IRR: FISTC shielded from court suits
Bad assets vehicle to be known as Financial Institutions Strategic Transfer corporations (FISTC) will be largely free from court intervention under the proposed implementing rules and regulation (IRR) of the Financial Institutions Strategic Transfer (FIST) Act which President Rodrigo Duterte signed last 16 February.
The Securities and Exchange Commission (SEC) is circulating the draft IRR for public comment. Its provisions will put into effect the newly signed law which seeks to bolster efforts to cushion the “serious economic setbacks and tremendous financial pressure on markets and industries” caused by the Covid-19 pandemic.
Under the draft IRR, FISTC will invest in or acquire non-performing assets of financial institutions such as banks, lending and financing companies, investment houses and insurance companies.
Rule 14 of the draft stated that “no court, other than the Court of Appeals and the Supreme Court, shall issue any temporary restraining order, preliminary injunction, preliminary mandatory injunction, status quo order, stay order, commencement order, or any other issuance of injunctive relief against the transfer of NPA from the financial institution to a FISTC.”
Such stipulation also covers transactions “from a FISTC to a third party, or dation in payment (other than cash) by the borrower or by a third party in favor of a financial institution or in favor of an FISTC, or judicial or extrajudicial foreclosure sales or execution sales of the FI or FISTC of collateral in settlement of non-performing loans (NPL).”
The SEC, the primary implementing agency of the FIST Act, drafted the IRR with inputs from the Bangko Sentral ng Pilipinas, Bureau of Internal Revenue and National Economic and Development Authority.
SPV may assume FISTC role
The draft IRR further provided that an FISTC shall be classified as corporations vested with public interest. As such, it shall have independent directors in its board of directors, appoint a compliance officer, submit compensation and performance reports, and comply with other requirements prescribed by law.
Entities created under Republic Act 9182, as amended, or The Special Purpose Vehicle Act of 2002, may avail of the privileges and incentives by submitting a notarized Secretary’s Certificate, recent articles of incorporation and bylaws, and latest audited financial statements and General Information Sheet showing their compliance with the minimum capital requirements.
FISTC may issue Investment Unit Instruments to any qualified buyer in the minimum amount of P10 million, pursuant to a plan submitted to the SEC and issued with a Certificate of Permit to Sell or Offer for Sale Securities.
No court, other than the Court of Appeals and the Supreme Court, shall issue any temporary restraining order, preliminary injunction, preliminary mandatory injunction, status quo order, stay order, commencement order, or any other issuance of injunctive relief against the transfer of NPA from the financial institution to a FISTC.
The draft IRR further provided that an FISTC shall be classified as corporations vested with public interest.