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Legal Updates
Owner Reveal! Tightening the Corporate Transparency
By Atty. Eden Catherine B. Mopia-Briones and Atty. Miguel Angelo C. Ocampo
The Securities and Exchange Commission (“SEC”) issued SEC Memorandum Circular No. 15, Series of 2025, otherwise known as the Beneficial Ownership Disclosure Rules of 2026, which introduced the revised rules on beneficial ownership disclosure (the “2026 Rules”). It aims to establish a comprehensive regulatory framework which requires reporting entities to provide accurate information on their beneficial ownership to the SEC in a timely manner, thereby strengthening transparency requirements under Philippine laws and regulations.
The 2026 Rules apply to all persons, natural and juridical, who are under the SEC’s jurisdiction, including but not limited to, all domestic stock and non-stock corporations, partnerships, foreign corporations, One-Person Corporations, incorporators, directors, trustees, officers, shareholders or members, beneficial owners of covered corporations, and persons filing applications for incorporation or registration of corporations with the SEC.
The 2026 Rules were issued on 22 December 2025, and took effect on 01 January 2026. Existing entities must provide beneficial ownership information in accordance with the 2026 Rules in the next General Information Sheet (“GIS”) following its effectivity. On the other hand, newly registered entities must submit beneficial ownership information at the time of incorporation or registration.
Beneficial Ownership Identification and Verification
Under SEC Memorandum Circular No. 15, Series of 2019, a “beneficial owner” may be classified into any of several categories, i.e., Category A to I. The 2026 Rules retained these categories subject to certain changes which are underscored and summarized below:
Category | SEC Memorandum No. 15, Series of 2019 | 2026 Rules | Summary of changes |
Category A (Ownership) | 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. | Natural person(s) owning, directly or indirectly through a chain of ownership, at least twenty percent (20%) of the voting rights, voting shares, or capital of the reporting entity. | Threshold for ownership percentage was decreased from 25% to 20%
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Category B (Contractual Control) | Natural person(s) who exercise control over the reporting corporation, alone or together with others, through any contract, understanding, relationship, intermediary or tiered entity. | Natural person(s) who exercise control over the reporting entity through any contract, understanding, relationship, intermediary, or tiered entity. | The qualification “alone or together with others” was removed |
Category C (Board Election Power) | Natural person(s) having the ability to elect a majority of the board of directors/trustees, or any similar body, of the corporation. | Natural person(s) having the ability to elect a majority of the board of directors/trustees, or any similar body, of the reporting entity | No significant change |
Category D (Dominant Influence) | Natural person(s) having the ability to exert a dominant influence over the management or policies of the corporation. | Natural person(s) having the ability to exert a dominant influence over the management or policies of the reporting entity. | No significant change |
Category E (Direction of Board) | 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. | Natural person(s) whose directions, instructions, or wishes in conducting the affairs of the reporting entity are carried out by a majority of the board members. | The qualification “who are accustomed or under an obligation to act in accordance with such person’s directions, instructions or wishes” was removed |
Category F (Property Stewardship) | 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). | Natural person(s) acting as stewards of properties of the reporting entity, where such properties are under the care or administration of said natural person(s). | No significant change |
Category G (Nominee Arrangements) | Natural person(s) who actually own or control the reporting corporation through nominee shareholders or nominee directors acting for or on behalf of such natural persons. | Natural person(s) who actually own or control the reporting entity through nominee shareholders or nominee directors acting for or on behalf of such natural persons. | No significant change |
Category H (Other Control Mechanisms) | 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. | Natural person(s) ultimately owning or controlling or exercising ultimate effective control through other means not falling under any of the foregoing categories including substantial benefits such as exclusive use of the reporting entity’s assets, receipt of profits and liquidating dividends, among others. | Examples of “other control mechanisms” were provided |
Category I (Senior Management) | Natural person(s) exercising control through positions held within a corporation (i.e., responsible for strategic decisions that fundamentally affect the business practices or general direction of the corporation such as the members of the board of directors or trustees or similar body within the corporation; or exercising executive control over the daily or regular affairs of the corporation through a senior management position). This category is only applicable in exceptional cases where no natural person is identifiable who ultimately owns or exerts control over the corporation, the reporting corporation having exhausted all reasonable means of identification and provided there are no grounds for suspicion. | Natural person(s) exercising control through senior management positions within the reporting entity. This category is applicable only when no natural person is identifiable under Categories A through H after exhausting reasonable means of identification. If there are multiple persons in the same level of seniority, all such persons shall be identified as beneficial owners. | a. Scope was narrowed down to senior management positions
b. Under the 2026 Rules, if there are multiple persons in the same level of seniority, all such persons shall be identified as beneficial owners |
A reporting entity may declare as many beneficial owners as it may have, which may fall under any of the categories above.
Corporations with tiered structures and/or those with cross-border ownership structures are subject to additional rules for determining and identifying beneficial ownership.
Information and Filing Requirements
All beneficial ownership information shall be submitted through the SEC’s designated beneficial ownership registry.
In addition to the beneficial ownership information already required to be disclosed in the GIS, a reporting entity is required to disclose each beneficial owner’s mobile number and/or landline, email address, civil status, status as Politically Exposed Person, and the date the individual became a beneficial owner.
Any change in beneficial ownership must be reported within seven (7) calendar days from the date of the event.
Penalties and Enforcement
A reporting entity which failed to disclose its beneficial ownership in accordance with the 2026 Rules shall be penalized based on its retained earnings with a fine ranging from Php25,000 to Php2,000,000. On the other hand, a reporting corporation which submitted false beneficial ownership information shall be penalized with a fine of up to Php2,000,000, and may be dissolved.
This article is only for informational and educational purposes, and it is not intended as a legal advice or opinion. For assistance and legal queries, please contact general@srmo-law.com.