The Securities and Exchange Commission (SEC) is pushing for the amendments in the Corporation Code, Securities Regulation Code (SRC) and Real Estate Investment Trust (REIT) to spur the creation of new businesses.
“We hope to encourage more people to go into business through the corporate vehicle. We also want more corporate governance culture to come in,” said SEC chairperson Teresita J. Herbosa.
Herbosa said the SEC hopes to get Congress’ nod to revise the two-decade-old Corporation Code.
While it is not a priority bill unlike the Rationalization of Fiscal Incentives Law and the Freedom of Information Bill, Herbosa said the amendment of the Corporation Code has gained the support of numerous members of the House of Representatives and Senate.
The proposed amendments took two years to be finalized, including one year for several public and stakeholder consultations, Herbosa said.
The Corporation Code, which governs firms’ registration and the monitoring of companies’ compliance with reportorial requirements, was last amended in 1980.
Highlights of the amended Corporation Code include the perpetual term for companies, the provision for a one-person firm, SEC’s power to call a stockholders meeting and a review on de facto mergers.
SEC targets allowing the creation of one-person stock corporation, but these firms will still be required to submit reports like financial statements and general information sheets.
The corporate watchdog is also looking at amending the SRC that took effect in 2000.
“For the SRC, we already have the first draft but I want to consolidate other proposals from the private sector,” Herbosa said.
Herbosa said the SEC will hire a special counsel to look into the amendments, which will be finalized this year.
Reviving the shelved REIT is also part of the SEC’s efforts to facilitate the capital markets.
The Congress is expected to conduct hearings on possible revisions and clarifications in the REIT Law that took effect in December 2009. It approved the creation of REITs — corporations that use a pool of investor funds to purchase and manage real estate assets.
However, implementing rules of the Bureau of Internal Revenue and SEC relating to the minimum public ownership, the imposition of value-added tax on property transfers and the requirement of escrow dampened the interest of property firms.
“We’ll also give our opinion when they call us. But we are open to amendments that would really help in this REIT contributing to the economy,” she said.
Several property giants earlier expressed interest in REIT ventures, among them SM Prime Holdings Inc., Ayala Land Inc. and Gokongwei-led Robinsons Land Corp. However, no REIT companies have yet to list in the local bourse given restrictive taxation policies.
The Philippine Stock Exchange (PSE) estimates that the Philippines can generate at least $2.4 billion in new investments from the private sector because of the additional capital that the REIT structure can provide.