The Securities and Exchange Commission (SEC) issued its first Memorandum Circular for 2021 (SEC MC No. 1, S. 2021) dated January 27, 2021, requiring existing corporations and businesses in the process of incorporation to report their nominee directors/trustee and nominee shareholders and the beneficial owner. Nominee director and shareholders, as defined, refer to any natural person who acts for and on behalf of another person as incorporator/director/trustee or shareholder.

This circular aims to curb the arrangement between two (2) persons were the nominee shareholder, director, or trustee acts on behalf of his beneficial owner and the latter wants to hide his/her identity as beneficial owner.

The said circular mandates transparency in the shareholders, officers, or trustees of a corporation. The disclosure of the nominee directors, trustee, or shareholders of the beneficial owner must be made within thirty (30) days from the date of effectivity of the aforesaid circular or issuance of the Certificate of Registration. Information required to be disclosed for the nominee and the nominator are as follows:

If the concerned corporation fails to submit the above disclosure requirements, the imposable penalties are as follows:

1. Fine of no less than Five Thousand Pesos (P5,000.00) nor more than Two Million Pesos (P2,000,000.00) plus not more than One Thousand Pesos (P1,000.00) for each day on continuing violation but in no case to exceed Two Million Pesos (P2,000,000.00);

2. Suspension or revocation of the Certificate of Incorporation; and

3. Other penalties within the power of the Commission to impose.

Under SEC’s Notice dated February 23, 2021, the disclosure requirements may be complied with by submitting the Beneficial Ownership Transparency Declaration (BOTD) Forms available for download on their website. The submission of BOTD Forms must not be not later than March 31, 2021.