By Arra B. Francia, Reporter
THE Securities and Exchange Commission (SEC) has issued a memorandum circular directing companies to declare their beneficial owner to ensure that they will not be used for money laundering and terrorist financing purposes.
In SEC Memorandum Circular No. 17 posted on its website yesterday, the SEC said it is revising the General Information Sheet (GIS) to include beneficial ownership information. This covers all SEC-registered domestic stock and non-stock corporations.
The SEC defines beneficial owner as any natural person who “ultimately owns or controls the corporation,” or “has ultimate effective control over the corporation.”
It further explained that ultimate effective control refers to “any situation in which ownership or control is exercised through actual or a chain of ownership or by means other than direct control.”
Ultimate effective ownership may be achieved through several ways, such as direct or indirect ownership of at least 25% of any category of voting shares. The person may also have the “ability to elect a majority of the board of directors, or any similar body, of a legal person or arrangement.”
With the memorandum circular, the beneficial owner must provide the SEC with his/her complete name, specific residential address, nationality, tax identification number, as well as percentage of ownership, if applicable.
In cases where the company is owned through multiple layers, they should identify any intermediate layers of their ownership structure. This should be illustrated in an ownership chart showing the intermediate layers with their corresponding ownership amounts.
The SEC said it will validate the beneficial ownership information through an onsite inspection of the company’s books and records, or through other means available.
The requirement is also in line with the Anti-Money Laundering Act, which seeks to “ensure timely access to adequate, accurate, and current information on the beneficial ownership and control of SEC-registered corporations and prevent their misuse for money laundering and terrorist financing purposes.”
The new GIS forms will be implemented starting Jan. 1, 2019.
