No Safe Harbor Behind the Corporate Veil: SEC Tightens Rules on Beneficial Ownership Disclosure | SEC MC No. 15-2025

Authors: Mark Benjamin C. Yam , Bianca Ysabel O. Vicente, Frances Louise M. Ronquillo

The Stock and Transfer Book identifies the registered or legal owner of shares, but it does not always reveal the natural person who ultimately owns or controls the corporation. A corporation, nominee, trust, estate, or other intermediary may appear within the ownership structure, while another natural person receives the economic benefits, directs corporate decisions, or otherwise exercises effective control.¹

To bridge this gap, the Securities and Exchange Commission (“SEC”) issued SEC Memorandum Circular (“MC”) No. 15, series of 2025, or the “Revised Beneficial Ownership Disclosure Rules” (the “Rules”). The Rules took effect on 01 January 2026 and introduced a more comprehensive framework for identifying, verifying, recording, and reporting beneficial ownership information. ²

To operationalize the new framework, the SEC launched the Hierarchical and Applicable Relations and Beneficial Ownership Registry (“HARBOR”), its dedicated online platform for beneficial ownership disclosure.³

Who Qualifies as a Beneficial Owner?

The Rules emphasize that only a natural person may qualify as a beneficial owner.⁴ Although corporations, partnerships, trusts, estates, or other legal arrangements may form part of the ownership structure, ownership must be traced until the natural person or persons who ultimately own or control the entity are disclosed.⁵

The Rules recognize ownership of at least twenty percent (20%) of the voting rights, voting shares, or capital as one basis for beneficial ownership.⁶ For tiered structures, the reporting entity must multiply the ownership percentages at each level.⁷ Thus, for instance, if an individual owns sixty percent (60%) of a holding company that owns forty percent (40%) of an operating company, the individual indirectly owns twenty-four percent (24%) of the operating company.

However, mere ownership share is not determinative, as a person who owns less than twenty percent (20%) may still qualify as a beneficial owner through contractual control, the power to elect a majority of the board, dominant influence over management or policy, a nominee arrangement, or other means of effective control. ⁸

For One-Person Corporations (“OPCs”), the reporting entity must identify the single stockholder as the beneficial owner.⁹ When a trust is the single stockholder, the beneficial owners include the beneficiaries with defined beneficial interests, the trustors, settlors, or grantors who established the trust, the natural persons who exercise effective control over the trust, and the trustees or administrators exercising control over the trust assets. When an estate is the single stockholder, the beneficial owners include the heirs and legatees with beneficial interests in the estate, the natural persons who exercise effective control over the estate, and the executor or administrator.¹⁰ Similarly, for partnerships, a natural person who satisfies any applicable beneficial ownership category under Section 6.1 qualifies as a beneficial owner.¹¹ Where a partnership includes corporate partners, each corporate partner must submit its respective beneficial ownership information.¹²

For cross-border structures, the reporting entity must trace ownership through all jurisdictions, which may be corroborated through foreign registry records. Accordingly, the reporting entity should not stop at a foreign corporate shareholder when natural persons remain behind that entity.¹³

Beneficial Ownership Reporting Through HARBOR

HARBOR became the mandatory platform for applicable beneficial ownership submissions on 30 January 2026. It works in conjunction with the SEC’s other online systems: eSECURE, which verifies the identity of the individual filer; eFAST, which receives the General Information Sheet (“GIS”) and other corporate reports; while HARBOR itself receives and maintains declarations of beneficial ownership.

For existing entities, beneficial ownership information must be provided with the next applicable GIS following the effectivity of the Rules.¹⁴ For newly registered entities, the beneficial ownership information must be provided during incorporation or registration. ¹⁵

Continuing Disclosure of Beneficial Ownership Changes

More than just an annual form-filing exercise, the Rules turn beneficial ownership disclosure into a continuing reporting obligation tied to each ownership change.

Reporting entities must:

1. Identify all natural persons who qualify as beneficial owners;¹⁶
2. Verify the information through reliable and independently sourced or obtained documents, data, or information;¹⁷
3. Maintain accurate, current, secure, and readily retrievable records;¹⁸
4. Report changes within seven (7) calendar days from the date of the event;¹⁹ and
5. Submit the required information through HARBOR. ²⁰

The seven (7)-day reporting period makes beneficial ownership disclosure an event-driven obligation. Whenever a share transfer, capital restructuring, voting agreement, nominee arrangement, estate settlement, or another event changes the ownership or control of the entity, such change must be reported rather than deferred until the next GIS filing. ²¹

Changes in reportable information, such as the ownership share, means of control, residential address, identification details, or politically exposed person status, must likewise be reported even when the beneficial owner remains the same. ²²

Prohibition Against Bearer Shares and Disclosure of Nominee Arrangements

The Rules also address legal mechanisms that may be used to circumvent beneficial ownership disclosure rules. For example, corporations must record share transfers in the Stock and Transfer Book or applicable registry within thirty (30) days from the transaction and must confirm the registered ownership before paying dividends. The Rules also prohibit the issuance, sale, offer for sale, or distribution of bearer shares and bearer share warrants.

Nominee incorporators, directors, trustees, or shareholders must disclose their status as nominees and identify their nominators, principals, or the persons on whose behalf they act.²³ While certain institutions and persons covered by the Anti-Money Laundering Act may, to a limited extent, be exempt from disclosing such nominee arrangements, this exemption does not generally remove the obligation to identify and report beneficial ownership.²⁴

Corporate and Individual Exposure

The Rules prescribe separate penalties for the reporting entity and for responsible directors, trustees, and officers.²⁵

Failure to disclose may result in escalating corporate fines. Continuing violations may incur an additional fine of one thousand pesos (PhP1,000.00) for each day of delay, subject to a maximum additional fine of two million pesos (PhP2,000,000.00).²⁶

A false declaration may expose the corporation to a fine of up to two million pesos (PhP2,000,000.00) and possible dissolution. Each director, trustee, or officer found responsible for a false declaration may separately face a fine of up to one million pesos (PhP1,000,000.00) and disqualification from serving in such positions for five (5) years.²⁷

Notably, the Rules treat the absence of written procedures, or the lack of meaningful board or senior management oversight, as prima facie evidence of failure to exercise the required due diligence.²⁸

Management should therefore not treat beneficial ownership compliance as the isolated responsibility of the Corporate Secretary. The board and senior management should ensure meaningful oversight of written procedures and policies for obtaining, updating, recording, and timely disclosing beneficial ownership information.

What Should Corporations Do Now?

After beneficial ownership information has been reported, corporations may be subject to further verification by the SEC. The SEC may require supporting documents, compare the declaration with other corporate records, conduct risk-based reviews or audits, and seek information from domestic or foreign authorities.²⁹ Thus, the reporting entity must be able to substantiate the accuracy and consistency of the declaration across corporate records.

Corporations should review their beneficial ownership processes before the next GIS deadline or corporate transaction. At a minimum, a reporting entity should maintain a current ownership and control chart that traces every layer of the structure to the relevant natural persons, supported by declarations and reliable documents from shareholders, intermediate entities, and controlling persons. Shareholder agreements, voting arrangements, nominee structures, trusts, estates, and board appointment rights that may affect the beneficial ownership must likewise be periodically reviewed.

Corporations should establish an internal process that promptly informs the Corporate Secretary of relevant changes and ensures that the authorized filer maintains working access to eSECURE, eFAST, and HARBOR. Corporations should also retain proof of every HARBOR submission or amendment. Appropriate data privacy and security controls should be applied to personal information.³⁰

Finally, corporations should also incorporate beneficial ownership review into transaction checklists involving share transfers, investments, financing arrangements, mergers and acquisitions, corporate restructurings, and succession matters. Early preparation will help corporations avoid filing delays, address gaps in complex ownership structures, and reduce corporate and individual exposure under the new regime.

Overall, the Rules further close the gap between legal ownership and actual ownership and align the Philippine framework with international standards by ensuring the authorities have adequate, accurate, and up-to-date information on the natural persons behind the legal entities. By promoting transparency, the Rules seek to prevent the misuse of corporate vehicles for illicit purposes and safeguard the integrity of the financial system.

This article is intended for informational purposes only and should not be construed as legal advice.

Footnotes

1.   Sections 5(d) and 6, SEC Memorandum Circular No. 15, Series of 2025.
2.   Section 33, SEC Memorandum Circular No. 15, Series of 2025.
3.   Sections 5(e) and 22.1, SEC Memorandum Circular No. 15, Series of 2025.
4.   Section 6, SEC Memorandum Circular No. 15, Series of 2025.
5.   Sections 5(d), 5(i), 5(k), 5(l), and 5(s), Sections 6, 7.1, 7.2, 7.3, and 7.4, SEC Memorandum Circular No. 15, Series of 2025.
6.   Section 6.1(a), SEC Memorandum Circular No. 15, Series of 2025.
7.   Sections 7.3(a) and 7.3(b), SEC Memorandum Circular No. 15, Series of 2025.
8.   Sections 6.1(b), 6.1(c), 6.1(d), 6.1(g), 6.1(h), and 7.3(c), SEC Memorandum Circular No. 15, Series of 2025.
9.   Section 7.1(a), SEC Memorandum Circular No. 15, Series of 2025.
10.   Section 7.1, SEC Memorandum Circular No. 15, Series of 2025.
11.   Section 7.2(a), SEC Memorandum Circular No. 15, Series of 2025.
12.   Section 7.2(b), SEC Memorandum Circular No. 15, Series of 2025.
13.   Sections 7.4(a) and 7.4(b), SEC Memorandum Circular No. 15, Series of 2025.
14.   Section 21.1(b), SEC Memorandum Circular No. 15, Series of 2025.
15.   Section 21.1(a), SEC Memorandum Circular No. 15, Series of 2025.
16.   Section 6, SEC Memorandum Circular No. 15, Series of 2025.
17.   Section 8, SEC Memorandum Circular No. 15, Series of 2025.
18.   Sections 8 and 10, SEC Memorandum Circular No. 15, Series of 2025.
19.   Section 21.2, in relation to Section 8, SEC Memorandum Circular No. 15, Series of 2025.
20.   Section 22.1, SEC Memorandum Circular No. 15, Series of 2025.
21.   Section 21.2, SEC Memorandum Circular No. 15, Series of 2025.
22.   Section 8, in relation to Sections 18.1, 18.2, and 21.2, SEC Memorandum Circular No. 15, Series of 2025.
23.   Sections 13 and 14, SEC Memorandum Circular No. 15, Series of 2025.
24.   Section 16, SEC Memorandum Circular No. 15, Series of 2025.
25.   Sections 25.1, 25.2, and 25.3, SEC Memorandum Circular No. 15, Series of 2025.
26.   Sections 25.1(a) to 25.1(f), SEC Memorandum Circular No. 15, Series of 2025.  Section 25.2 and Section 25.3, second paragraph, SEC Memorandum Circular No. 15, Series of 2025.
27.   Section 25.3, third paragraph, SEC Memorandum Circular No. 15, Series of 2025.
28.   Sections 9, 19, 23.1, and 23.2(a) to 23.2(f), SEC Memorandum Circular No. 15, Series of 2025.
29.   Section 10, SEC Memorandum Circular No. 15, Series of 2025; Section 20, Republic Act No. 10173, otherwise known as the Data Privacy Act of 2012.