Business groups buck proposed hike in SEC fees
MANILA, Philippines — Business groups are raising concern over some provisions of the revised schedule of fees and charges being proposed by the Securities and Exchange Commission (SEC), calling them unreasonable.
In a letter addressed to SEC chairperson and CEO Emilio Aquino dated Oct. 2, the business groups voiced their objections to the proposal of the commission.
Among these is the creation of bonded indebtedness, where the SEC is proposing to charge corporate issuers one-fourth of the one percent of the total indebtedness.
“Using 2022 numbers, SEC’s fees would amount to P1.27 billion on the total bond issuances of P508 billion for that year,” the business groups claimed.
They explained that one-fourth of the one percent fee proposal is even higher than the relevant fees struck down by the Supreme Court citing a case between the SEC and First Philippine Holdings Corp. in 2020.
Based on the case, the group emphasized that “the Supreme Court declared as invalid the fees imposed by the SEC for application of amended articles of incorporation where the amendment consists of extending the term of corporate existence where the fees shall be one-fifth of one percent (20 basis points) of the authorized capital stock, but not less than P2,000. The Supreme Court found the same to be invalid and unreasonable for being arbitrary.
In addition, the business groups also called out the proposal to impose a fee on the total transactions cleared and settled in the previous year by the Securities Clearing Corp. of the Philippines (SCCP) and Philippine Depository Trust Corporation (PDTC) in the amount of 0.1 basis point and 0.05 basis point, respectively.
“Based on 2022 transactions, this would amount to P14.51 million and P7.25 million of additional friction cost for stock market investors,” the business groups claimed.
According to the SEC’s draft revised schedule of fees and charges, the commission is proposing annual fees of 1/1000 of one percent of transactions cleared and settled in the previous year for clearing agencies.
It is also proposing an annual fee of 1/2000 of one percent of transactions cleared and settled in the previous year for central depositories.
The business groups said the fees that far exceed the costs of regulation are beyond the authority and power of the SEC to impose.
“If the purpose is regulatory – and not revenue generation – then the test of reasonableness vis-à-vis costs to regulate should be met in order to increase the processing fees of SEC. Clearly, this standard has not been met by the SEC in coming up with the proposed fee increases under the guise of regulation,” the business groups said.
The business groups also noted that the move to increase fees goes against the initiatives of the government to attract investors.
“While the President and his economic team are actively wooing new investors and struggling to maintain existing ones, it is unfortunate that SEC is doing exactly the opposite by proposing unnecessary and unconscionable increases in fees. We cannot help but feel that SEC is operating on its own and is not aligned with this thrust of the current administration,” the business groups said.
They also noted that the increased cost of doing business will also hurt SMEs covered by SEC and/or due to the ripple effects of the fee increases.
“Consistent with the ease of doing business law, we then strongly recommend that SEC submit this proposed policy to the Anti-Red Tape Authority (ARTA) for a Regulatory Impact Assessment (RIA) to check against harmful impacts to business and the economy. We likewise raise the need for exhaustive stakeholder consultation prior to the RIA as part of the regulatory process and due diligence on the part of SEC,” the groups said.
“Rallying behind the Bagong Pilipinas brand of governance, we raise the challenge for SEC to step up in contributing to this vision by reviewing, if not totally scrapping this proposal as anti-business and therefore detrimental to the economy and our people. We are ready to discuss our position with the Commissioner or a designate at a convenient time,” they said.
The letter was signed by the Philippine Chamber of Commerce and Industry, Federation of Filipino Chinese Chamber of Commerce and Industry, Inc., Philippine Exporters Confederation, Inc., Employers Confederation of the Philippines, Management Association of the Philippines, Philippine Retailers Association, Philippine Franchise Association, and Philippine Food Processors and Exporters Organization Inc.
It was also signed by Philippine Association of Legitimate Service Contractors, Stratbase ADR for Strategic and International Studies, and the Chamber of Thrift Banks.