ERC sorts out ‘stock offering’ scope for power firms

By Myrna M. Velasco – July 10, 2019, 10:00 PM
from Manila Bulletin

The Energy Regulatory Commission (ERC) has spelled out the parameters as to what can be considered as stock offering of the generation companies (GenCos) and the distribution utilities (DUs), other than an initial public offering (IPO) at the Philippine Stock Exchange.

ERC logo(Photo courtesy of

ERC logo(Photo courtesy of

The ERC, in part, has sought legal shelter from an opinion issued by the Securities and Exchange Commission (SEC) stating that a “public offering” under the Securities Regulation Code (SRC) “does not necessarily require listing and selling in the PSE or any exchange for that matter, since listing is just one form of public offering.”

The SEC has cited provisions of the 2015 implementing rules and regulations (IRR) of the SRC, which defines public offering as “any offering of securities to the public or to anyone, whether solicited or unsolicited.” The SEC also specified the extent and requirements that must be complied with in the “solicitation or presentation of securities for sale.”

Accordingly, the ERC on its June 4, 2019 resolution has upheld the SEC opinion prescribing that one form of public offering for the power firms to carry out shall be the “sale of securities” based on the provisions of the SRC.

Nevertheless, the ERC has emphasized that “the offer of the common shares of stock through an Employee Stock Option Plan (ESOP) or any other plan analogous thereto shall not be deemed as public offering.”

It expounded that such shall be excluded in the frame of public offering coverage, “since the offer is limited only to employees of the generation companies and DUs, as against the general public to whom the offer is to be made.”

The power industry regulator further qualified though that “said offer and sale of shares of stock, through ESOP, is considered as public offering only when the generation company or DU is a ‘registered enterprise’ under the Omnibus Investment Code.”

The ERC took reference from Chapter II Article 7 of the Omnibus Investment Code of 1987, which stipulates that “registered enterprises may be required by said Board to list their shares of stock in any accredited stock exchange or directly offer a portion of their capital stock to the public and/or their employees.”

The ERC ruling is anchored on an earlier clarification sought by the Private Electric Power Operators Association (PEPOA) as some of their members raised concern that listing at the PSE may not be feasible especially for the DUs that do not have the required minimum capital stock of P5.0 billion.