The Securities and Exchange Commission issued stricter rules on the sale of corporate assets to safeguard minority investors’ interests.
It said in a statement the new rules would require the approval of shareholders on the sale or disposal of properties and assets amounting to at least 51 percent of a corporation’s total assets.
Under the rules issued through SEC Memorandum Circular No. 12 Series of 2020, the approval of the stockholders representing at least two-thirds of the outstanding capital stock in a meeting duly called for the purpose would be required prior to the execution of the sale transaction.
It said in aggregate sale transactions, shareholder approval would be required on those breaching the 51-percent corporate asset threshold.
“The newly issued rules reinforce the protection afforded to minority investors by enabling them to better participate in the decision-making and promoting transparency to reduce the risk of abuse,” SEC chairperson Emilio Aquino said.
“We will continue spearheading corporate governance reforms, as part of our commitment to contribute to the inclusive development of the country’s economy through the introduction of reforms that protect minority investors,” Aquino said.
The determination of whether or not the sale breaches the threshold will be based on the total assets of the corporation as shown in its latest audited financial statements. The computation may also be based on the latest quarterly financial statement or a special purpose report prepared in connection with the execution of the transaction.
The SEC said it might impose any or all of the sanctions provided under Section 158 of Republic Act No. 11232, or the Revised Corporation Code of the Philippines, for the violation of any provision of the memorandum circular.
