May 20, 2013

SEC MEMORANDUM CIRCULAR NO. 08-13

WHEREAS, the Constitution, the ADEHTS

WHEREAS, Section 15 of the

WHEREAS, Section 17 of the

WHEREAS, Section 14 of the

WHEREAS, the Supreme Court in ruled that the term 'capital' in Section 11, Article XII of the 1987 Constitution refers only to shares of stock entitled to vote in the election of directors;

WHEREAS, Section 1 (b) of the

WHEREAS, it is essential to ensure that full beneficial ownership and effective control of the appropriate voting rights lie with Philippine nationals;

WHEREAS, Section 143 of the

NOW, THEREFORE, the Commission hereby issues and promulgates the following guidelines on compliance with the ownership requirements in the Constitution and/or existing laws by corporations engaged in nationalized or partly nationalized activities: cETCID

SECTION 1. This Circular shall apply to all corporations ("covered corporations") engaged in identified areas of activities or enterprises specifically reserved, wholly or partly, to Philippine Nationals by the Constitution, the

SECTION 2. 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 number of outstanding shares of stock, whether or not entitled to vote in the election of directors.

Corporations covered by special laws which provide specific citizenship requirements shall comply with the provisions of said law.

SECTION 3. All Corporate Secretaries of covered corporations are directed to monitor and observe compliance with the provisions on ownership requirements provided in the Constitution, the

The Corporate Secretary cannot delegate the responsibility of complying with the provisions of this Circular without the express authority from the Board of Directors or Trustees, as the case may be.

SECTION 4. This Circular shall take effect immediately after its publication in two (2) national newspapers of general circulation, provided: that all existing covered corporations which are non-compliant with Section 2 hereof shall be given a period of one (1) year from the effectivity of this Circular within which to comply with said ownership requirement. The Commission may extend the period of compliance but only in meritorious and exceptional cases, and upon proper petition.

Failure to comply with this Circular shall subject the juridical entity, any person, and the corporate officers responsible, to sanctions provided in Section 14 of the

Signed this 20th day of May 2013, Mandaluyong City, Philippines.

By Authority of the Commission En Banc:

(SGD.) TERESITA J. HERBOSA
Chairperson
Securities and Exchange Commission

Footnotes

1. G.R. No. 176579, October 9, 2012.

2. For example,