SEC gives pre-need firm deadline

The Securities and Exchange Commission has given pre-need plan firm Primeplan International Corp. until the end of the month to meet the minimum paid-up capital requirement of P50 million.

At present, Primeplan’s paid-up capitalization stands at P35.2 million. Under the SEC rules, a pre-need plan firm must have a paid-up capital of at least P50 million to be able to sell at least one plan type.

Primeplan, which sells pension plans, had 6,336 planholders as of April this year.

Emilio Aquino, head of the SEC’s Non-Traditional Department, said Primeplan would face suspension if it failed to comply with the required minimum paid-up capital within the prescribed period. Pre-need firms are required to gradually build up their capital to P100 million.

The SEC earlier issued a circular providing for a P50-75-100 million paid-up capital formula depending on the number of plan types being sold by pre-need companies. For one-plan type, the minimum capital is P50 million; for two-plan types , P75 million and for three-plan types and those selling traditional education plans, P100 million.

New entrants are required to put up a paid-up capital of P100 million as a market entry requirement.

Before the passage of the new rules, only eight companies were considered as compliant. The compliance rate of pre-need companies has reached 98 percent with 45 out of the current 46 licensed companies having complied with the circular.

To date, 23 pre-need companies have complied wit the P100 million paid-up capital requirement, which make them eligible to sell three plan types, three companies have met the P75 million levels and 18 other companies have met the P50 million requirement to allow them to at least sell one plan type.

Given a weak economic environment, pre-need plan firms experiencing tight liquidity problems are being urged to merge with bigger pre-need plan companies to stay afloat in this highly competitive business.