October 4, 2019 | 7:51 pm [ bworldonline.com ]
THE Securities and Exchange Commission (SEC) released on Friday its proposed amendments to the rules guiding real estate investment trusts (REITs) in the Philippines.
The corporate regulator formalized through two notices uploaded on its website its planned changes on Republic Act No. 9856, or the REIT Act of 2009. The proposal includes easing public ownership requirements, requiring proceeds from a REIT offer to be reinvested in the country, adding oversight powers in related party transactions and imposing sanctions for administrative violations.
The SEC is seeking public comments on the draft rules until noon of Oct. 18.
“The proposed amendments align with our mandate to promote the development of the capital market toward the democratization of wealth and broadening of participation in the ownership of enterprises,” SEC Chairperson Emilio B. Aquino said.
As announced in earlier reports, the SEC’s draft amendment proposes to reduce the public ownership requirement for REITs to a 33% minimum public float from the current 40% on the first year.
It also wants to require all income generated from a REIT offer to be reinvested in the Philippines, with the goal of promoting growth in the capital market and Filipino participation in real estate.
The SEC also proposes to create a special committee which will be tasked to review related party transactions of REITs. The goal is to tighten the SEC’s review process of related party transactions. It is also requiring listed firms to disclose all such transactions within three days from execution.
REIT fund managers will also be required to obtain a license from the SEC, which will be given if it fulfills the requirement of having a minimum paid-up capital of P10 million for both local and foreign corporations. Its experience in property management and real estate will now also be considered for the three-year track record requirement for fund managers.
Should REITs violate any of the rules, the SEC is also seeking powers to impose administrative sanctions.
The release of the amended REIT rules is expected to encourage companies to launch REITs in the country. — Denise A. Valdez
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