Biz Buzz: Disclosure debate

A legal battle looms between the Securities and Exchange Commission (SEC) and capital market practitioners, as represented by the Philippine Association of Securities Brokers and Dealers Inc. (Pasbdi), over the disclosure requirements on beneficial ownership of securities.

We heard that Pasbdi filed at the Mandaluyong Regional Trial Court a petition seeking a temporary restraining order against the provisions in the 2015 Securities Regulation Code (SRC) implementing rules and regulations (IRR) that require disclosure of beneficial ownership.

The case seems reminiscent of the dispute between the private sector and the Bureau of Internal Revenue in 2014 on the “alphalist”—the proposed disclosure requirement on alphabetical list recipients of income payments subject to creditable and final withholding taxes that prohibits the lumping into a single amount and account of various income payments and taxes withheld (on which Supreme Court issued a TRO).

One industry source familiar with the matter said the debate was indeed similar to the “alphalist” issue (earlier warned to be a potential trigger for capital flight) but that the new petition had more issues at hand. In this new debate on SRC 2015, brokers are not happy that they can be summoned to disclose the list of clients even without cause.

“So brokers will be in breach of confidentiality agreements with their clients,” one industry source said, adding that this would curb investor interest.

At the same time, Pasbdi has alleged lack of due process in the SEC’s amendment of the implementing rules.

One side is hopeful that the TRO petition will be denied while the other side believes there’s a strong case against this beneficial ownership disclosure provision. Doris Dumlao-Abadilla

IdeaSpace tightens belt

STARTUP incubator IdeaSpace Foundation is tightening its belt, though not at the expense of the many businesses it has financed and plans to fund still in the years to come.

At the launch of the 2016 startup competition, its fourth thus far, IdeaSpace made a major announcement: it would no longer take the usual 20 percent stake in the 10 companies selected annually for incubation and acceleration.

It’s not cutting back on spending for the startups—the winners will still get the P1 million funding support, of which up to P500,000 will be in cash. Good for the startup founders since the money is practically “free” with no equity strings attached.

The reasons behind the move were more interesting for IdeaSpace, which is backed by the Manuel V. Pangilinan group of companies.

Diane Eustaquio, Executive Director at IdeaSpace, admitted that sitting on the boards of dozens of startups was “challenging on the resources.”

She added that startups also weren’t maximizing their potential when it came to future funding. Outside investors looking into IdeaSpace companies, for example, preferred to reward the founders rather than having to place a portion of that money to buy shares of the incubator.

This means that IdeaSpace is returning to its roots as a CSR initiative rather than the “investment firm” path it was on.

Eustaquio said there were ways for IdeaSpace, which backed firms like saltwater lamp-maker SALT and travel startup PinoyTravel, to raise more money.

Starting this year, she said they would begin exiting positions in the various startups it had brought to life. That’s apart from ongoing funding from the Pangilinan group and even outside proposals.

The important thing is IdeaSpace is still very much open to entrepreneurs with bright ideas. The next date to keep in mind is March 18, the deadline for the submission of startup ideas for the 2016 contest. Miguel R. Camus

Airbus A350 for PAL?

IT LOOKS like flag carrier Philippine Airlines (PAL) has made a decision on which next-generation, long-haul aircraft it would buy next.

Readers following PAL’s activities would know that the choice is between the Airbus A350 and the Boeing 787. The new planes will replace PAL’s aging fleet of Airbus A340s while allowing it to reach more parts of the globe efficiently.

PAL president Jaime Bautista said a decision had been made and it would be announced next month.  Why next month? Well, apparently a deal hasn’t been signed yet and negotiations are still ongoing.

Due to the size of the order, and the general interest in PAL given its long history, there has been speculation on which plane the flag carrier would buy. We’ve heard rumors the deal would be awarded to either Airbus or Boeing.

Late last year, PAL put on display at a casino-hotel event various business-class and first-class seat designs and configurations, which it said was for new plane orders. Interestingly, Biz Buzz noticed that the seats bore discreet markings of the A350 XWB “Cirrus Catalogue.”

Circumstantial? Absolutely, which is why we will stop right there. We will all know for sure soon enough, assuming PAL makes good on that upcoming announcement. Like we always say here, abangan! Miguel R. Camus

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