PHILIPPINES Law and Practice Contributed by: Raoul Angangco, Sylvette Y Tankiang, Kristin Charisse C Siao and Ma Carla Mapalo, Villaraza & Angangco
with the intention to share in both profits and risks. An acquisition of shares may be considered a joint ven - ture if joint control exists among the new joint venture partners after the acquisition. Other definitive agreements that grant parties the option to acquire the shares of stock or other conver - sion agreements that allow other entities to gain or obtain control over an entity, may be subject to the notification requirement. The following transactions are exempt from the rules on compulsory notification: • internal restructurings within a group of companies wherein the acquired and acquiring entities have the same UPE; • consolidation of ownership wherein the merger or acquisition involves several entities controlled by the same natural person and there is no change in control over the acquired entity post-transaction; • land acquisition not for the purpose of obtaining control; and • joint ventures formed by winning bidder(s) in solic - ited public-private partnership projects under the Build Operate Transfer Law, upon application by the procuring government agency. 2.4 Definition of “Control” “Control” refers to the ability to substantially influ - ence or direct the actions or decisions of an entity, whether by contract, by agency or otherwise. Control is presumed to exist when the parent owns, directly or indirectly, through subsidiaries, more than half of the voting power of an entity, except in exceptional circumstances where it can clearly be demonstrated that such ownership does not constitute control. Control may also exist even when an entity owns 50% or less of the voting power of another entity, namely when: • there is power over more than half of the voting rights by virtue of an agreement with investors; • there is power to direct or govern the financial and operating policies of the entity under a statute or agreement;
• there is power to appoint or remove the majority of the members of the board of directors or equiva - lent governing body; • there is power to cast the majority votes at meet - ings of the board of directors or equivalent govern - ing body; • ownership exists over or the right to use all or a significant part of the assets of the entity; or • rights or contracts exist that exert decisive influ - ence on the entity’s decisions. With respect to joint ventures, the granting of veto powers may also be deemed to vest control if the veto rights relate to strategic decisions in the busi - ness policy or activities of the corporation, such as the appointment of corporate officers or key management personnel, determination of the budget, adoption of and amendments to the business plan and other simi - lar aspects of business management. The existence of any such right, depending upon the content of the veto right and the importance of this right in the con - text of the specific business of the corporation, may be sufficient to constitute control. 2.5 Jurisdictional Thresholds See 2.1 Notification . There are no special jurisdic - tional thresholds applicable to specific sectors. 2.6 Calculations of Jurisdictional Thresholds The Size of the Party Test is calculated based on the UPE’s assets and revenues in the Philippines, includ - ing all entities it controls. The Size of the Transaction Test is calculated based on the value of the assets being acquired and/or gross revenues generated by the assets being acquired or of the acquired entity and entities it controls, depending on the type of transaction. In determining the value of the assets being contrib - uted for joint venture transactions, the following will be included: • all assets that the joint venture partners agreed to transfer or for which agreements have been secured for the joint venture to obtain at any time; and
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