X126.1 - X126.

2
14.12.31

d. An individual and a corporation or stockholders of the corporation, irrespective

corporations which are wholly-owned, or of the place of incorporation. For purposes
a majority of the voting stock of which is hereof, the term controlling stockholders
owned, by him, may own only up to a shall refer to stockholders holding more than
combined forty percent (40%) of the voting fifty percent (50%) of the voting stock of the
stock of a UB, KB or TB, and up to a corporate stockholders of the bank.
combined sixty percent (60%) of the voting In the case of RBs, a corporate
stock of a RB. stockholder thereof shall be deemed
e. Stockholdings of family groups or Filipino-owned if it is organized under the
related interests. Individuals related to each laws of the Philippines and at least sixty
other within the fourth degree of percent (60%) of its capital is owned by
consanguinity or affinity, whether legitimate, Filipino citizens.
illegitimate or common-law, shall be (3) The relationship of individuals who
considered family groups or related interests are stockholders of a bank shall be
and may each own up to forty percent (40%) determined in accordance with the
of the voting stock of a UB, KB or TB and provisions of Articles 963 to 966 of the Civil
up to sixty percent (60%) of the voting stock Code of the Philippines.
of an RB: Provided, That said relationship (As amended by Circular Nos. 858 dated 21 November 2014,
must be fully disclosed in all transactions 809 dated 23 August 2013, 718 dated 26 April 2011 and Circular
No. 682 dated 15 February 2010)
by such individuals or family groups or
related interests. X126.2 Transactions involving voting
f. Two (2) or more corporations owned shares of stocks. The following regulations
or controlled by the same family group or shall govern all transactions involving voting
same group of persons shall be considered shares of stocks in banks.
related interests but may each own up to For purposes of this Subsection,
forty percent (40%) of the voting stock of a transaction shall refer to subscription/
UB, KB or TB and up to sixty percent (60%) issuance, purchase/sale, transfer, conversion
of the voting stock of an RB: Provided, That of preferred shares or debt instruments into
said relationship must be fully disclosed in voting shares of stock, and such act, contract,
all transactions by such individuals or family agreement or arrangement whereby a
groups or related interests. person, whether natural or juridical,
g. Ceiling on stockholdings in a Coop acquires voting shares of stock from one
Bank. The equity investment of any person, whether natural or juridical, or is
cooperative in any Coop Bank shall not vested the right to vote or the control of the
exceed forty percent (40%) of the subscribed voting shares of stock of a bank.
capital stock of such Coop Bank. a. Unlawful and void transactions
h. Determination of foreign-owned involving voting shares of stock of banks.
voting stock and citizenship of corporate The following transactions, to the extent of
stockholders in a bank as well as the the excess over any of the prescribed
relationship of stockholders of a bank. ceilings under R.A. No. 8791, R.A. No.
(1) The percentage of foreign-owned 7906, R.A. No. 7353, as amended by R.A.
voting stocks in a bank shall be determined No. 10574, R.A. No. 7721 as amended by
by the citizenship of all the stockholders in R.A. No. 10641 and other relevant laws are
that bank. hereby declared unlawful and void:
(2) The citizenship of the corporation, (1) Any transaction involving voting
which is a stockholder of a bank shall follow shares of stock of a bank, if such transaction,
the citizenship of the controlling in itself, or in relation with other/previous

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 X126.2
14.12.31

transaction/s shall result in the ownership accompanied by, in the case of transferee-
and control by an individual or corporation stockholder, the same papers/documents
of voting shares of stock in excess of any of required of incorporators/stockholders of
the prescribed limits of stockholdings in a newly established banks as provided in
bank. Appendix 37. The corporate secretary shall
(2) Any act, contract, agreement or hold in abeyance the registration of the
arrangement, such as voting trust agreement transaction until the required prior Bangko
or proxy, which vests in any person, whether Sentral approval is submitted as provided
natural or juridical, the right to vote or the in Subsec. X126.2.c.
control of the voting shares of stock of a bank, (3) In the case of additional subscription,
if such arrangement in itself, or in relation the bank shall not recognize the fund infused
with other/previous transaction/s, shall by the subscriber in its book as asset and
result in the acquisition of the right to vote liability or equity unless prior Monetary
or the control of voting shares of stock of Board approval is obtained. Pending
the bank, in excess of the prescribed approval by the Monetary Board, the fund
ceilings. infused by the subscriber shall be placed in
b. Transactions requiring prior Monetary an escrow in another bank.
Board approval (4) Sanctions. Any willful delay in the
(1) Prior approval of the Monetary Board submission by the transferor and transferee
shall be required on transaction involving of the request for prior Monetary Board
voting shares of stock of a bank, if such approval, together with the required
transaction, in itself or in relation with other/ supporting papers/documents, within sixty
previous transactions will: (60) calendar days from date of transaction
(a) result in ownership or control of more or thirty (30) calendar days from receipt by
than twenty percent (20%) of voting shares corporate secretary of request for
of stock of a bank by any person whether registration of the transaction, whichever is
natural or juridical or which will enable earlier, shall subject the transferor, the
such person to elect, or be elected as, a transferee, or both to the sanctions
director of such bank; or prescribed under Section 35 of R.A. No.
(b) effect a change in the majority 7653, without prejudice to the appropriate
ownership or control of the voting shares legal actions for the rescission and
of stock of the bank from one (1) group of invalidation of the transaction.
persons to another group: Provided, That in Moreover, any director and/or officer of
no case shall such transaction be approved a bank found to be acting in the interest of
unless the bank concerned shall an unregistered stockholder shall be subject
immediately comply with the prescribed to the applicable administrative sanctions
minimum capital requirement for new under Section 37 of R.A. No. 7653, without
banks, notwithstanding any approved prejudice to the filing of appropriate criminal
capital build-up program. charges as provided under Section 36 of R.A.
(2) The request for prior Monetary Board No. 7653.
approval shall be submitted jointly by the Furthermore, any violation of the
transferor-stockholder (or the bank in the provisions of Subsec. X126.2.b(3) hereof
case of additional subscription or shall subject the bank and/or its directors
conversion of preferred shares or debt and/or officers to the applicable
instruments) and the transferee-stockholder administrative sanctions under Section 37
thru the bank to the appropriate department of R.A. No. 7653, without prejudice to the
of the SES. The request shall be filing of appropriate criminal charges as

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 X126.2
14.12.31

provided under Section 36 of R.A. No. 7653. with the right to vote has controlling interest,
c. Duties of a corporate secretary. In all and the extent thereof;
transactions, which may lawfully come to (3) require the subscriber, purchaser,
the knowledge of the corporate secretary transferee or recipient of voting shares of
involving voting shares of stock of a bank stock to execute an affidavit (sample format
such as but not limited to subscription/ shown in Appendix 4) stating, among other
issuance, purchase/sale, transfer, conversion things, that the subscriber, transferee or
of preferred shares or debt instruments into recipient of voting shares of stock is a
voting shares of stock, or registration of bonafide owner of the said shares of stock,
voting trust agreements, or any form of that he/she is not an agent, assignee, proxy,
agreement vesting the right to vote or the nominee or a dummy of any person,
control of the voting shares of stock of the whether natural or juridical, and that he/
bank, the corporate secretary shall, before she acknowledges full awareness of:
registering the transaction or agreement in (a) the prohibitions against ownership
the stock and transfer book of the bank: of voting shares of stock in excess of the
(1) ascertain the identity and citizenship ceilings prescribed by laws/Bangko Sentral
of the subscriber, purchaser, transferee or regulations as provided in Subsec. X126.2.a;
recipient of voting shares of stock, voting and/or
trustee, proxy or person vested with the right (b) the requirement for prior Monetary
to vote, and for this purpose, he should Board approval for transactions resulting to
require the subscriber, transferee or significant ownership of voting shares of
recipient of voting shares of stock, voting stock of a bank by any person, whether
trustee, proxy or the person vested with the natural or juridical, or by one (1) group of
right to vote to submit proof of citizenship, persons, as provided in Subsec. X126.2.b.
which may consist, in case of a corporation, If the request for registration of
of a certified true copy of the articles of transaction will patently cause the voting
incorporation, accompanied by the affidavit shares of stocks of an individual or a
of the corporate secretary of the corporation, corporation to exceed the ceilings
certifying to the correctness and accuracy prescribed by laws/Bangko Sentral
of the list of stockholders, their citizenship regulations, the corporate secretary shall
and the percentage of shares owned by deny the registration of the transaction and
them; forthwith inform the parties to the
(2) require the subscriber, purchaser, transaction in writing.
transferee or recipient of voting shares of If the request for registration of
stock, voting trustee, proxy or person vested transaction would result to the significant
with the right to vote, at the time of the ownership of the voting shares of stock of a
receipt of the request for registration of bank by any person, whether natural or
transaction, to disclose all information with juridical, or by one (1) group of persons,
respect to persons related to the subscriber, requiring prior Monetary Board approval as
transferee or recipient of voting shares of provided in Subsec. X126.2.b, and no such
stock, voting trustee, proxy or person vested prior Monetary Board approval is submitted,
with the right to vote, within the fourth the corporate secretary shall hold in
degree of consanguinity or affinity, whether abeyance the registration of the transaction
legitimate, illegitimate or common-law, as and forthwith inform the parties to the
well as corporations, where the subscriber, transaction in writing.
transferee or recipient of voting shares of In the event the corporate secretary has
stock, voting trustee, proxy or person vested reason to doubt the legality of the transaction

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 X126.2 - X126.3
14.12.31

sought to be registered, he/she may (2) A separate list containing the names
commence an action before the appropriate of stockholders who own voting shares of
body; stock in the bank and who are related to
(4) promptly inform stockholders each other within the fourth degree of
(a) who have reached any of the ceilings consanguinity or affinity, whether legitimate,
prescribed by laws/Bangko Sentral illegitimate or common-law (in the case of
regulations of their ineligibility to own or individuals) as well as corporations which
control more than the applicable ceiling are wholly-owned or a majority of the stock
or (b) who would own voting shares of of which is owned by any of such
stock requiring prior Monetary Board stockholders, including their subsidiaries;
approval; and and
(5) disclose the ultimate beneficial (3) An affidavit under oath (sample
owners of bank shares held in the name of format shown in Appendix 4) from each of
Philippine Central Depository (PCD) the stockholders attesting, among other
Nominee Corporation in the annual (or things, that he/she/it is the bonafide owner
quarterly whenever changes occur) report of the voting shares of stock of the bank in
on Consolidated List of Stockholders and his/her/its own right, and not as an agent,
Their Stockholdings (BSP 7-16-11), which assignee, proxy, nominee or a dummy of
report shall be made under oath by the any other person, natural or juridical.
(As amended by Circular Nos. 858 dated 21 November 2014,
corporate secretary. Any willful delay in the
809 dated 23 August 2013 and 718 dated 26 April 2011)
submission of said report, a Category A-2
report, shall subject the bank to the
X126.3 Other foreign equity
corresponding fines for delayed reports in
investment in domestic banks. Except as
accordance with the provisions of Subsec.
otherwise covered under Sec. X105 and
X192.2 to be reckoned on the day following
Subsec. X126.1, the following guidelines
the due date of submission until the correct shall be observed on equity investments of
report is submitted to the Bangko Sentral. foreigners in domestic banks:
Sanctions. The corporate secretary found a. The prior authority of the Monetary
to have willfully falsely certified/submitted Board shall be obtained by foreign banks,
misleading statements and/or violated any including their subsidiaries and their holding
of the provisions of Subsec. X126.2.c shall companies having majority holdings in such
be subject to the applicable administrative foreign banks, whenever acquiring more
sanctions under Section 37 of R.A. No. than forty percent (40%) of the voting stock
7653. The imposition of the said of a domestic bank, including foreign-owned
administrative actions is without prejudice shares outstanding and foreign-held as of 27
to the filing of appropriate criminal charges April 1973 and which continued to be held
as provided under Section 35 of R.A. No. by the foreign stockholder up to the date of
7653 for the willful making of false or the acquisition by the foreign banks.
misleading statement. b. (Deleted by Cir. No. 256 dated 15
d. Requirement for newly established August 2000)
banks. Entities which may hereinafter apply c. The prior authority of the Monetary
for a license to engage in banking business Board is not required if the foreign investor
shall, before being allowed to operate, is (1) an individual, (2) a non-financial entity,
submit - or (3) a non-bank financial entity which is
(1) An alphabetical list of stockholders not owned or controlled by a bank, its
with the number and percentage of voting subsidiary or holding company, and the
shares of stock owned by them; investor is acquiring foreign-owned shares

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