By
Lenie Lectura - July 10, 2019
THE Energy Regulatory
Commission (ERC) has moved to address concerns raised by a group of power
generation companies (gencos) on the allowed modes of public offering.
Under the Electric
Power Industry Reform Act (Epira) of 2001, all private gencos and distribution
utilities (DUs) not publicly listed shall offer and sell to the public a
portion of not less than 15 percent of their common shares of stocks.
However, the ERC
suspended the directive in 2016 following the petitions made by the Private
Electric Power Operators Association (Pepoa). One of the clarifications it
raised included “whether registration of common shares at the Securities and
Exchange Commission [SEC] was inadvertently omitted as a mode of public
offering.”
The SEC, when asked for
its opinion, told ERC that public offering under the Securities Regulation Code
(SRC) does not necessarily require listing and selling in the Philippine Stock
Exchange (PSE) or any stock exchange for that matter, since listing is just one
form of public offering.
Further, the SEC
reiterated that in case a special law such as Epira requires a corporation to
offer and sell to the public a particular portion of its common shareholdings,
compliance with its requirements will primarily depend on what particular law
or its implementing rules will prescribe.
“The general definition
of public offering under the 2015 IRR of the SRC will only apply suppletorily,
if such special law does not provide for its own definition or modes of public
offering,” it said. Thereafter, the ERC conducted another round of public
consultation in December last year.
The result of the
consultation led the ERC to adopt a resolution amending Resolution 9 which
requires gencos and DUs which are not publicly listed to offer and sell to the
public a portion of not less than 15 percent of their common shares of stock.
Resolution 4, which
amended Resolution 9, cites the following modes for public offering:
- Listing of the generation companies and distribution utilities in the PSE.
- Listing of the shares of stock in any accredited stock exchange, or direct offer of a portion of registered enterprises’ capital stock to the public and/or their employees, when deemed feasible and desirable by the Board of Investments.
- Public offering under the Securities Regulation Code and its implementing rules and regulations.
However, gencos and DUs
whose respective holding companies are already listed in the PSE are already
complaint. Also, the offer of the common share of stock through a employee
stock option plan (Esop) or any other similar plan shall not be deemed as
public offering since the offer is limited only to the employees of the gencos
and DUs, as against the general public to whom the offer is to be made.
“Said offer and sale of
shares of stock, through Esop, is considered as public offering only when the
genco or DU is a registered enterprise under the Omnibus Investment Code,” the
ERC said. The ERC added gencos under the build-operate-transfer scheme shall
not be deemed in compliance with the public-offering requirement given that the
privatization provisions of the Epira has the effect of transferring the
ownership of the privatized BOT projects to the new owners.
“Thus, the new owners
shall comply with the public offering requirement,” the ERC said.
Resolution 4 was signed
by the ERC commissioners last June 4 but was approved for posting last July
4.
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