OWNERSHIP STRUCTURE OF TRUST CORPORATIONS IN THE PHILIPPINES
A doctrinal and practical survey
1 Introduction
Within the Philippine financial system, a trust corporation is a stock corporation that has been (i) organized under the Revised Corporation Code (RCC), and (ii) granted a certificate of authority by the Bangko Sentral ng Pilipinas (BSP) to “engage in trust, other fiduciary business, and investment management activities” in accordance with §79 of the General Banking Law of 2000 (Republic Act No. 8791, “GBL”). Because it is neither a bank nor a public utility, its ownership is shaped by a unique combination of constitutional rules, sector-specific statutes, BSP regulations, and corporate-law constructs.
This article synthesises all material sources, limits, practices, and open issues that define who may own a Philippine trust corporation, in what proportions, and subject to what continuing duties. It is written for lawyers, compliance officers and transaction advisers who need an authoritative one-stop reference. (It is not legal advice; specific transactions should still be vetted case-to-case.)
2 Legal & Regulatory Matrix
| Level | Instrument | Salient ownership rules |
|---|---|---|
| Constitution | 1987 Constitution, Art. XII | No specific ceiling on foreign ownership of financial institutions; only the 60-40 rule on public utilities applies (trust corporations are not “public utilities”). |
| Primary statutes | • RAC (R.A. 11232) • General Banking Law (R.A. 8791, esp. §§11-12, 79) • BSP Charter (R.A. 7653 as amended by R.A. 11211) • AMLA (R.A. 9160, as amended) |
• Must be a stock corporation; par-value shares only. • §79 GBL: stockholding limitations for a trust corporation “shall be the same as those prescribed for a bank, unless otherwise provided by law.” |
| Special laws affecting foreign equity | • R.A. 10641 (2014) - full entry of foreign banks • R.A. 11647 (2022) - liberalised Foreign Investments Act |
R.A. 10641 does not amend §79 GBL for trust corporations; thus the default ceilings under §11-12 GBL continue to govern. R.A. 11647 removes trust corporations from the “Negative List,” but that general permission yields to the specific caps in §79/§11-12 GBL (lex specialis over lex generalis). |
| BSP Regulations | • MORB Part I, §X401-X409 (for trust departments) • MORNBFI Part IV, §T-1 to T-10 (for stand-alone trust corporations) • BSP Circulars 914/950/1048 (capital adequacy, fit-and-proper, BO disclosure) |
• Minimum paid-in capital ₱300 million (higher if the trust corp. also seeks quasi-bank licence). • Risk-based capital adequacy ratio (CAR) ≥ 12 % of Trust Risk-Weighted Assets. • Prior BSP consent for any transfer that results in ≥ 10 % voting shares or changes control. |
| SEC Regulations | • SRC Rule 23 (beneficial ownership) • RCC Rule 14 (foreign investments reporting) |
• List of stockholders & beneficial owners filed annually and upon every change of control. |
3 Core Equity Caps and Aggregation Rules
Individual / Corporate Shareholder Cap (Filipino or Foreign). Under §12 (a) GBL (read with §79), no single “person”—whether natural or juridical—may own or control > 40 % of the voting shares of a trust corporation. “Control” aggregates:
- direct holdings;
- indirect/beneficial holdings (including through nominees, relatives within the fourth civil degree, or corporations in which the person owns ≥ 40 %);
- voting agreements and other arrangements that give equivalent influence.
Family/Related-Interest Cap. A family group or entities under common control are likewise limited to an aggregate 40 % holding. BSP requires a family relationship diagram in the licence application and updated each time shares are transferred.
Foreign-Equity Ceiling. Absent a special law enlarging the limit, the aggregate foreign voting shares of a trust corporation may not exceed 40 % of outstanding voting stock (the same limit that applied to domestic banks prior to R.A. 10641). Key points:
- Foreign banks may own up to 100 % of a bank, but if that bank organises a separate trust corporation, the subsidiary itself remains subject to the 40 % cap unless its own charter law lifts it.
- If the trust business is housed in a trust department of the bank (instead of a stand-alone trust corporation), the bank-level foreign-equity rules apply (which may now be up to 100 % for qualified foreign banks).
Public-Listing Exemption. There is no automatic exemption for “widely-held” or listed trust corporations; the same BSP pre-clearance still applies, and the stock-watching duties fall on the corporate secretary and transfer agent.
4 Fit-and-Proper Requirements for Significant Owners
Any person (individual or entity) that will own, directly or indirectly, at least 10 % of voting shares (or will otherwise exercise “substantial influence”) must:
| Criterion | Main Parameters |
|---|---|
| Financial capacity | Audited net worth at least equal to the proposed investment; clean credit standing; no default on obligations to any supervised financial institution. |
| Integrity & reputation | No conviction for an offense involving moral turpitude, fraud, securities violations, or money laundering; no administrative case for unsafe banking practices or trust violations. |
| Experience | Individuals: at least five (5) years in banking, asset management, or allied fields. Corporates: at least three (3) consecutive years of profitable operations in financial services. |
| Ultimate Beneficial Owners | Full KYC disclosure to the BSP, even if the investor is a listed foreign fund. Layering or “discretionary trusts” is disallowed without look-through. |
5 Process and Approvals for Equity Transactions
Pre-Organisation
- Articles of Incorporation must state that the corporation will “engage in trust and other fiduciary business” and include “TRUST CORPORATION” in its name.
- Minimum subscribed capital ≥ ₱300 million; at least 25 % of the authorised capital must be subscribed, and at least 25 % of that subscription must be paid-up, but not less than ₱300 million paid-up on licence date.
- A certification from the Treasurer-in-Trust (TITO) as to the deposit of the paid-up amount is filed with the SEC and submitted to BSP within 15 days.
License (Certificate of Authority)
- BSP Monetary Board approval (vote of at least five members) after prudential evaluation.
- Separate CA needed for quasi-banking or investment management activities not covered by the basic trust licence.
Subsequent Share Transfers
Prior BSP approval is required if the transaction will:
- make any transferee a 10 % owner, or
- result in a cumulative change of ≥ 20 % ownership within any 12-month period, or
- alter the majority of the Board.
A post-closing report must be filed within 15 business days, attaching (i) updated General Information Sheet, (ii) notarised Deeds of Assignment/Subscription, and (iii) proof of tax payment of documentary stamp tax (DST).
Listing or Secondary Offering
- Prior BSP clearance is mandatory; proceeds must be booked as Tier 1 capital unless otherwise approved. The trust corporation must maintain post-offer CAR ≥ 12 %.
6 Capital Adequacy and “Lock-In” Rules Affecting Shareholders
| Item | Requirement | Rationale for Ownership Structure |
|---|---|---|
| Minimum Common Equity Tier 1 (CET1) | ₱300 million absolute floor, plus risk-based buffers (≥ 12 % TRWA). | Forces a strategic investor to commit “patient” capital; thinly-capitalised nominal shareholders are disallowed. |
| Dividend lock-up | No dividends may be declared if (i) CAR < 12 %, or (ii) unbooked valuation losses on trust assets would impair CET1. | Aligns shareholder returns with prudent risk appetite. |
| Single Borrower’s Limit (SBL) | Exposure of the trust corporation to any one counterparty (except GOCCs) may not exceed 25 % of CET1. Shareholder loans are aggregated here. | Large shareholders cannot “channel” assets to themselves beyond the SBL; prevents abusive self-dealing. |
7 Typical Ownership Models in Practice
| Model | Key Features | Illustrative Example* |
|---|---|---|
| Bank Subsidiary | 100 %-owned trust corporation; capital and risk integration with parent bank; foreign cap follows §79/§11-12, not the bank’s looser cap. | BPI Asset Management & Trust Corp. (wholly-owned by Bank of the Philippine Islands). |
| Independent Domestic Majority | ≥ 60 % Filipino shareholders; minority strategic stake (≤ 40 %) held by foreign asset manager or regional bank; board seats proportionate. | ATRAM Trust Corporation (domestic fintech founders + European fund manager minority). |
| Joint-Venture | 60-40 Filipino-foreign split; veto matters in SHA; gradual earn-in tied to AUM milestones. | An imaginary example would be “LocalCo-Global Trust JV Corp.” |
| Conglomerate Family Office | Single family (collectively ≤ 40 %) teams up with third-party local investors to reach minimum capital; used to manage inter-generational wealth and employee retirement funds. | “XYZ Family Trust Corp.” formed by a Cebu-based shipping group. |
*Examples are drawn from public filings as of Q1 2025.
8 Reporting & Ongoing Disclosure Obligations
| Frequency | Report | Key Ownership Data |
|---|---|---|
| Quarterly | Consolidated List of Stockholders | Names, citizenship, direct/indirect % holdings, BO identifiers. |
| Annually | General Information Sheet (GIS) to SEC and BSP | Capital structure, share movements, board composition, ultimate BO chart. |
| Event-driven | • Change in control • Material litigation against a significant owner • Breach of CAR due to shareholder withdrawal |
Must be reported to BSP within 10 calendar days. |
Failure to comply disqualifies directors/officers and may trigger Monetary Board sanctions, including suspension of new business lines, monetary penalties, or revocation of the certificate of authority.
9 Emerging Issues & Reform Proposals (2024-2025)
Further Foreign-Equity Liberalisation. Business groups lobby for extending R.A. 10641’s full-ownership privilege to stand-alone trust corporations. Draft bills in the 19th Congress propose amending §79 GBL to delete “same as banks” and substitute a reciprocity test rather than a hard cap.
Group-Wide Supervision and Resolution. The BSP’s proposed Financial Institution Recovery and Resolution Act (FIRRA) would treat trust corporations belonging to a banking group as part of a “resolution group,” affecting parent-subsidiary cross-holdings and creditor ranking.
Beneficial-Ownership Transparency. A 2024 BSP draft circular will shorten the look-through threshold from 5 % to 2.5 % and adopt real-time BO register updates, necessitating more granular shareholder monitoring systems.
Digital-Asset Custody. Trust corporations exploring cryptocurrency custody face ownership-fit-and-proper reviews that include tech-risk competence of controlling shareholders—an extra filter beyond the traditional financial-integrity test.
10 Take-Away Checklist for Potential Investors
- Plan for the 40 % ceiling unless and until §79 GBL is amended.
- Secure BSP pre-approval well ahead of any share sale or subscription that crosses the 10 % line.
- Ensure traceable beneficial-ownership documentation down to the last natural person ≥ 2 layers away.
- Budget for lock-in capital—dividends may be restricted by prudential ratios.
- Align governance rights (board seats, veto matters) with BSP’s expectations on proportionality and fit-and-proper stature.
11 Conclusion
While the Philippines continues to open its financial sector, trust corporations remain governed by bank-style ownership caps and rigorous prudential vetting. Understanding the intricate overlay of the Constitution, the GBL, BSP regulations, and corporate-law doctrines is indispensable for structuring equity, negotiating shareholder agreements, or advising on M&A deals involving a trust corporation. Mastery of these rules not only ensures compliance but also preserves the credibility essential to fiduciary business.
Prepared 27 May 2025, Manila (UTC+8).