MANILA — The Supreme Court (SC) on Tuesday prevented several government agencies which include the Bureau of Internal Revene (BIR), the Department of Finance (DOF), and the Securities and Exchange Commission (SEC) from requiring firms to reveal the list of investors who receive income payments and dividends.
The High Court handed out the temporary restraining order (TRO) against BIR Commission Kim Henares, Finance Secretary Cesar Purisima, and SEC Chair Teresita Herbosa, following the appeal raised by various business groups last September 4.
Last week, the Philippine Stock Exchange (PSE) together with some business firms, filed a petition for certiorari and prohibition to prevent the BIR, DOF, and SEC from requiring them to submit proof of income payments and from naming PDC Nominee Corp. (PCD) as payee of dividends. The PDC holds the title to most paperless shares being traded in the stock market.
The regulations are included under Henares’ Revenue Memorandum Circular 05-14, Purisima’s Revenue Regulation 01-14, and Herbosa’s SEC Memorandum Circular No. 10 series of 2014.
“The Court issued a Temporary Restraining Order, effective immediately and until further orders, stopping respondents from further enforcing or implementing RR 01-14 and RMC 05-14 where these prohibit the naming of the PCD nominee (or any other securities intermediary designated and allowed under section 43.1 of the Securities Regulation Code) as the payee for the dividend payments made by listed companies and SEC MC 10-14 in its entirety,” according to the briefer on the en banc resolution by the Supreme Court.
The full resolution is not yet released.
The issued TRO will be effective until the high court continues to discuss the petition’s merits which were also filed by the Bankers Association of the Philippines, the Philippine Association of Securities and Dealers Inc., the Fund Managers Association of the Philippines, the Trust Officers Association of the Philippines, and the private investment firm Marmon Holdings Inc.
In the petition of the business groups, they claimed that the following agencies – BIR, SEC, and DOF – do not have regard to the rights of the petitioners’ to privacy, thus exercised severe abuse of discretion in issuing the regulations.
Aside from these the companies also stressed the importance of the uncertificated trading system “as the best global practice for securities regulators, including stock exchanges,” recognized by the International Organization of Securities Commissions. This is the current system in place as practiced by the PSE for years.
“Having PCD Nominee as the registered shareholder and payee of dividend payments of listed companies not only ensures the efficient transfer of shares but also preserves the integrity of the market, which could be affected by information on the identity of the investor buying or selling the shares of stock in a listed company, and protects the investors, whose safety might be compromised if identified by unauthorized third parties,” the petitioners said.