Hon. Gloria Macapagal-Arroyo

June 21, 1993 Hon. Gloria Macapagal-Arroyo Senate 3rd Flr., East Wing VELCO Centre Bldg. cor. 13th St. and Chicago St. Port Area, Manila Madam : This refers to your letter of May 27, 1993 requesting comments on S.B. 1232, entitled: "AN ACT PROVIDING INCENTIVES TO DEVELOP THE PHILIPPINE SECURITIES MARKET." LibLex Relative thereof, we wish to inform you that we are supportive of the Bill as it encourages capital formation. In fact, the SEC has endeavored to coordinate closely with other agencies for the purpose of improving the economic atmosphere, not only for securities market development but for capital market enhancement in general. The introduction of the Bill is a welcome development and a move in the right direction in the continuous and earnest effort of the Commission to create a favorable investment climate conductive to the Philippine economic development. Given the necessary legislative support through laws granting incentives to companies to offer their shares to the public, the capital market will develop and continue to prosper. It would be to the advantages of close corporations with expansion in their agenda if they offer their shares to the public even if this would entail the entry of many stockholders to their corporation. In effect, there would be less restriction on the transferability of the shares. In publicly held corporations, most stockholders are merely investors and regard liquidity of their investment as a primary consideration. Ready marketability of the share is a meaningful attribute to shares in such corporation. Funds invested can be withdrawn by simply selling the shares in the open market. However, the following provision in the Bill need clarifications/modification: 1. Clarification as to the coverage of the term "securities". It can be construed from the Bill, particularly under Section 3 (a) and Section 5 thereof, that the term "securities" covers "listed debt securities" or securities other than shares of stock. It is worth mentioning that only shares of stocks can be listed in the stock exchange. 2. Since the two existing stocks exchange have been unified, reference to stock exchanges under Section 3 (b) should be limited only to the newly unified stock exchange, the Philippine Stock Exchange. 3. Clarification why the term "Foreign Securities" is included in the definition of terms under Section 3. It appears that there terms under Section 3. It appears that there is no provision in the Bill relating thereto. Likewise, it is suggested that the provision relating to "tax incentives" be referred to the NEDA and BIR for comments as they might affect Government policies on revenue generation. We believe that the NEDA and the BIR are in the better position to determine the amount of tax incentives to be granted under the Bill. Very truly yours, (SGD.) ROSARIO N. LOPEZ Chairman