Congress body okays IRR for SPV Act

The Congressional Oversight Committee approved Wednesday night the proposed implementing rules and regulations (IRR) of the Special Purpose Vehicle (SPV) law, which will jumpstart the government’s efforts to turn around the financial sector’s distressed assets.

Justina Callangan, head of the SEC’s Corporation Finance Department, said the COC has agreed to incorporate some changes proposed by several financial institutions and the corporate watchdog agency in the IRR.

The COC agreed to allow an SPV to pay for non-performing assets (NPAs) it will acquire.

Under the original IRR, the note of an SPV is not acceptable as a form of payment because it is not a property of SPV.

The SEC said payment through notes should be allowed since from the point of view of the selling financial institutions, such note is property and thus, it should follow the same treatment accorded to an SPV.

The COC has also approved a provision that requires all IUIs (investment units instruments) to be registered with the SEC despite objections from a number of financial institutions.

The rules have been prepared by the SEC in consultation with the Department of Finance, Bangko Sentral ng Pilipinas, the Bureau of Internal Revenue, and the private sector. SEC is the primary implementing agency of the SPV law.

Signed last Jan. 10 by President Arroyo, the SPV will lay down the framework and grant tax perks to SPVs or asset management companies which would acquire, turn around and resell the financial sector’s NPAs. – Zinnia Dela Peña