The Market Monitor Minding the Nation's Business
By Riza Lozada
The Securities and Exchange Commission (SEC) is pushing for a lower minimum float public requirement of real estate investment trusts (REIT) at 33 percent from the current 40 percent to encourage property ownership and promote development of the capital market.
“The SEC is reviewing the minimum public float requirement under the REIT Act as well as studying any legislative amendment it may require… SEC is ready to change the rules on minimum public ownership (MPO),” SEC chairperson Teresita Herbosa said.
Herbosa said the original implementing rules and regulations (IRR) of the Republic Act No. 9856 or The REIT Act of 2009 prescribes a minimum 33-percent MPO.
She noted they are also looking to incorporate in the amended implementing rules and regulations (IRR) for REIT the need to review the minimum public free float within five years and determine “if there is a need to increase.”
“Maybe, just reserve the right to increase it when the markets are okay,” she told reporters. MPO refers to the portion of common shares public investors must hold in the trust required to list on the Philippine Stock Exchange (PSE).
The REIT Act lapsed into law in 2009 but was stalled by issues on high MPO requirement and tight taxation framework.
Its MPO requirement is 40 percent for the first two years after listing, and 67 percent by the third year. Industry market participants are pushing to revert to the original set of IRRs which they believe to be “more workable”.
On taxation, Herbosa bared that the SEC, Bureau of Internal Revenue (BIR) as well as the Financial Executives Institute of the Philippines (Finex) and Capital Market Development Council (CMDC) will start studying about making reforms in corporate taxes in the capital markets.
“A reform is trying to see where we probably be able to help people get into business, save money, at the same time, we need to see if there is enough revenues for government undertaking the infrastructure projects during this golden age of infrastructure,” she said.
Herbosa expressed no objection to the removal of initial public offering (IPO) tax proposed by the PSE, noting “I was told we are the only country with IPO tax.” She said the administration is pushing forward with the income tax reforms but is proposing to take away some exemptions.
“Probably, we’ll also do that in the capital markets –do away with the IPO tax then, maybe we can increase the stock transaction tax even a little,” she added.