SEC says foreign ownership rules may be more liberal
The Securities and Exchange Commission said its final foreign ownership rules will probably be more liberal than its current draft.
The SEC said that's because of an entry of judgment -- or a clarification -- issued by the Supreme Court.
On October 15, the Supreme Court appeared to say that the rule on foreign ownership in the telco, media and other industries applies to all types of shares of stock.
That would make it very difficult for companies to design ways to allow more foreign investment while complying with the constitutional rules.
But the SEC now says it recently received an entry of judgment -- or clarification -- from the Supreme Court that says the rule applies only to voting shares.
That would give companies more leeway to take foreign investments as long as control stays with Filipinos.
The Philippine Stock Exchange, Philippine Long Distance Telephone Co., and other companies had warned that the stricter rules could have forced foreign investors to sell over P300 billion of shares in various companies.
That might have resulted in a steep decline in share prices.
Meanwhile, PLDT Director Ray Espinosa welcomed the statement of the SEC on more liberal foreign ownership rules.
"It is good news for the country as it will clarify concerns of foreign investors and will lay the added groundwork for more foreign direct investments," Espinosa said.
Other businessmen also welcomed the SEC's comments.
"We are supportive of SEC's efforts to implement the Foreign Investments Act in a way that will encourage foreign investments. Determining Filipino ownership requirements based on voting shares is a step in that direction," said Ramon Opulencia, president of FINEX and treasurer of Ayala Corp.
"The SEC's recent comment will help reduce jitters in the capital market. Existing foreign investors should not be worried about being forced to sell their stakes. We will continue to work with the SEC and government agencies to come up with final rules that will add clarity and spur market development," said Ed Francisco, president of Management Association of the Philippines.
Former PSE president Francis Lim expressed hope the SEC will not come up with a rule that will discourage foreign investors.
"I hope that the SEC will not come up with a rule that the economic benefit accruing to foreign investors shall be limited to their allowable foreign ownership, regardless of the amount of capital they invest. Such rule will greatly discourage foreign investors from investing," Lim said.
ANC News Now, January 11, 2013.