SC stops BIR on ‘alphalist’ disclosure
The Supreme Court on Tuesday stopped the Bureau of Internal Revenue, the Department of Finance and the Securities and Exchange Commission from requiring firms to disclose an alphabetical list (alphalist) of investors who receive income payments and dividends, a regulation that has stirred concerns of capital flight and its crippling effects on the economy. INQUIRER FILE PHOTO
MANILA, Philippines–The Supreme Court on Tuesday stopped the Bureau of Internal Revenue (BIR), the Department of Finance (DOF) and the Securities and Exchange Commission (SEC) from requiring firms to disclose an alphabetical list (alphalist) of investors who receive income payments and dividends, a regulation that has stirred concerns of capital flight and its crippling effects on the economy.
The high court issued the temporary restraining order (TRO) against BIR Commissioner Kim Henares, Finance Secretary Cesar Purisima and SEC Chair Teresita Herbosa following an en banc session on Tuesday, providing immediate relief to business groups that had impleaded the respondents on Sept. 4.
The Philippine Stock Exchange (PSE) along with several business firms last week filed a petition for certiorari and prohibition to stop and declare as unconstitutional BIR, DOF and SEC regulations issued this year that required the disclosure of recipients of income payments and barred listed companies from naming PCD Nominee Corp. (PCD) as the payee of dividends. The PCD, as an intermediary, holds the title to uncertificated or paperless shares traded in the stock market.
These regulations include 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,” read a briefer on the en banc resolution sent out by the Supreme Court Tuesday.
The full resolution has yet to be released.
The TRO will be effective while the high court deliberates on the merits of the petition, 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 their 56-page petition, the business groups said the BIR, SEC and DOF had exercised grave abuse of discretion in issuing the regulations without regard to the petitioners’ right to privacy.
The petitioners also underscored the importance of the scripless (uncertificated) trading system, recognized by the International Organization of Securities Commissions “as best global practice for securities regulators, including stock exchanges.” The PSE has used this system for more than a decade.
“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.
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