The Securities and Exchange Commission (SEC) has suspended the registration statement (RS) of BDO Leasing and Finance Inc. (BDOLF) to issue securities noting that information contained in the RS has become materially incomplete and inaccurate.
The SEC’s Markets and Securities Regulation Department (MSRD), in particular noted the change in primary business of the company from leasing and finance to a holding company after it was announced that its mother company, BDO Unibank Inc., is selling its controlling stake in BDOLF to a third party.
“The MSRD found the following material information under Rule 14 of the 2015 Implementing Rules and Regulations of the Securities Regulation Code present under the given circumstances, which would necessitate the filing of an amended RS with the SEC,” said the SEC.
“The MSRD finds that the suspension of the RS is consistent with public interest and protection of investors as the RS is materially incomplete and inaccurate and, if left unchecked, would tend to work a fraud on investors,” it added.
BDO Unibank in end-January announced that it entered into an agreement to sell a controlling stake in its publicly-listed subsidiary, BDO Leasing and Finance (BDOLF), to a third party as part of the Bank’s restructuring of its leasing business.
The restructuring of BDO’s leasing business is being undertaken to optimize the financial needs of clients in light of new accounting regulations covering lease transactions. IFRS 16, which took effect in January 2019, requires leases to be recognized on-balance sheet, similar to a loan facility. This makes lease transactions a less attractive option to corporate borrowers compared to the past.
Under the restructuring process, BDO has incorporated a new, privately-held finance company, BDO Finance Corp., (BDO Finance), to provide its customers “continuing access to lease products and services.”
“Additionally, BDO Finance will assume current lease transactions booked in BDOLF to provide continuity to existing clients. Meanwhile, clients who now find regular bank loans more attractive vis-í -vis leases can access BDO’s wide range of products and services,” BDO earlier said.
