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Philippine corporate governance hindered by highly concentrated ownership, OECD says

by June 30, 2025
June 30, 2025

CONCENTRATED corporate ownership, particularly among family owned listed firms, undermines corporate governance, the Organisation for Economic Co-operation and Development (OECD) said.

“Concentrated ownership… can undermine corporate governance,” it said in its Asia Capital Markets Report issued last week.

The OECD described the Philippines’ concentration of corporate ownership as among the highest in Asia.

“The average equity held by the three largest shareholders in each company exceeds 50% in 11 out of 18 countries,” it said.

Ownership concentration is particularly high in Mongolia (75%), Sri Lanka (73%), Indonesia (71%) and Philippines (63%).

“These ownership structures often blur the lines between ownership and management, which can lead to the appointment of successors based on family ties or loyalty rather than qualifications, increasing the risk of poor leadership and weak oversight,” it said.

The OECD said corporate governance weaknesses and concentrated ownership structures continue to weigh on investor confidence in some Asian markets.

It said such controlling shareholders may choose to benefit themselves at the expense of minority shareholders through related-party transactions, asset transfers or the appropriation of company resources for personal or familial use.

The OECD warned that this could undermine value for outside investors and dampen transparency, accountability and long-term corporate performance.

“Regulatory enforcement is particularly limited in parts of Southeast Asia, including in jurisdictions such as Indonesia and the Philippines,” it said.

The OECD cited limited financial, human and technical resources as factors that constrain the enforcement of corporate governance frameworks.

“There is other evidence of constraints in regulatory capacity in the region. For example, in Indonesia and the Philippines, the number of insider trading cases reported is very low, suggesting limited enforcement activity due to a lack of investigative resources,” it said. — Aubrey Rose A. Inosante

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