Financial sector urges passage of RICA bill

The passage into law of the proposed Revised Investment Company Act (RICA), currently pending in the Senate, will help develop the country’s capital market.

In fact, Philippine Stock Exchange (PSE) president Francis Lim said that Congress has formed a committee composed of representatives from the Investment Houses Association of the Philippines (IHAP), Investment Companies Association of the Philippines (ICAP), the Securities and Exchange Commission (SEC), the Financial Executives of the Philippines (Finex), PSE, and the sponsor/s of the bill.

Lim explained that the measure is essential not only for the development of the capital markets but also for the protection of the investors.

The ICAP, in fact , has been at the forefront for the passage of the RICA.

In a letter addressed to Sen. Edgardo Angara (the bill’s principal author) and the Department of Finance, ICAP president Efren Cruz said the RICA will likewise boost the stock of the mutual funds industry, which play a critical role in the development of the country’s capital markets.

"The Investment Company Act (ICA), which was passed in the 1960’s, is too restrictive, obsolete and was designed to largely to control the scams that plagued the industry then," Cruz said.

Yet, mutual funds remain to be the most transparent and investor participative investment scheme as well as regulated with the most globally accepted supervision standards and practices.

In addition to helping develop the capital markets, mutual funds also contributes to the national coffers. Last year, mutual funds either paid or provided taxes and government fees amounting to over P300 million.

The RICA, which is also supported by the SEC and the Capital Market Development Council (CMDC), helps to level the playing field between mutual funds and other collective investment schemes. It allows foreigners to sit in the boards of mutual funds, and mutual funds can offer shares beyond their original authorized capital without the need to comply with the 25-25 rule for applications for capital increase. – TPT