SEC Amended IRR of the REIT Act of 2009
Due to the concerns raised by potential REIT applicants and stakeholders, the SEC amended the Implementing Rules and Regulations of the REIT Act, specifically, rules 4, 5 and 11.
You can read the amendments here: SEC IRR Amendments
The amendments mentioned above were later incorporated in the official SEC Revised IRR of the REIT Act of 2009, Memo 1.
Here are the key take away:
- The SEC changed the Minimum Public Ownership (MPO) requirement from 40% of the outstanding capital from the first year of operation with an increase of 67% within 3 years from its listing TO only one-third or 33.33% of the outstanding capital and with at least 1,000 public shareholders each owning at least 50 shares.
- Money earned by the Sponsor/Promoter from the sale of REIT shares or raised through the sale of income-generating real estate property to the REIT must be REINVESTED in the Philippine within one year from the date of receipt of the money.
- The PSE shall furnish the SEC with a copy of the “Reinvestment Plan” of the Sponsor/Promoter within three days from the receipt of the said plan. They would also add rules that would require the Sponsor/Promoter to be a party to the REIT’s Listing Agreement and impose reporting requirements to monitor the REIT.
- Contracts or transactions between a REIT and a Related Party must be approved by the Related Party Transaction Committee. This Committee’s sole task is the reivew of related party transactions. The members must be made up with a majority of independent directors that shall vote unanimously in approving the transactions.
- Related Party Transactions must also comply with SEC Memorandum Circular No. 10. series of 2019: Rules on Material Related Party Transactions for Publicly-Listed Companies