Foreigners may secure seats in the board of directors of Philippine corporations with foreign equity and engaged in public utilities and in partially-nationalized activity based only on their “actual” and “allowable” shares, the Department of Justice said in a legal opinion addressed to the Securities and Exchange Commission.
Justice Secretary Jesus Crispin Remulla said that for public utilities and corporations engaged in the advertising industry, “foreign investors in the board of directors is limited to their actual participation or share in the capital of such entities.”
“For all other corporations with foreign equity engaged in a partially-nationalized activity, and subject to existing capitalization requirements and ownership of stocks, or those corporations engaged in regular activity, the participation of foreigners is limited by their allowable participation or share in the capital of such entities, as provided for in Section 2-A of the Anti-Dummy Law,” Remulla said.
Under Republic Act No. 11659, public utility has been defined as “a public service that operates, manages, or controls for public use any of the following: (1) Distribution of Electricity; (2) Transmission of Electricity; (3) Petroleum and Petroleum Products Pipeline Transmission Systems; (4) Water Pipeline Distribution Systems and Wastewater Pipeline Systems, including sewerage pipeline systems; (5) Seaports; and (6) Public Utility Vehicles.”
“In consonance with the objectives of the Anti-Dummy Law, for purposes of determining the number of seats allowed for foreigners in a partially nationalized business or activity, or in any other corporation engaged in regular activity, the allowable participation or share in the capital of such corporation shall be taken into account,” Remulla said.