It has always been a rule to observe, at all times, the constitutional and statutory ownership requirement of corporations engaged in nationalized or partly nationalized activities. In fact, as emphasized in the Corporation Code of the Philippines, a provision in the Articles of Incorporation must include that there must be no transfer or stock or interest which will reduce the ownership of Filipino Citizens to less than the required percentage of the capital stock. Likewise, the Securities and Exchange Commission is empowered to reject or disapprove articles of incorporation or any amendments thereto if the percentage of ownership of the capital stock to be owned by citizens of the Philippines has not been complied with as required by existing laws or the Constitution.
Adding more value to this, the Securities and Exchange Commission has recently released on 20 May 2013, and subsequently published the same on newspapers, Memorandum Circular No. 8 Series of 2013. Subject of the same issuance are guidelines to corporations in complying with the laws providing for Filipino-Foreign Ownership Requirements as Prescribed in the Constitution and/or Existing Laws by Corporations Engaged in Nationalized or Partly Nationalized Activities.
All covered corporations are mandated to comply and for purposes of determining compliance, the required percentage of Filipino ownership shall be applied both (a) to the total number of outstanding shares of stock entitled to vote in the election of directors AND (b) the total number of outstanding shares of stock, whether or not entitled to vote in the election of directors”. Corporations covered, however, by special laws which provide specific citizenship requirements shall comply with the provisions of said law.”
Furthermore, SEC has prescribed that all Corporate Secretaries of covered corporations to strictly monitor and observe compliance with the ownership requirements of the Constitution, the Foreign Investments Act (Negative List), its Implementing Rules and Regulations, with the same Circular, as well as all other applicable laws specially the Anti-Dummy Law. The required monitoring by Corporate Secretaries is not to be delegated to any other officer without express authority of the Board of Directors or Trustees. Any Incorrect reports, if proven to be fraudulent or negligently done may subject not only the corporate secretaries, but all principal officers, to sanctions. Regrettably, if warranted by the circumstances, the principal officers can be answerable for criminal prosecution under the Anti- Dummy Law.
Ergo, all covered corporations and their respective principal officers must strictly conform to the law to avoid the inconvenience of any potential legal implications it may create in the future.
By : Atty. Grace R. Pangilinan