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Beneficial Owner refers to any natural person(s) who ultimately own(s) or control(s) or exercise(s) ultimate effective control over the corporation.
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Legal Owners are those natural or juridical person who owns or has the controlling ownership interest over the corporation.
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The natural person(s) who ultimately owns at least twenty-five percent (25%) of the voting shares or capital of the reporting corporation through ownership of shares in a corporate stockholder or through multiple layers of corporate stockholders shall be considered as a Beneficial Owner.
A ll SEC registered domestic corporations required to submit the General Information Sheet are now required to the include the name of beneficial owner of the corporation. Who then is the beneficial owner?
Under SEC Memorandum Circular No. 15 Series of 2019:
Beneficial Owner refers to any natural person(s) who ultimately own(s) or control(s) or exercise(s) ultimate effective control over the corporation. This definition covers the natural person(s) who actually own or control the corporation as distinguished from the legal owners.
Legal Owners are those natural or juridical person who, in accordance with the pertinent provisions of Philippine law, owns or has the controlling ownership interest over the corporation and shall not affect its applicability in determining the nationality of a corporate shareholder.
Beneficial ownership may be determined on the basis of the following:
| Category | Description |
| A | Natural person(s) owning, directly or indirectly or through a chain of ownership, at least twenty-five percent (25%) of the voting rights, voting shares or capital of the reporting corporation. This is without prejudice to ownership thresholds that may be imposed by other regulators. |
| B | Natural person(s) who exercise control over the reporting corporation, alone or together with others, through any contract, understanding, relationship, intermediary or tiered entity. |
| C | Natural person(s) having the ability to elect a majority of the board of directors/trustees, or any similar body, of the corporation. |
| D | Natural person(s) having the ability to exert a dominant influence over the management or policies of the corporation. |
| E | Natural person(s) 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. |
| F | Natural person(s) acting as stewards of the properties of corporations, where such properties are under the care or administration of said natural person(s). |
| G | Natural person(s) who actually own or control the reporting corporation through nominee shareholders or nominee directors acting for behalf of such natural persons. |
| H | Natural person(s) ultimately owning or controlling or exercising ultimate effective control over the corporation through other means not falling under any of the foregoing categories. |
| I | Natural person(s) exercising control through positions held within a corporation. |
Beneficial ownership shall be determined as follows:
- The identity of the natural person(s) who ultimately has controlling ownership interest in the corporation.
- The identity of the natural persons (if any) exercising control of the corporation through other means.
- The identity of the natural persons composing the Board of Directors/Trustees or any similar body and/or the senior managing official of the reporting corporation.
For purposes of determining beneficial ownership, any natural person directly or indirectly, or through a chain of ownership, owning at least twenty-five percent (25%) of the voting shares or capital of the corporation, or at least twenty-five percent (25%) of the voting rights therein, as may be applicable, shall be considered as a beneficial owner.
In the event that the entity owning at least twenty-five percent (25%) of the reporting corporation is an estate, trust or partnership, the natural person owning or controlling the estate, trust or partnership shall be disclosed as beneficial owner.
This is only in exceptional circumstances where no natural person can be identified as ultimately owning or controlling or exercising ultimate effective control over the corporation through controlling ownership interest, controlling voting rights, or through other means. The reporting corporation must be able to show that it has exhausted all other means of identifying the beneficial owner. This is subject to verification and strict monitoring by the Commission.
Determination of Natural Person Who Ultimately Owns the Corporation Through Indirect Ownership.
In determining the natural person(s) who ultimately owns the corporation, the percentage of ownership shall be computed using the methodology applied in the “Grandfather Rule”. The natural person(s) who ultimately owns at least twenty-five percent (25%) of the voting shares or capital of the reporting corporation through ownership of shares in a corporate stockholder or through multiple layers of corporate stockholders shall be considered as a Beneficial Owner. To arrive at the actual percentage of beneficial ownership in the reporting corporation, both the direct and indirect shareholdings in the corporation shall be considered.
Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/0917-5772207.
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