SEC to scrutinize ownership data

MANILA, Philippines — The Securities and Exchange Commission (SEC) will scrutinize ownership data in companies to help curb corruption in the government procurement process.

Essentially, the SEC would cooperate with government agencies and international authorities in sounding the alarm on company owners who may be involved in corrupt practices.

Information available through the beneficial ownership data may aid in curbing corruption in government, particularly in detecting bid rigging activities and conflicts of interest.

The corporate regulator has teamed up with the United Nations Office on Drugs and Crime (UNODC) and Open Ownership (OO) to harness the potential of using beneficial ownership data.

A beneficial owner is one who ultimately owns or exercises ultimate effective control over a corporation.

This is different from legal owners, as beneficial owners may directly or indirectly have the power to vote or influence transaction decisions of the company, even without them being reported as a stockholder, member, director, or officer.

The SEC requires the declaration of beneficial owners in the general information sheet through SEC memorandum circular 15, said SEC chairperson Emilio Aquino.

“Beneficial ownership plays an important role in detecting indicators of bid rigging and conflicts of interest during the procurement process,” Aquino said.

Last August, the SEC and UNODC organized a focus group discussion (FGD) on Beneficial Ownership Data Use in Public Procurement with the discussions mainly focused on the application of beneficial ownership on public procurement, emphasizing the importance of data in mitigating corruption and improving the decision-making process of the procurement lifecycle.

Participants included officers from the Philippine Competition Commission, House of Representatives, Office of the President, Office of the Ombudsman, Philippine Government Electronic Procurement System, and the Government Procurement Policy Board Technical Support Office (GPPB-TSO).

The discussions mainly focused on the application of beneficial ownership on public procurement, emphasizing the importance of data in mitigating corruption and improving the decision-making process of the procurement lifecycle.

“It is important that we ensure there are few avenues for corrupt individuals to take advantage of the system,”Aquino said.

SEC also partnered with the Bureau of Internal Revenue to explore the use of beneficial ownership data to support tax enforcement.

“Through our cooperation with the UNODC and other government agencies, we hope to find ways to limit tax evasion and aid in the economic development of the nation by maintaining tax integrity,” Aquino said.

The SEC on September 22 likewise conducted a focus group discussion on beneficial ownership data use in tax enforcement as part of its continued collaboration with the UN body to ensure increased accountability beyond the COVID-19 pandemic.