SEC seeks to lower public float for REIT firms to 30%
MANILA, Philippines – The Securities and Exchange Commission (SEC) is ready to submit a proposal to the Department of Finance (DOF) to bring down the minimum public float requirement for real estate investment trust (REIT) firms to 30%.
This is to attract potential REIT issuers, said SEC Chairperson Teresita Herbosa.
REIT is a stock corporation created primarily for the purpose of owning income-generating real estate assets.
The Philippines' REIT law was passed in 2009, yet no company has put up an REIT yet due to stringent rules like the 67% minimum public float requirement.
"We are already finished with the study and we'll definitely propose a lower minimum public ownership requirement and maybe just reserve the right to increase it when the markets are okay," Herbosa said in an interview on the sidelines of a forum held in Shangri-la at the Fort.
Herbosa said the minimum public ownership for REIT may be subject to review by the SEC after 5 years.
Aside from the minimum public ownership, Herbosa said the government should also address another important concern of potential REIT issuers, which is the imposition of value added on the transfer of assets to REIT firms.
This issue will be addressed by the Bureau of Internal Revenue (BIR).
Other than REIT, Herbosa said the BIR was tasked by the DOF to start reviewing the corporate taxes on capital markets, including initial public offering (IPO) tax and stock transaction tax.
Increase stock transaction tax
While Herbosa is open to removing IPO tax, she said there is a need to increase stock transaction tax.
"Personally I don't have any objection to that (removal of IPO tax) because I was told that we're the only country with IPO tax. But we have to increase stock transaction tax. So maybe if we increase the minimum public ownership, we will also bat for maybe a little higher stock transaction tax," Herbosa explained.
The review of the corporate taxes on capital markets will be undertaken by the SEC together with the Financial Executives Institute of the Philippines and the Capital Market Development Council.
"The tax reform that we are trying to see is where we will probably be able to help people get into business, save money," Herbosa said.
"But at the same time, we need to see if there is enough revenues for government undertaking the infra projects during this golden age of infrastructure," she added.
Meanwhile, the SEC is now reviewing two new products that will boost the domestic capital markets.
These are the Dollar-Denominated Securities and the rules on Public-Private Partnership listing which will pave the way for the listing of PPP firms on the stock exchange. – Rappler.com