SEC relaxes foreign ownership rules in second draft

MANILA, Philippines – The Securities and Exchange Commission (SEC) has released a second draft of rules for determining foreign ownership in local companies, and asked the public to send in their comments.

The regulator posted the draft memorandum circular (MC) on its website on Monday, March 25.

The MC removed an initial provision imposing a cap on foreign ownership for each class of company shares, whether common, preferred, preferred voting or any other class.

The revised draft rules however maintained the 40% limit on foreign ownership of both common shares and total outstanding shares of stock of companies like telco providers and utilities.

The SEC ordered, “All covered corporations shall, at all times, observe the constitutional or statutory ownership requirement. For purposes of determining compliance therewith, the required percentage of Filipino ownership shall be applied to both (a) the total number of outstanding shares of stock entitled to vote in the election of directors; and (b) the total outstanding stock, whether or not entitled to vote in the election of directors.”

“In case the law requiring a certain percentage of ownership of shares to belong to Filipinos specifically refers to voting stock, the requirements set forth therein shall be complied with.”

The new set of rules complies with an October 2012 Supreme Court ruling on a foreign ownership case involving PLDT. The case determined that the term “capital” in Section 11 of Article XII of the 1987 Constitution only covers common shares or those with voting rights.

The SEC said it will accept comments on the revised rules until April 25. – with a report from Christian Bautista/Rappler.com