All corporations who have nominee directors or shareholders are now mandatorily required to disclose the information of principals or nominators who are the actual beneficial owners of the corporation on or before July 31, 2021. The guidelines for the required disclosures are contained in SEC Memorandum Circular (MC) No. 1, series of 2021 (SEC MC No. 1-2021) or the Beneficial Ownership Transparency Guidelines. These measures are being implemented in order to combat money laundering and terrorist financing, pursuant to the Anti-Money Laundering Act of 2001.
The Beneficial Ownership Transparency Guidelines requires the following disclosures:
1. What are “nominee” directors/trustees/shareholders/subscribers?
Nominees are those who hold a share in trust for another, usually under a Voting Trust Agreement or a Declaration of Trust. This is usually done so that a person can qualify to be elected as a Director or a Trustee. In the past, nominee shareholders were appointed in order to complete the required number of shareholders under the old Corporation Code. Nominees are the legal owners of the shares and are entitled to vote, but it is the principal who is considered the beneficial owner and is entitled to the dividends and other rights granted by the stock.
2. What information are corporations required to disclose to the SEC under the BOTD Guidelines?
(1) For Existing Corporations:
a. Documentary Requirements:
i. Beneficial Ownership Transparency Declaration (BOTD) Form for Existing Corporations
b. Deadlines:
i. For nominee directors or trustees and nominee shareholders / subscribers of existing corporations: by July 31, 2021
ii. For those who become nominees after the deadline for existing corporations: within 30 days from the time they assumed their position as nominees.
(2) For Corporations Applying for Registration / Corporations Registered on or after January 29, 2021:
a. Documentary Requirements:
i. Beneficial Ownership Transparency Declaration (BOTD) Form for Applicant Corporations
b. Deadline:
i. By July 31, 2021
ii. If incorporated after such deadline, within 30 days from issuance of the Certificate of Registration
c. Information required to be disclosed:
All required forms must be uploaded in PDF format through https://forms.gle/Y1MvBYBjxXkDvA4V7.
For more information on the Beneficial Ownership Transparency Guidelines, interested parties may visit the link on Frequently Asked Questions (FAQs) on SEC Memorandum Circular No. 1, Series of 2021.
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