After reading Infusion of Foreign Equity in the Capital of Rural Banks, read also What is a Foreign Corporation?
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No rural bank shall be operated without a Certificate of Authority
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Non-Filipino citizens may become members of the Board of Directors of a rural bank
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Foreign equities may now be infused in the capital of rural banks
Under Republic Act No. 10574 or An Act Allowing the Infusion Foreign Equity in the Capital of Rural Banks, no rural bank shall be operated without a Certificate of Authority from the Monetary Board of the Bangko Sentral ng Pilipinas.
How should rural banks be organized?
The law says:
Rural banks shall be organized in the form of stock corporations. No less than forty percent (40%) of the voting stocks of a rural bank shall be owned by citizens of the Philippines or corporations or associations organized under the laws of the Philippines at least sixty percent (60%) of whose capital is owned by such citizens.
Non-Filipino citizens may own, acquire or purchase up to sixty percent (60%) of the voting stocks in a rural bank. The percentage of foreign-owned voting stocks shall be determined by the citizenship of the individual or corporate stockholders of the rural bank.
May non-Filipino citizens become members of the Board of Directors of a rural bank?
The law says:
Non-Filipino citizens may become members of the Board of Directors (Board) of a rural bank but their participation in the Board shall be limited to their proportionate share in the equity of the rural bank. This is on the condition that at least one (1) independent director shall be elected to the Board of Directors.
Take note that no director or officer of any rural bank shall, either directly or indirectly, for himself or as the representative or agent of another, borrow any of the deposits or funds of such banks, nor shall he become a guarantor, indorser, or surety for loans from such bank to others, or in any manner be an obligor for money borrowed from the bank or loaned by it except with the written approval of the majority of the directors of the bank, excluding the director concerned.
Considering that non-Filipino citizens are allowed to become members of the Board, are foreign equities allowed to be infused in the capital of rural banks?
The law says:
Yes, it is expressly provided under Section 5 of Republic Act No. 10574 is stated in the following manner:
SEC. 5. The Bangko Sentral ng Pilipinas, consistent with Section 11 of Republic Act No. 7353, shall prescribe the necessary rules and regulations on the amendments of the Rural Banks Act of 1992 in consultation with various stakeholders as well as disseminate this information to allow entry of foreign equity into our rural bank system to revitalize the rural banking industry and improve access of banking services to the rural areas in the country.
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