MANILA, Philippines - The Department of Finance (DoF) and the Bureau of Internal Revenue (BIR) have asked the Securities and Exchange Commission (SEC) to amend its implementing rules on real estate investment trust (REIT) and require firms to sell more shares to the public.
The DoF and BIR want the SEC to amend rules on minimum public ownership and capitalization requirement.
Under the proposed amendment, REIT companies should sell 51% of their outstanding shares to the public, against the earlier required minimum of 33.3%.
The public float should also increase to 67% before the end of the third year of a REIT firm's establishment.
The higher public ownership requirement is consistent with the thrust of the law, which is to make REITs public companies, according to the SEC.
The DoF and the BIR also want to add a requirement, mandating REIT firms to invest 50% of fresh capital to develop infrastructure projects in the first year, and the rest of the funds should be invested until the end of the third year.
"Finance Secretary Cesar Purisima and the Bureau of Internal Revenue, through commissioner Kim Jacinto-Henares, last week requested the Securities and Exchange Commission to amend implementing rules and regulations of the REIT Act of 2009," SEC said in a notice posted in its website.
The SEC said the BIR also suggested to do away with the appointment of a property manager on the ground that "REIT itself should be construed as a property company that is expected to be an expert in dealing with property management."
"Moreover this expertise of a REIT in dealing with property is the major consideration of the public in investing with it. Aside from expertise, a REIT has a name and reputation that has positive effect on public perception. Thus contracting the service of a property manager would be illogical and unreasonable for a REIT," the BIR said.
The SEC, meanwhile, noted it will accept comments from all concerned sectors, including real estate companies, regarding the proposed amendments on or before October 29, 2010.
Among the firms that previously expressed interest in doing REIT offers are Ayala Land Inc., Robinsons Land Corp., and SM Prime Holdings Inc.