PHILIPPINES Trends and Developments Contributed by: Francis L. Fragante, Jennifer Marie G. Castro and Carriz Andrea F. Nana, Cruz Marcelo & Tenefrancia
Registration Processes in Key Industries The Securities and Exchange Commission (SEC) has continued its efforts to simplify registration processes for companies engaged in key industries with the fol - lowing issuances: • Real Estate Companies with Rental Pool Agree - ments (SEC RENT) through SEC Memorandum Circular (MC) No 12 s. 2024; and • Power Generators and Distribution Utilities (SEC POWERS) through SEC MC No 4 s. 2024. This follows previous SEC issuances for agribusiness - es under SEC MC No 8 s. 2023 and Hospitals under SEC MC No 11 s. 2017. SEC RENT Under SEC RENT, the SEC recognised the sustained rise in rental property developments in the Philip - pines, noting that these projects present meaningful growth opportunities for developers, investors, prop - erty owners and other stakeholders. Participation in rental property projects increasingly involves pooled investment arrangements, which may include the sale or public offer of investment contracts, certificates of participation, or profit-sharing agreements issued to unit owners acting as investors. To provide regulatory clarity, SEC RENT sets the guidelines for registering these securities before they are offered to the public. The coverage of SEC RENT includes the issuance of investment contracts, certificates of participation, profit-sharing agreements and other forms of securi - ties issued by real estate developers and/or managers in relation to rental pool agreements. The issuance defines the term “rental pool agree - ments” as investment contracts whereby the appli - cant sells or offers units in real estate projects such as condominiums, hotels, resorts or dormitories to pro - spective buyers on the condition that the buyers shall contribute the units, whether mandatory or optional, to a rental pool managed and operated by the applicant or a third-party operator. Under these arrangements, investors receive a share of rental income based on
agreed commercial terms, typically drawn from the revenue generated by leasing the units to third parties. Under SEC RENT, the registrant is required to obtain clearances from the SEC’s Company Registration and Monitoring Department (CRMD), Corporate Govern - ance and Finance Department (CGFD), Enforcement and Investor Protection Department (EIPD), Office of the General Counsel (OGC) and Office of the General Accountant (OGA) before filing its registration state - ment with the Markets and Securities Regulation Department (MSRD). After completing pre-filing activities, the registrant must submit the documentary requirements to the MSRD for pre-processing, namely the OGA Pre-Eval - uation Clearance Form, SEC RENT Pre-evaluation Checklist Form, SEC RENT Form, Prospectus and all other required exhibits. Thereafter and upon pay - ment of the filing fees, the MSRD will begin the 45-day Under SEC POWERS, the SEC provided guidelines for a simplified registration of securities for power gen - eration companies (PowerGen) and distribution utili - ties (DU) companies, which are mandated under the Electric Power Industry Reform Act of 2001 (EPIRA) and Energy Regulatory Commission (ERC) Resolution No 09, Series of 2011, as amended, to offer and sell to the public a portion of not less than 15% of their common shares of stocks. Under SEC POWERS, the registrant is required, among other procedures, to obtain clearances from the relevant SEC departments, namely the CRMD, CGFD, EIPD, OGC and OGA before filing its registra - tion statement with the MSRD. review period. SEC POWERS For both SEC RENT and SEC POWERS, upon favour - able consideration by the Commission En Banc of the registration statement, the MSRD shall issue a pre- effective letter. Upon compliance with the require - ments, the MSRD shall issue an Order of Registration and/or Permit to Sell Securities to the Public. The sale of the securities via public offering shall commence within ten business days from the date of the effec - tivity of the registration statement and shall continue
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