Various business groups are urging the Securities and Exchange Commission (SEC) to review its plan of increasing fees and charges since the proposed rates will exceed Supreme Court rulings and could adversely affect small and medium enterprises (SMEs).
A joint statement issued by 12 business organizations recently opposed the proposed draft Memorandum Circular on the Revised Schedule of SEC Fees and Charges.
Signatories of the joint statement include the Philippine Chamber of Commerce and Industry, Federation of Filipino Chinese Chambers of Commerce and Industry, Inc., Philippine Exporters Confederation, Inc., Employers Confederation of the Philippines, Management Association of the Philippines, Makati Business Club, Chamber of Thrift Banks, Philippine Retailers Association, Philippine Franchise Association, Philippine Association of Legitimate Service Contractors, Stratbase ADR Institute for Strategic and International Studies, and the Philippine Food Processors and Exporters Organization, Inc.
“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,” the opposing groups said.
Issued last Aug. 1, the SEC proposal imposed a new schedule of fees for registration, licensing, accreditation, and other related transactions for registered entities.
The groups argued against this proposed increase in regulatory fees by the SEC, citing principles such as cost recovery and socio-economic impact.
Additionally, they noted that the Supreme Court has previously ruled against fee increases that have far-reaching effects on the capital market, stating that such fees could discourage small investors and hamper market growth.
The Supreme Court has also ruled in cases like Philippine Association of Stock Transfer and Registry Agencies v. Court of Appeals and First Philippine Holdings Corp. v. Securities and Exchange Commission, stating that fee increases affecting the capital market should be avoided.
The court also declared the fees imposed by the SEC for applying amended articles of incorporation invalid and unreasonable.
According to the opposing groups, these objectionable fees and charges are based on several factors, which serve as a significant burden on its stakeholders.
One factor is that the SEC’s proposed fee exceeds the Supreme Court’s ruling in the First Philippine Holdings Corp. case, requiring “1/4 of 1% (25 basis points) of the authorized capital stock but not less than P2,500.00 or the subscription price of the subscribed capital stock, whichever is higher.”
They also claimed that the SEC’s proposed fees are beyond the authority and power of the SEC to impose, as they haven’t met “the test of reasonableness vis-à-vis costs to regulate.”
“While the President (Ferdinand R. Marcos Jr.) 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,” business groups added, sensing that SEC is operating independently and is not in line with the current administration’s objectives.
Further, they said that the increased cost of doing business will also hurt SMEs covered by the SEC and/or due to the ripple effects of the fee increases.
To address these objections, the groups recommended SEC to submit the proposed policy to the Anti-Red Tape Authority (ARTA) for a Regulatory Impact Assessment (RIA) to ensure it doesn’t negatively impact the business and economy.
Exhaustive stakeholder consultation prior to the RIA is also recommended as part of the regulatory process and due diligence on the part of the SEC.
“We are ready to discuss our position with the Commissioner or a designate at a convenient time,” they concluded.
Meanwhile, the business groups noted that the Administrative Order No. 31, s. 2012 and the Department of Finance-Department of Budget and Management-National Economic Development Authority Joint Circular No. 1-2013 emphasize the importance of balancing cost recovery and socio-economic impact in regulating fees.
In 2017, the SEC increase demonstrated that the fees collected from stock market transactions were sufficient to fund its operations.
However, the groups argued that the current fees collected from stock market transactions are already exceeding the cost of operations, including the purchase of a P2.5 billion building in Makati Central Business District and 90 commercial parking slots, amounting to P1 million each.
They also expressed concern about the cost of the CIFFS eSearch Facility that allows the public to purchase and download digital copies of documents submitted to the SEC, which has increased from P0.50 per page to P1,000 to P2,000, indicating a desire to make the facility a money-making activity rather than cost recovery. (Ma. Joselie C. Garcia)