTION 6. Senior Managing Official as Beneficial Owner in Exceptional Cases. In exceptional cases where no natural person is identifiable who ultimately owns or exerts control over the corporation, the reporting corporation having exhausted all other means of identification and provided there are no grounds for suspicion, may consider the senior managing official of the reporting corporation to be the beneficial owner/s. If another corporation ultimately owns at least twenty percent (20%) of the voting shares or capital of the reporting corporation applying the methodology used in the Grandfather Rule, the senior managing official of such corporation may be considered as the beneficial owner/s of the reporting corporation. SECTION 7. Updating of Beneficial Ownership Information. – The SEC shall be timely apprised of relevant changes in the submitted beneficial ownership information as they arise. An updated GIS shall be submitted to the SEC within seven (7) calendar days after such change occurred or became effective. For publicly listed companies whose shares are traded in the stock exchange, updating of beneficial ownership information arising from the change in the ownership of exchange traded shares is required only if the change in the ownership of shares results in any person, natural or juridical, acquiring at least twenty percent (20%) of the voting shares or capital of said companies.

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SECTION 8. Validating Information. – The Commission may, at any reasonable time, check the validity of the beneficial ownership information provided in the GIS through an on-site inspection of the books and records of the corporation and/or through other means available which may include but not limited to information that may be obtained from other sources such as the books and records of other corporate entities and data gathered from investigations conducted by law enforcement agencies and the AMLC. SECTION 9. Modifications in the GIS. For purposes of incorporating the modifications as provided for and adopted in this Circular, the Beneficial Ownership Declaration Page and the Attestation Page in the GIS shall be in the form as appearing in the corresponding pages in Annex “B” (GIS for Stock Corporations) and Annex “C” (GIS for Non-Stock Corporations) hereof. SECTION 10. Penalties.

i. Failure to Disclose. Failure to disclose the Beneficial Owner of the reporting corporation in accordance with this Circular is tantamount to non-filing/non-submission of the GIS and the erring corporation shall be penalized accordingly.

ii. Willful Certification of Incomplete, Inaccurate, False or Misleading Statements or Reports. Any person who willfully certifies the GIS knowing that the same contains incomplete, inaccurate, false or misleading information or statements shall be punished in accordance with Section 162 of the RCC without prejudice to the filing of criminal charges against the individuals responsible for the violation.

iii. Liability of the Members of the Board of Directors/Trustees or Any Similar Body and Officers of the Corporation. The obligation to disclose beneficial ownership information and ascertain the truth of such disclosure devolves upon the members of the Board of Directors/Trustees or any similar body of the corporation and its Officers. The said Directors/Trustees and members of a similar body of the corporation and its Officers may thus be held liable for non-compliance with this Circular as a violation of the rules and regulations of the Commission and penalized in accordance with the provisions of Section 158 of the RCC.

SECTION 11. Submission of GIS in Electronic Format. The submission of the GIS in electronic format pursuant to SEC Memorandum Circular No. 6, Series of 2006 is hereby suspended until further notice. SECTION 12. Submission of the GIS with the Required Beneficial Ownership Information. The GIS as provided for in this Circular shall be used by corporations whose GIS are due for submission beginning 30 June 2019. SECTION 13. Amendment/Repeal. All rules, regulations, orders, circulars and issuances of the Commission that are inconsistent with this Memorandum Circular are hereby amended and/or repealed accordingly.

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SECTION 14. Separability Clause. If any portion or provision of this Circular is declared unconstitutional or invalid, the other portions or provisions hereof, which are not affected thereby shall continue in full force and effect. SECTION 15. Effectivity. This Memorandum Circular shall take effect immediately after its publication in two (2) national newspapers of general circulation and its posting in the Commission’s website. Pasay City, Philippines, _________ May 2019.

FOR THE COMMISSION: EMILIO B. AQUINO Chairperson

ANNEX “A”

PERSON 4 (P4)

PERSON 3 (P3)

PERSON 5 (P5)

PERSON 2 (P2)

PERSON 1 (P1)

PERSON 6 (P6)

PERSON 1, PERSON 5 and PERSON 6 are the beneficial owners of COMPANY 1.

PERSON 1 indirectly owns 28% of COMPANY 1 computed as follows: %P1 x %C4 x %C3 x %C2 = 35% x 100% x 100% x 25% = 8.75% + %P1 x %C4 x %C3 x %C7 = 35% x 100% x 100% x 30% = 10.50% + %P1 x %C4 x %C5 x %C6 = 35% x 100% x 100% x 25% = 8.75% TOTAL 28.00%

PERSON 5 indirectly owns 49.60% of COMPANY 1 computed as follows::

%P5 x %C4 x %C3 x %C2 = 62% x 100% x 100% x 25% = 15.50% + %P5 x %C4 x %C3 x %C7 = 62% x 100% x 100% x 30% = 18.60% + %P5 x %C4 x %C5 x %C6 = 62% x 100% x 100% x 25% = 15.50% TOTAL 49.60%

PERSON 6 directly owns 20% of COMPANY 1.

COMPANY 1 (C1)

COMPANY 4 (C4)

COMPANY 3 (C3)

COMPANY 2 (C2)

100%

COMPANY 5 (C5)

COMPANY 6 (C6)

COMPANY 7 (C7)

62%

1%

1%

1%

35%

100%

100%

100% 25%

25%

30% 20%

100% Indirect Owner (28%)

Indirect Owner

(49.6%)

BENEFICIAL OWNERSHIP DECLARATION

“Beneficial Owner” refers to any natural person who ultimately owns or controls the corporation or has ultimate effective

control over the corporation. Such beneficial ownership may be determined on the basis of the following:

Category Description A Natural person who owns, directly or indirectly or through a chain of ownership, at least twenty

percent (20%) of the voting shares or capital of the corporation. B Natural person who has the ability to elect a majority of the board of directors/trustees, or any

similar body, of the corporation. C Natural person who has the ability to exert a dominant influence over the management or policies

of the corporation. D Natural person whose directions, instructions or wishes in conducting the affairs of the corporation

are carried out by majority of the members of the board of directors of such corporation who are accustomed or under an obligation to act in accordance with such person’s directions, instructions or wishes.

E Natural person who exercises control through positions held within a corporation (i.e., responsible for strategic decisions that fundamentally affect the business practices or general direction of the corporation such as the members of the board of directors or trustees or similar body within the corporation; or exercises executive control over the daily or regular affairs of the corporation through a senior management position).

F Natural person who ultimately owns or controls or has ultimate effective control over the corporation in any other manner.

COMPLETE NAME (Surname, Given

Name, Middle Name, Name

Extension [i.e., Jr., Sr., III])

SPECIFIC RESIDENTIAL

ADDRESS

NATIONALITY

TAX IDENTIFICATION

NO.

% OF OWNERSHIP1

TYPE OF

BENEFICIAL OWNER2

Direct (D)

or Indirect (I)

CATEGORY OF

BENEFICIAL OWNERSHIP3

1 Not applicable to Non-Stock Corporations. 2 Not applicable to Non-Stock Corporations. 3 For Non-Stock Corporations, Category “A” is not applicable.

Instructions:

1. Identify the Beneficial Owner/s of the corporation as described in the Categories of Beneficial Ownership in items A to

F below. List down as many as you can identify. You may use an additional sheet if necessary.

2. Fill in the required information on the beneficial owner in the fields provided for.

3. In the “Category of Beneficial Ownership” column, indicate the letter/s corresponding thereto. In the event that the

person identified as beneficial owner falls under several categories, indicate all the letters corresponding to such

categories.

4. If the category of beneficial ownership is under letter “E”, indicate the position held (i.e., Director/Trustee, President,

Chief Executive Officer, Chief Operating Officer, Chief Financial Officer, etc.).

5. Do not leave any item blank. Write “N/A” if the information required is not applicable or “NONE” if non-existent. 6. Where a corporation is owned through multiple layers, attach an ownership chart clearly showing the intermediate

layers with their respective ownership amounts.

I, ___________________________________________, Corporate Secretary of _________________________________________ declare under penalty of perjury that all matters set forth in this GIS have been duly verified by me and to the best of my knowledge and belief are true and correct. I hereby attest that all the information in this GIS are being submitted in compliance with the rules and regulations of the Securities and Exchange Commission (SEC) the collection, processing, storage and sharing of said information being necessary to carry out the functions of public authority for the performance of the constitutionally and statutorily mandated functions of the SEC as a regulatory agency. I attest that the members of the Board of Directors and the other Officers of the corporation have knowledge of the information submitted in this GIS and I have been authorized by said Board to file this GIS with the SEC. I understand that the Commission may place the corporation under delinquent status for failure to submit the reportorial requirements three (3) times, consecutively or intermittently, within a period of five (5) years (Section 177, RA No. 11232). Done this _______ day of ________________, 20 _____ in _____________________________. ____________________________________________ (Signature over printed name) SUBSCRIBED AND SWORN TO before me in _______________________ on ____________________ by affiant who personally appeared before me and exhibited to me his/her competent evidence of identity consisting of _____________________ issued at ____________ on ___________________. NOTARY PUBLIC