A BILL seeking to remove a 100% Filipino requirement for board members of investment companies has been filed at the House of Representatives, opening the door for foreign shareholders to exercise control of such companies.
“The unintended consequence of the 100% Filipino board requirement in the Investment Company Act is to disincentivize the formation of foreign-owned funds in the country, such as venture capital funds, private equity funds, and hedge funds,” Parañaque Rep. Gus S. Tambunting said in introducing House Bill No. 9522.
“This is also the reason why there are very few investment companies being set up in the Philippines even though there is no foreign equity limitation,” he added.
The measure effectively amends Section 15 of Republic Act No. 2629 or the Investment Company Act.
The law requires investment companies to have 100% Filipino board membership even if the company is owned wholly or partly by foreign shareholders.
Under the proposed Foreign Board Representation in Investment Companies Act, “the election of foreigners as members of the board of directors of the investment company shall be allowed in proportion to their participation or share in the capital of the investment company,” according to a copy of the bill.
“Majority stockholders should be able to participate in the exercise of corporate control through board representation,” Mr. Tambunting said. — Beatriz Marie D. Cruz