Emil Aquino, head of the SEC’s Non-Traditional Securities Department, said he would sit down with members of the Federation of Pre-need Plan Companies Inc. next week to discuss the possibility of taking over the operations of Asian Diamond, which has been hard pressed to meet the SEC’s minimum paid-up capital requirement.
Aquino said the move is intended to encourage consolidation and mergers in the industry, allowing smaller pre-need firms to cope with their financial difficulties and meet the minimum paid-up capital and trust fund requirements.
He said Asian Diamond would need around P35 to P50 million to correct its trust fund deficiency. While it cannot sell new plans, Asian Diamond is required to continue meeting obligations to existing planholders.
The SEC earlier reimposed a moratorium on the acceptance of applications for the establishment of new pre-need companies unless the new firm to be created will take over the operations of an existing pre-need company.
The moratorium does not apply to companies that will acquire the shares and/or the assets and liabilities of existing pre-need companies.
Under 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 type of plan.
Pre-need firms are required to gradually build up their capital to P100 million.
To be able to sell two plan types, pre-need firms must have a paid-up capital of P75 million and for three-plan types and those selling traditional education plans, a P100-million paid-up capital must be maintained.
New entrants, on the other hand, are required a paid-up capital of P100 million.
The minimum capital requirements are meant to ensure that the companies are able to meet their obligations to their planholders.
For this year, the SEC has issued dealership licenses to only 43 pre-need companies compared with the 46 licenses renewed in 2002.