DEVELOPERS intending to sell units under a rental pool arrangement scheme will now have to register and get approval from the Securities and Exchange Commission (SEC).
The SEC said it issued the guideline called “Securing and Expanding Capital in Real Estate Investment Transactions (SEC RENT) to regulate the sale of properties under a rental pool agreements, in line with the rising trend of real estate developers offering potential investment returns and additional income by renting out properties.
Rental pool agreements refer to investment contracts in which a property developer sells or offers units in real estate projects such as condominiums, hotels, resorts or dormitories to prospective buyers, provided they contribute the units to a rental pool managed and operated by the company or a third-party operator.
Buyers in rental pool agreements typically receive a share in the real estate developer’s income earned by renting out the units to third parties.
Under the guidelines, the SEC said the developer needs to secure the necessary approvals from the SEC Company Registration and Monitoring Department, Corporate Governance and Finance Department, Enforcement and Investor Protection Department, Office of the General Counsel, and Office of the General Accountant (OGA) before filing its registration statement with the Markets and Securities Regulation Department (MSRD).
“The OGA shall review the company’s financial statements to determine their compliance with Revised SRC Rule 68 and the Philippine Financial Reporting Standards, and other relevant issuances of the SEC, after which the company shall be given pre-evaluation clearance,” the SEC said.
“After completing the pre-filing activities, the company shall submit the pre-evaluation clearance, SEC RENT Checklist form, SEC RENT Form and Prospectus, and all other required exhibits to the MSRD for pre-processing,” it added.
Once accepted for processing, the SEC’s MSRD will then initiate a 45-day review period, of which after a review and approval by the SEC’s Commission En Banc of the registration statement and the company’s compliance for other requirements, the MSRD shall issue the registration and permit to sell securities to the public.
The public offering of the securities will then have to commence within 10 business days from the date of the effectivity of the registration statement or it will be cancelled, the SEC said.
