SEC streamlines capital raising for power firms
The Securities and Exchange Commission (SEC) has streamlined the registration process for capital raising of power generation companies and distribution utilities, in support of the public offering mandate stipulated in the Electric Power Industry Reform Act (EPIRA) of 2001.
The SEC has issued a memorandum circular adopting the guidelines for a simplified registration for power generation firms and distribution utilities seeking fresh funds through the public offering of securities.
Through the Securing and Expanding Capital for Power Generation Operators and Wholesale Electricity and Retail Services (SEC POWERS), the registration of securities for power generation companies and distribution utilities that are mandated to offer and sell at least 15 percent of their shares to the public, pursuant to EPIRA, has been simplified.
The SEC said the simplified procedure supports 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.
According to the guidelines, the SEC Markets and Securities Regulation Department (MSRD) must complete the review of the registration statement within 45 days from filing.
The MSRD, upon favorable consideration by the commission en banc, shall then issue a pre-effective letter stating the conditions to be complied with.
Upon complying with the conditions, the MSRD will issue the order of registration and/or permit to sell securities to the public.
The public offering and sale of the securities may then commence within 10 business days from the date of the effectivity of the registration statement, according to the SEC.
To facilitate the timely processing of its registration statement, the corporate regulator said the registrant must secure all necessary clearances from the commission before filing its application with the MSRD.
“A registrant corporation may choose not to engage an underwriter for the public distribution or offering of its shares, provided that it has secured approval from the SEC by demonstrating that it has the ability to sell all or substantially all of its securities to the public,” the SEC said.
The commission said a power generation or distribution utility company may also issue securities in tranches, to be offered on a continuous or delayed basis for a period not exceeding three years from the effective date of its initial shelf registration statement.
The SEC came up with the guidelines with the help of the Energy Regulatory Commission (ERC).
The ERC earlier said generation companies and distribution utilities have been encountering issues with the public offering requirement, noting that compliance rate is less than 50 percent for the generation sector alone.
The EPIRA mandates non-publicly listed generation and distribution utilities companies to offer and sell to the public a portion of not less than 15 percent of their common shares and stocks.
The SEC and ERC have been exploring avenues of collaboration in order to streamline regulatory processes and create a joint framework for the public offering requirement mandated by EPIRA.