Bourse hoping for Congress OK of three new laws

Legislation of fresh market-friendly measures is on the Philippine Stock Exchange (PSE) agenda for 2010 following the approval of landmark measures last year. It is hopeful that one -- the Financial Rehabilitation Insolvency Act -- can be passed by Congress this month before legislators turn their attention to the May national elections, while two others -- the Collective Investment Scheme Law and the Stock Market Competitiveness Act -- are expected to be passed by the incoming 15th Congress. PSE President Francis Ed. Lim told reporters yesterday that the Insolvency Law would be the local counterpart of the US’s Chapter 11 bankruptcy code. It is meant to replace the country’s 1909 Insolvency Act, which he described as obsolete. Mr. Lim said the measure, currently in its final stages in the House of Representatives, would help distressed companies recover quickly. Among its features, he said, is a provision preventing the "tyranny of the minority." It states that a debtor may have a restructuring plan approved with dispatch by a court if it can show that it is supported by creditors holding at least two thirds of its total liabilities. The court, meanwhile, will have 120 days to act on a rehabilitation plan otherwise it is deemed approved. "Hopefully, the House will approve it this month. We are keeping our fingers crossed that before Congress take an election recess next month, it will be approved into law," Mr. Lim said. "That is the last law that we will see in place in this Congress," he added, noting the recent passage of the Personal Equity and Retirement Account law and the Real Estate Investment Trust Act. The exchange, Mr. Lim said, will push for the passage of the Collective Investment Scheme and the Stock Market Competitiveness Act when the 15th Congress convenes after election. "The technical group study in the Senate for the Collective Investment Scheme is already done but it still needs the House counterpart," he said. The Collective Investment Scheme is expected to modernize the mutual fund industry by setting the legal and tax frameworks needed to come up with new products -- such as the Exchange Trust Fund and the Unit Investment Trust Fund -- that can be listed in the exchange. "It will improve the mutual fund industry. The Philippines has one of the smallest mutual fund industries in the region because we are still using the 1960s mutual fund law," Mr. Lim said. The Stock Market Competitiveness Act, meanwhile, will provide tax perks to companies that go public, among others. Mr. Lim said the PSE could submit a draft law to Congress before it goes on recess. But given the likelihood of the bill not being passed before the elections, the bourse would have to refile the bill after the 15th Congress convenes. "These [new bills] are really essential in making our stock market and capital market attractive and competitive to investors," Mr. Lim said. The benchmark PSE index, which posted gains last year, lost 1.56% or 47.67 points during the first trading day of the year to close at 3,005.01. Analysts pointed to anemic trading and investor anxiety. -- K. J. R. Liu, BusinessWorld