Philippines beneficial ownership rules tighten due diligence demands

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Philippines beneficial ownership rules

Highlights

SEC Memorandum Circular No. 15, Series of 2025, lowers the Philippine beneficial ownership threshold from 25% to 20% and mandates disclosure only of natural persons as beneficial owners.
Effective January 30, 2026, beneficial ownership declarations must be filed through the HARBOR registry, replacing the previous General Information Sheet submission for SEC-registered corporations.
Noncompliance—such as failure to disclose beneficial ownership—may lead to fines, bid disqualification, corporate registration suspension or revocation, and heightened investment and procurement transaction risks.

Disclosure rules reshape compliance requirements

As outlined in BusinessWorld Online, beneficial ownership identification is becoming a central requirement in the Philippines as regulators push corporations to look beyond registered shareholders and determine who ultimately exercises control or enjoys the economic benefits of ownership. The article explains that this distinction matters when shares are held through nominee or trust arrangements, which may serve lawful purposes but can become unlawful if used to conceal the real owner or facilitate wrongdoing.

Section 73 of the Revised Corporation Code of the Philippines requires corporate information on ownership structures, voting rights, stockholders or members, group structures, intra-group relations, ownership data and beneficial ownership information. The Securities and Exchange Commission's Memorandum Circular No. 15, Series of 2025, the Revised Beneficial Ownership Disclosure Rules, requires SEC-registered corporations to disclose beneficial ownership information and recognizes only natural persons as beneficial owners.

The revised framework broadens the ways beneficial owners are identified, including through contracts, relationships, intermediaries and tiered entities, and lowers the Category A ownership threshold from 25% to 20%. Beginning Jan. 30, 2026, beneficial ownership declarations must be filed through the Hierarchical and Applicable Relations and Beneficial Ownership Registry, or HARBOR, which is integrated with eFAST for General Information Sheet filing, replacing the earlier practice of submitting such information through the GIS.

Failure to disclose beneficial ownership information may lead to fines against corporations and their directors or officers, as well as suspension or revocation of corporate registration and other penalties under applicable laws and SEC regulations, subject to due process.

Transaction, procurement and investment risks widen

Looking through the ownership chain is increasingly important in commercial transactions because legal ownership alone may not reveal the parties who actually control a company. In government procurement, the New Government Procurement Act keeps the requirement for legal entities to submit the GIS and now also requires the HARBOR-generated beneficial ownership page with a system-generated QR code.

These disclosures are intended to help determine the ultimate beneficiary, prevent collusion and address possible conflicts of interest. Noncompliance can trigger automatic bid disqualification, while suppliers, manufacturers, distributors, contractors and consultants must declare beneficial ownership information to participate in procurement.

In foreign investment transactions, beneficial ownership analysis can also affect compliance with nationality and foreign equity restrictions under the Constitution, the Foreign Investments Act, the Foreign Investment Negative List and the Anti-Dummy Law. In M&A transactions, examining indirect ownership and control may reveal related-party dealings, clarify competitive effects and help identify possible economic concentration under the Philippine Competition Act.

For buyers, identifying the ultimate beneficial owner supports valuation and risk assessment by exposing legal, regulatory, financial, reputational and commercial issues that may not appear in corporate records. The article notes that exposure to politically exposed persons, sanctions risks, related-party conflicts and other hidden concerns can remain obscured unless companies determine who truly owns, benefits from or controls the business.

We recently wrote about Philippine bond reforms, as the country works to modernize markets and broaden its investor base.

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