SEC requires 30-day period for registration of shares under FIA

The Securities and Exchange Commission (SEC) has ruled that any application for registration under the Foreign Investments Act (FIA) resulting from the issuance of shares of stocks shall be filed within 30 days from the transfer of such shares.

Previously, the SEC had no policy on the period of time within which to file FIA application when the same is either the result of an issuance of shares of stocks out of the unissued portion of the authorized capital stock or through transfer of shares.

Benito Cataran, head of the SEC’s Company Registration and Monitoring Department, said it is left to the discretion of the applicant-corporation when to file said application, which period of time ranges from one week to one year from said issuance or transfer of shares.

According to the SEC, foreign investments are gradually returning to the country following a number of reforms initiated by the government to regain the confidence of both local and international investors.

Based on a report prepared by the SEC’s Economic and Research Department, foreign direct investments (FDIs) in new and existing domestic stock corporations and partnerships grew by 27.13 percent in 2002.

FDIs that were infused in new and existing domestic firms reached P5.2 billion as against P4.09 billion in 2001. The 2002 figure does not include the P25.7 billion investment made by Japan’s Kirin Brewery Ltd. in food and beverage giant San Miguel Corp., the SEC said.

Apart from this, there was a significant increase in additional equity investments in domestic corporations. In particular, the increase in additional paid-up capital stock jumped by 102.89 percent to P77.32 billion from P38.11 billion. Increases in authorized and subscribed capital stock likewise grew by 124.21 percent and 104.44 percent, respectively.

According to the SEC, the marked increase in subscribed and paid-up capital stock resulted from the significant equity infusion of Kirin in San Miguel.

The SEC said efforts to implement regulations intended to protect and promote the interest of planholders and investors in pre-need and financing companies also pushed the growth of capital expansions.

Pre-need firms were required to build up their authorized capital stock to P100 million to ensure their financial viability.

Meanwhile, new investments registered with the SEC declined by 4.5 percent to P67.81 billion compared with P71.01 billion in 2001. The number of domestic entities that applied for a corporate license with the SEC stood at 11,435.

The subscribed and paid-up capital stock of these new companies also declined. In 2001, new companies’ subscribed capital stock totaled P26.62 billion and their paid-up capital reached P17.59 billion. These were lower by 5.2 percent and .05 percent, respectively.

The SEC noted that the corporate failures in the past two or three years have been a result of corporate misdeeds and not due to the economic recession that started in March 2001 nor the 9/11 terrorist attacks which further deepened investor distrust in the global financial system.

Nevertheless, the SEC said it is bent on pursuing the necessary reforms to revitalize the capital market. These reforms include new policies to strengthen the market and support for new legislation to install the suitable infrastructure.