Thursday, June 4, 2009 | MANILA, PHILIPPINES [ BusinessWorld Online ]
CORPORATE REGULATORS have permanently barred a group of firms planning to build Boracay’s largest condominium-hotel complex from soliciting investments for violating securities rules.
The Securities and Exchange Commission (SEC) ordered Crown Regency Holiday International, Inc., Fuente Triangle Realty Development Corp., Megatrend Realty Network, Inc. and Boracay Multiple Properties Developer to stop selling and advertising investment contracts for the planned Boracay Crown Regency, which was to be the popular tourist spot’s largest condominium-hotel complex.
The companies had appealed a temporary cease-and-desist order (CDO) issued in March, but the SEC rejected the petition, saying the firms continued to offer and sell unregistered securities.
The corporate regulator made the CDO permanent last week, but published the order on its Web site only yesterday.
In a telephone interview yesterday, Augusto M. Macam, a lawyer and official of Boracay Multiple, said his group would file another motion of reconsideration, claiming there was no violation of the Securities Regulation Code and that shares were issued only to property developer Fuente Triangle Realty and J. King and Sons Co., Inc., owner of the land, in 2007.
Mr. Macam argued that the Securities Regulation Code allows the non-registration of securities for sale if these would be limited to 20 people and disposed of within 12 months.
The SEC order said the firms in question failed to prove that shares were not sold to the public.
"Respondents’ Web site [showed] that [they] continuously offer and advertise for sale unregistered securities and [there are] no changes and modifications in their investment scheme," the SEC’s enforcement department said.
Boracay Multiple’s Web site also showed that the company was "indiscriminately" offering and selling preferred shares and investment contracts to the public, complete with details about the project, a profit-sharing scheme, and a reservation application form, among others, the department added.
While the SEC order won’t affect the development of Boracay Crown Regency, the proponents want to straighten the record, Mr. Macam said.
Mr. Macam admitted that Boracay Multiple issues shares but only when buyers purchase units.
"We are giving [investors] equity or share that is equivalent to specific units ... Once the property is titled, the shares would be redeemed in exchange. It’s just an assurance, we don’t even have to give the shares out. It’s just to show how serious we are," he explained.
The P1.2-billion Boracay Crown Regency project, which will have 457 hotel rooms and a convention center capable of accommodating 1,800 people, has been the subject of criticism by environmental groups and the government.
Last year, the Environment department ordered J. King and Sons to suspend construction at the Boracay site, saying it would destroy a nearby wetland. — Don Gil K. Carreon
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