AN ACT LIBERALIZING THE PHILIPPINE INVESTMENT HOUSE INDUSTRY

Case Overview and Summary

Summary of Republic Act No. 8366

Liberalizing the Philippine Investment House Industry

- Declaration of Policy (Section 1):
    - The State aims to expand and strengthen the capital base of the economy to ensure sustained economic growth and development.
    - The Philippine investment house industry is liberalized to increase foreign equity participation and raise minimum capitalization to meet market demands.

- Citizenship Requirements (Section 2):
    - At least 40% of the voting stock of any investment house must be owned by Filipino citizens. (Sec. 5)
    - Foreign equity applications will be approved by the Securities and Exchange Commission (SEC) only if similar rights are enjoyed by Philippine nationals in the applicant's country. (Sec. 5)
    - Foreign nationals can become members of the board of directors to the extent of their participation in the equity. (Sec. 5)

- Capital Requirements (Section 3):
    - Minimum paid-in capital for newly-organized investment houses is ₱300,000,000. (Sec. 8)
    - Existing investment houses must build up their paid-in capital to ₱300,000,000 within 2 years: ₱200,000,000 after the law's effectivity and an additional ₱50,000,000 for every year thereafter until the minimum is attained. (Sec. 8)
    - The Monetary Board may prescribe a higher minimum capitalization to promote stability and competitiveness. (Sec. 8)
    - The Monetary Board shall prescribe a risk assets to capital ratio and other capital adequacy ratios within 6 months to protect the investing public. (Sec. 8)

- Effectivity (Section 4):
    - The Act shall take effect 15 days from its publication in a newspaper of general circulation.