The Securities and Exchange Commission wants companies planning to dispose of at least 51 percent of their assets to obtain two-thirds approval from their shareholders.
The move is in line with SEC’s thrust to promote good governance and protect minority shareholders.
The SEC, in a draft memorandum circular issued on Friday, said the sale or disposal of corporate property and assets amounting to at least 51 percent of the corporation’s total assets should be considered as sale of all or substantially all of corporate property and assets, whether such sale accrued in a single transaction or in several transactions taking place within one year from the date of the first transaction.
The SEC said a sale of 51 percent of a company’s assets would require a vote of the stockholders representing at least two-thirds of the outstanding capital stock of the company
The SEC said the determination of whether or not the sale amounts to at least 51 percent of the corporation’s assets must be computed based on total assets as shown in the latest audited financial statements.
Concerned and affected sectors may submit their comments, feedback and inputs on the draft rules on the sale of corporate assets on or before March 7, 2020.
The implementation of rules on sale of corporate assets is pursuant to SEC’s regulatory powers under Section 179 of the Republic Act 11232, or the Revised Corporation Code of the Philippines.
If, after due notice and hearing, the commission finds that any provision of this Memorandum Circular has been violated, the Commission may impose any or all of the sanctions provided under Section 158 of the RCCP,” the SEC said.
The sanctions under the RCCP include the imposition of a fine ranging from P5,000 to P2 million and not more than P1 for each day of continuing violation, issuance of a permanent cease-and-desist order, suspension or revocation of the certificate of incorporation and dissolution of the company.