Business organizations are opposing a plan by the Securities and Exchange Commission (SEC) to raise fees on company transactions with the agency, calling the proposal objectionable that will serve a huge burden to businesses.
In a letter to SEC chairman Emilio Aquino earlier this month, the business groups called the SEC’s plan “unreasonable” and the charges possibly “obscene.”
They pointed out the increased cost of doing business will also hurt small and medium-size enterprises covered by the SEC.
The letter was signed by the heads of the of the Philippine Chamber of Commerce and Industry, Philippine Exporters Confederation Inc., Philippine Franchise Association, Management Association of the Philippines, Stratbase ADR Institute for Strategic and International Studies, Philippine Association of Legitimate Service Contractors, Federation of Filipino Chinese Chambers of Commerce and Industry Inc., Philippine Food Processors and Exporters Organization Inc., Employers Confederation of the Philippines, Philippine Retailers Association and the Chamber of Thrift Banks.
In particular, the organizations noted the SEC’s plan to impose a fee of 0.25 percent (1/4 of 1 percent) to the total value if and when a company files an application to raise funds through a bond sale.
They also noted the SEC’s plan to slap a fee on total transactions cleared and settled in the previous year by the Securities Clearing Corporation of the Philippines and Philippine Depository Trust Corp. at 0.1 basis point and 0.05 basis point, respectively.
In the SEC’s draft memorandum circular in July, the Commission also announced plans to increase the fees for the filing of a company’s articles of incorporation to “1/4 of 1 percent (0.25 percent) of the authorized capital stock but not less than P2,500 or the subscription price of the subscribed capital stock whichever is higher,” from the “1/5 of 1 percent (0.2 percent) of the authorized capital stock but not less than P2,000 or the subscription price of the subscribed capital stock whichever is higher” for a stock corporation that assigns a par value to its shares.
The SEC is also looking to impose or adjust fees in other company filings such as corporation by-laws, amendments in the articles of incorporation, amendments in by-laws, increase in capital stocks, decrease in capital stocks, mergers of companies, equity restructuring and others.
The associations said the planned increase is even higher than the fees struck down by the Supreme Court in 2020 on a case involving First Philippine Holdings Corp. (First Holdings), where the High Tribunal ruled as “invalid and unreasonable for being arbitrary.”the imposition of a 1/5 of 1 percent (20 basis points) of the authorized capital stock, but not less than P2,000 on First Holdings’ amendments of its articles of incorporation to extend its corporate life.
The groups said the SEC’s planned fees that “far exceed the costs of regulation” is beyond its authority and power to impose.
“If the purpose is regulatory — and not revenue generation — then the test of reasonableness vis-í -vis costs to regulate should be met in order to increase the processing fees of SEC,” they said.
The current fee collections of SEC “already far exceed the cost of its operations,” the organizations added.
“Proofs of this include the purchase of its own building in Makati CBD reportedly costing about P2.5 billion, in addition to about 90 commercial parking slots estimated at about P1 million per slot,” they said.
“While the President and his economic team are actively wooing new investors and struggling to maintain existing ones, it is unfortunate that SEC is doing exactly the opposite by proposing unnecessary and unconscionable increases in fees. We cannot help but feel that SEC is operating on its own and is not aligned with this thrust of the current administration,” they added.
The organizations urged the SEC to submit its plan to the Anti-Red Tape Authority for a regulatory impact assessment, apart from exhausting stakeholder consultation as part of due diligence.
