Accounting Alert

Background

Republic Act (RA) No. 9136, otherwise known as the "Electric Power Industry Reform Act of 2001 (EPIRA) provides that it is the policy of the State to enhance the inflow of private capital and broaden the ownership base of the power generation, transmission and distribution sectors. The said law also requires generation companies and distribution utilities which are not publicly listed to offer and sell to the public a portion of not less than fifteen percent (15%) of their common shares of stock.

The Energy Regulatory Commission (ERC) has issued resolutions which recognizes the various modes of public offering under the Securities Regulation Code (SRC) and its implementing rules and regulations and the listing in the Philippine Stock Exchange. 

Guidelines

The Commission hereby though this Circular adopts the guidelines for a simplified registration of securities for power generation companies ("PowerGen") and distribution utilities ("DU") companies by using the form SEC POWERS under the jurisdiction of the Markets and Securities Regulations Department (MSRD or the Department).

Summarized below are the pertinent guidelines:

• Pre-filing activities - All clearances from the pertinent operating departments of the Commission shall be secured and/or completed prior to the filing of a registration statement with the Department.
• Office of the General Accountant (OGA) Review - The registrant shall provide the required financial information and disclosures in accordance with the Revised SRC Rule 68 and the Philippine Financial Reporting Standards and other relevant issuances of the Commission.  The registrant shall present to the OGA its financial statements for pre-evaluation in order to determine basic compliance with the Revised SRC Rule 68.  If compliant/acceptable the OGA shall issue the pre-evaluation clearance to be submitted to the Department. The review will only commence upon submission of any proof of payment of registration fee.
• Compliance with registration - Once application is accepted, the registrant shall submit two (2) sets of hard copies as enumerated in Section 5 of this Circular and shall comply with the requirements under Section 6.
• Underwriting requirement and plan of distribution - A registrant corporation shall engage an underwriter in the public distribution or offering of the registered shares. In  case  the  registrant  is  able  to  demonstrate  that  it  has  the  ability  to  sell  all or substantially all of its securities to the public, it shall submit not later than five (5) days before the actual filing of the registration statement, a justification letter providing details on how the shares will be sold or offer subject to the Commission consideration if it may allow the non-engagement of an underwriter.

Please see attached circular for further details.