SEC chair Emilio Aquino
The Securities and Exchange Commission (SEC) has given foreign companies setting up shop in the country more leeway to submit their security deposits, considering the enhanced community quarantine (ECQ) prevailing in Luzon and other key areas.
“We recognize the impact of the COVID-19 pandemic not just on registered corporations in the Philippines but also on foreign corporations all over the world,” SEC chair Emilio Aquino said in a press statement on Tuesday.
“Giving corporations more time and the flexibility to comply with the applicable rules and regulations could go a long way in easing the burden on the business sector during these extraordinary times,” he added.
In a memorandum circular dated March 26, the SEC allowed branch offices of foreign corporations that are duly licensed to do business in the Philippines 30 days from the lifting of the ECQ to submit the initial deposits originally falling due during the ECQ period.
Foreign firms required to submit additional deposits during the effectivity of the ECQ are likewise given 30 days from the lifting of the quarantine to comply with the requirement.
Also, licensees whose deposits matured during the ECQ period may file an application for substitution of securities 30 days from the end of the quarantine period.
Under Section 143 of Republic Act No. 11232, or the Revised Corporation Code of the Philippines, all branch offices of foreign corporations duly licensed to do business in the country, except foreign banking or insurance corporations, must deposit with the SEC securities for the benefit of the present and future creditors of the licensees.
The deposit may consist of bonds or other evidence of indebtedness of the Philippine government, its political subdivisions and instrumentalities, or of government-owned or -controlled corporations and entities.
The licensee may also deposit shares of stock or debt securities registered under Republic Act No. 8799, or The Securities Regulation Code; shares of stock in domestic corporations listed in the stock exchange, shares of stock in domestic insurance companies and banks, any financial instrument determined suitable by the Commission, or any combination thereof.
The deposited securities must have an actual market value of at least P500,000 or such other amount that may be set by the SEC.
Section 2 of the revised guidelines on securities deposit of branch offices of foreign corporations requires all branch offices of foreign corporations duly licensed to do business in the Philippines to deposit the securities within 60 days after the issuance of their respective SEC licenses.
The revised guidelines, issued through SEC Memorandum Circular No. 17, Series of 2019, further provide that additional securities must be deposited within six months after the end of the fiscal year of a licensee in certain conditions.
If its gross income within the Philippines for the fiscal year has exceeded P10 million, the licensee must deposit additional securities with actual market value equivalent to 2 percent of the increase in its gross income. If the actual market value of the deposited securities or financial instruments has decreased by at least 10 percent from the time they were deposited, the licensee must provide additional securities with an actual market value that would cover the decline.