Foreign nationals can be directors of local firms

MANILA, Philippines — The Securities and Exchange Commission (SEC) said foreign nationals can be elected as directors of corporations in proportion to their shares, but cannot be elected as officers in top positions.

In determining the “representation of alien stockholders in the board of directors of corporations engaged in partially nationalized activities,” the basis should be the actual share of the alien stockholders in the capital of the corporation, the SEC said in an opinion.

These shares, however, should not exceed the foreign equity ceiling prescribed by law for a particular corporation or association, it pointed out.

The SEC opinion, penned by SEC general counsel Romuald Padilla, was in response to a query from Razon-led Prime Infrastructure Holdings Inc. regarding the appointment of a foreign director in a corporation engaged in a “partly nationalized activity.”

Prime Strategic Holdings Inc. subsidiary Trident Water Company Holdings has acquired 51 percent voting shares in Manila Water Co. Inc.

Prime Infrastructure sought the clarification in case it would elect a foreign director to the board of MWC.

The SEC said this is allowed in the case of MWC because its foreign equity is within the limits set by laws.

“Since MWC is involved in the business of operating a public utility, its foreign equity is limited to 40 percent. Based on the shareholding structure as of Dec. 31, 2020, the percentage of foreign equity in MWC is 24.59 percent,” the SEC said.