SEC Makes Capital Raising Easier for Power Generation Companies

The Securities and Exchange Commission (SEC) has streamlined the registration process for power generation companies and distribution utilities seeking fresh funds through the public offering of securities.

The Commission on February 15 issued SEC Memorandum Circular No. 4, Series of 2024, aimed at Securing and Expanding Capital for PowerGen Operators and Wholesale Electricity and Retail Services (SEC POWERS).

SEC POWERS simplify the registration of securities for power generation companies and distribution utilities that are mandated to offer and sell at least 15% of their shares to the public, pursuant to Section 43(t) of Republic Act No. 9136, or the Electric Power Industry Reform Act of 2001 (EPIRA).

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, as provided under the EPIRA Law.

Under the guidelines, the SEC Markets and Securities Regulation Department (MSRD) shall complete the review of the registration statement within 45 days from filing, in accordance with the requirements of Republic Act No. 8799, or the Securities Regulation Code (SRC); Republic Act No. 11232, or the Revised Corporation Code of the Philippines; and pertinent issuances of the SEC.

Upon favorable consideration by the Commission En Banc of the registration statement, the MSRD shall issue a pre-effective letter stating the conditions to be complied with. Upon complying with the conditions, the MSRD shall 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.

To facilitate the timely processing of its registration statement, the registrant shall secure all necessary clearances from the SEC Company Registration and Monitoring Department, Corporate Governance and Finance Department, Enforcement and Investor Protection Department, Office of the General Counsel, and Office of the General Accountant (OGA) before filing its application with the MSRD.

The pre-filing activities include the presentation to the OGA of the registrant’s financial statements for pre-evaluation in order to determine their basic compliance with the Revised SRC Rule 68 and the Philippine Financial Reporting Standards, to better facilitate the registration process.

After completing pre-filing activities, the registrant shall submit to the MSRD the pre-evaluation clearance form, plus the SEC POWERS Submission Checklist, the SEC POWERS Form and Prospectus, and all other required exhibits.

The registrant shall send digital copies of the documentary requirements through email for the initial review. If the application is accepted for processing by the MSRD, the registrant shall submit two sets of the printed documents, and proceed with the registration process. 

SEC POWERS has waived the minimum public float requirement of 20% for listed companies, as provided under SEC Memorandum Circular No. 13, Series of 2017, in favor of the 15% minimum requirement under EPIRA.

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.

​A power generation company 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.