Guidelines for the Filing of the Registration Statements by Power Generation and Distribution Utilities Companies

The Securities and Exchange Commission (“SEC”) issued Memorandum Circular No. 04-2024 (“SEC MC No. 04-2024”) on 15 February 2024 in light of the requirement under Section 43(t) of the Electric Power Industry Reform Act of 2001 (“EPIRA”) that power generation (“PowerGen”) companies and distribution utilities (“DU”) companies, which are not publicly listed, must offer and sell to the public a portion of not less than 15% of their common shares of stocks and the prohibition under Subsection 8.1 of the Securities Regulation Code (“SRC”) to sell or offer for sale or distribution of securities within the Philippines without a registration statement duly filed with and approved by the SEC. Accordingly, SEC MC No. 04-2024 provides the guidelines for the simplified registration of securities for PowerGen and DU companies.

Pre-Filing Activities of the Registrant

Before a registrant may commence the registration process, they must first obtain the following clearances from the appropriate offices of the SEC: 

1. Certificate of Good Standing from the Company Registration and Monitoring Department;
2. Validation of the qualifications and non-disqualifications of its independent directors and compliance with website template from the Corporate Governance and Finance Department; 
3. Certificate of no pending case from the Office of the General Counsel and Enforcement and Investors Protection Department; and 
4. A Pre-Evaluation Clearance from the Office of the General Accountant (“OGA”).

Documentary Submission

The registrant shall then begin the registration process by sending digital copies to the Markets and Securities Regulation Department (“MSRD”) via msrdsubmission@sec.gov.ph in word and PDF format of the following: 

1. OGA Pre-Evaluation Clearance Form; 
2. Securing & Expanding Capital for PowerGen Operators & Wholesale Electricity & Retail Services (“SEC POWERS”) Submission Checklist; 
3. Form SEC POWERS; 
4. Prospectus; and 
5. All required Exhibits.

Registration Process

If the MSRD finds the application acceptable for processing, the registrant shall submit 2 sets of hard copies of the same documents, pay the assessed registration and other fees, and send proof of payment to msrdsubmission@sec.gov.ph. The transmission of proof of payment is important, as it is the reckoning point of the 45-day review period. Thereafter, the registrant shall secure a Notice of Filing of the Registration Statement signed by the Director of MSRD. The registrant shall then immediately cause the publication of the notice in 2 newspapers of general circulation in the Philippines for 2 consecutive weeks and submit copies of Affidavit of Publication as soon as available. It is important to note that any request for confidential treatment and/or exemptive relief shall be simultaneously filed with the registration statement. The registrant must also immediately upload a digital copy of the prospectus in the company’s official website, and in case of registration under shelf registration (shelf registration is a registration of a new issue that can be prepared up to 3 years in advance), submit letter of undertaking to pay the remaining registration fee not later than 30 business days prior to the expiry of the 3-year reckoned from the date of the effectivity of the registration statement.

Delayed and Continuous Offering and Sale of Securities

Delayed and continuous offering and sale of securities relate to sale of securities that are intended to be issued in tranches at more than one instance and that may be offered on a continuous or delayed offering for a period not exceeding 3 years from the effective date of the initial shelf registration statement under which they are offered and sold. For subsequent offering, the registrant shall file an updated prospectus, pay the assessed registration fee within 7 business days prior to commencement of the offer/sale based on the total registration fee payable per tranche of issuance and proportional to the issue value, and submit a Certification of No Material Change. However, the SEC noted that subsequent offering after the initial tranche can only be allowed if: 

• The registration statement remains effective; 
• The registration statement is not subject to suspension or revocation orders under Sections 13 or 15 of the SRC;
• The registrant has timely filed reports required under the MC; 
• The registrant or any of its directors or officers is not the subject of an administrative sanction under SRC Rule 54 in connection with an offering or any other SRC violations which is deemed by the SEC as necessary in the interest of the public and protection of investors; or 
• No application for registration or amendment thereof, or request for exemptive relief or for reconsideration, or other similar request shall be accepted by the MSRD unless the payment of the fees and other dues collectible is made. 

Requirement on Minimum Public Offering on Initial Public Offering

Power generation and distribution utilities companies shall be allowed to register their shares of stocks in compliance with the minimum public ownership as set by the Energy Regulatory Commission in compliance with the relevant provisions of the SRC and its Implementing Rules and Regulations. 

Underwriting Requirement and Plan of Distribution

The registrant shall engage an underwriter in the public distribution or offering of the registered shares. However, if the registrant is able to demonstrate that it has the ability to sell all or substantially all of its securities to the public, they shall submit no later than 5 days before the actual filing of the registration statement, a justification letter providing details on how the shares will be sold or offer subject to SEC consideration if it may allow the non-engagement of an underwriter.

Approval of the Registration Statement

The SEC shall review and declare the registration statement effective or reject the same within 45 days after the date of filing with MSRD. If approved and all the conditions of the SEC are complied with, the MSRD shall issue an Order of Registration and/or Permit to Sell Securities to the Public. 

The sale of the securities via public offering shall commence within 10 business days from the date of the effectivity of the registration statement and shall continue until the end of the offering period or until the sale is terminated by the issuer.  If the sale is not commenced within 10 business days, the registration statement shall be cancelled, and all fees paid thereon forfeited. A written notification of completion or termination of the offering shall be filed by the issuer with the MSRD within 3 business days from such completion or termination, and the notice shall state the number of securities sold.