A Securities and Exchange Commission (SEC) official clarified during an impeachment trial that Philippine corporate law does not mandate companies to declare dividends to shareholders.
During the impeachment trial of Vice President Sara Duterte, Gerardo del Rosario, Director of the SEC’s Company Registration and Monitoring Department, testified that the Corporation Code does not require companies to declare dividends to stockholders. He explained that Section 42 of the Corporation Code states that the board of directors “may declare dividends” from unrestricted retained earnings, with the keyword “may” indicating discretion rather than obligation. Del Rosario also highlighted some exemptions from declaring dividends, such as when the corporation plans expansion projects, is restricted by loan agreements without lender consent, or needs to retain earnings for special reserves. The testimony arose in the context of disclosure issues involving dividend declarations by companies linked to the Vice President and her husband between 2004 and 2025, with several firms not declaring dividends or not submitting financial statements. Del Rosario emphasized that the SEC does not have access to determine the Vice President’s substantial shareholder status or other asset information beyond SEC jurisdiction, such as inheritance or property sales. This testimony underscores the discretionary nature of dividend declarations under Philippine corporate law, which affects transparency and assessment of officials’ financial interests.
Sources referenced:
- https://www.gmanetwork.com/news/topstories/nation/1003236/sec-witness-law-does-not-require-firms-to-declare-dividends/story/
