The Philippine Securities and Exchange Commission has issued rules requiring all listed companies to discontinue the classification of common shares into Class A and Class B, repealing legacy provisions designed to monitor foreign ownership limits in order to improve the efficiency of equity trade execution and settlement. SEC Memorandum Circular No. 10, Series of 2025 repeals a 1973 framework tied to the 40% foreign ownership cap, under which Class A shares could only be issued to Filipino citizens while Class B shares could be issued to Filipinos and foreigners. The SEC cited price disparities between the classes, administrative inefficiencies for market participants and the Securities Clearing Corporation of the Philippines, and technological advances in the Philippine Stock Exchange’s trading system that allow foreign ownership limits to be monitored and enforced without share classification. Listed companies with Class A and Class B shares must amend their articles of incorporation within one year from the rules’ effectivity; during the amendment period, regular-board buyers must receive the specific class purchased and cannot be compelled to accept an alternative class. If a trade results in a breach of allowable foreign ownership limits, the foreign buyer must, through its broker, dispose of the excess shares at the prevailing market price as soon as practicable and the proceeds must be returned to the investor, with same-day disposal required if discovered during trading hours and otherwise at the opening of the next trading day. Violations are subject to penalties, after notice and hearing, under Section 54 of Republic Act No. 8799, the Securities Regulation Code.

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