Removal of foreign equity restrictions in companies and investment houses sought
April 21, 2015 at 13:55
PRESS RELEASES
Removal of foreign equity restrictions in companies and investment houses sought
Total views: 31 21 April 2015 09:10:25 AM
Writer: Rowena B. Bundang, Media Relations Service-PRIB
A House leader is seeking to remove the foreign equity restrictions in financing companies, adjustment companies, lending companies and investment houses for the government to attract and promote more foreign direct investments into the country.
Deputy Speaker and Isabela Fourth District Rep. Giorgidi B. Aggabao said removing or reducing the limitations on foreign investments or participation in certain activities or areas listed in the Foreign Investment Negative List (FINL) becomes imperative if the country wants to attract and welcome more foreign direct investments.
“This is also in keeping with the major reforms in the financial sector and the government’s thrust of bringing in more capital into the country that would support the economy and provide more jobs for the people,” said Aggabao, a lawyer accountant.
Aggabao’s proposal embodied in House Bill 5544 or the proposed “Foreign Investment Liberalization Act of 2015” is now pending at the House Committee on Trade and Industry chaired by Rep. Mark A. Villar (Lone District, Las Piñas City).
The bill declares it is the State policy to attract, promote and welcome productive investments from foreign individuals, partnerships, corporations, and governments, including their political subdivisions, in activities, which significantly contribute to industrialization and socio-economic development.
It is also the State policy to improve investment liberalization and facilitation in the country to comply with its ASEAN Economic Community Commitments, the bill provides.
Given the country’s development objectives or thrusts and the need to increase investments to achieve these, the bill provides that removing or reducing the limitations on foreign investments or participation in certain activities or areas listed in the FINL, as provided for in specific laws, becomes necessary.
Under the measure, the FINL shall mean “a list of areas of economic activity whose foreign ownership is limited to a maximum of 40 percent of the outstanding capital stock in the case of a corporation or capital in the case of partnership.”
It defines foreign investment as “an equity investment made by a non-Philippine national. Provided, however, that for purposes of determining foreign ownership, peso investments made by a non-Philippine national shall be considered. Provided, further, that only foreign investments in the form of foreign exchange and/or other assets actually transferred to the Philippines and duly registered with the Bangko Sentral ng Pilipinas and profits derived therefrom can be repatriated.”
It refers to Existing Foreign Investment as “an equity investment made by a non-Philippine national duly registered with the Securities and Exchange Commission (SEC) or the Bureau of Trade Regulation and Consumer Protection in the form of foreign exchange and/or other assets transferred to the Philippines.”
The bill provides that all statutory laws and implementing rules and regulations that impose nationality requirements or foreign investment limitations on adjustment companies, lending companies, financing companies and investment houses are hereby repealed, except as otherwise provided in the proposed Act, and subject to the provisions of the Constitution.
The measure seeks to amend Section 332 of Presidential Decree 612, otherwise known as “The Insurance Code,” as amended by Republic Act 10607, so that “No person, partnership, association, or corporation shall act as an adjuster, as herein defined, unless authorized so to act by virtue of a license issued or renewed by the Commissioner pursuant to the provisions of this Code.”
It also seeks to amend Section 6 of RA 9474, otherwise known as the “Lending Company Regulation Act of 2007” pertaining to Citizenship Requirements so that “A lending company may be owned up to 100% foreign nationals. Provided, however, where the loan is secured by land, a lending company, more than 40% of whose capital is owned by foreign nationals, shall not bid or take part in any sale of such land as a consequence of such mortgage. No foreign national may be allowed to own stocks unless the country of which he is a national accords reciprocal rights to Filipinos.”
The bill likewise seeks to amend Section 6 of RA 8556, otherwise known as the “Financing Company Act of 1998,” so that on the Form of organization and capital requirements, “Financing companies shall be organized in the form of stock corporations, may be owned up to 100% by foreign nations, and shall have a paid-up capital of not less than Ten million pesos (P10,000,000) in case the financing company is located in Metro Manila and other first class cities, Five million pesos (P5,000,000) in other classes of cities and Two million five hundred thousand pesos (P2,500,000) in municipalities: Provided, however, That no foreign national may be allowed to own stock in any financing company unless the country of which he is a national accords the same reciprocal rights to Filipinos in the ownership of financing companies or their counterpart entities in such country: and Provided, further, That financing companies duly existing and in operation before the effectivity of this Act shall comply with the minimum capital requirement within one (1) year from the date of the said effectivity; and Provided, finally, where land is concerned, the financing company with the constitutional provision on foreign ownership of land.”
Lastly, the bill seeks to amend Section 5 of Presidential Decree 129, as amended by RA 8366, otherwise known as the “Investment Houses Law,” so that On Citizenship requirements “An Investment House may be owned up to 100% percent by foreign nationals. In approving foreign equity applications in Investment Houses, the Securities and Exchange Commission (SEC) shall approve such applications only if the same or similar rights are enjoyed by Philippine nationals in the applicant’s country. Foreign nationals may become members of the board of directors to the extent of the foreign participation in the equity of said enterprise.”
SOURCE: Media Relations Service, Public Relations and Information Bureau,
