Power generation companies and distribution utilities can now easily tap the capital market to raise fresh funding by offering public securities—thanks to a recent Securities and Exchange Commission, or SEC, order that simplified the process.

The SEC issued Memorandum Circular No. 4, Series of 2024 last 15 February to roll out a so-called SEC POWERS, which stands for Securing and Expanding Capital for PowerGen Operators and Wholesale Electricity and Retail Services.

Under the Electric Power Industry Reform Act of 2001, or EPIRA, power generation companies and distribution utilities are required to offer and sell at least 15 percent of their shares to the public.

The SEC POWERS has streamlined the process for these companies to register their securities.

The simplified procedure supports the state policy to enhance the private capital inflow and broaden the ownership base of the power generation, transmission, and distribution sectors, as provided under the EPIRA Law.

Under the guidelines, the SEC Markets and Securities Regulation Department, or MSRD, needs to complete the review of the registration statement within 45 days from filing, according to the requirements of the Securities Regulation Code, or SRC; Revised Corporation Code of the Philippines; and other pertinent issuances of the SEC.

Upon favorable consideration by the Commission En Banc of the registration statement, the MSRD will issue a pre-effective letter stating the conditions to be complied with.

Once all conditions are met, the MSRD will then issue the Order of Registration and/or Permit to Sell Securities to the Public.

The public offering and sale of the securities may then commence within 10 business days from the date of the effectivity of the registration statement.

To facilitate the timely processing of its registration statement, the registrant shall secure all necessary clearances from the SEC Company Registration and Monitoring Department, Corporate Governance and Finance Department, Enforcement and Investor Protection Department, Office of the General Counsel, and Office of the General Accountant before filing its application with the MSRD.

Notably, the SEC POWERS has also waived the minimum public float requirement of 20 percent of listed companies, as provided under SEC Memorandum Circular No. 13, Series of 2017, in favor of the 15 percent minimum requirement under EPIRA.

A corporation that's registered may decide not to involve an underwriter in the public distribution or offering of its shares.

However, it must first obtain approval from the SEC by demonstrating that it's capable of selling all or substantially all of its securities to the public.

Similarly, a power generation company or a distribution utility company is allowed to issue securities in tranches, which can be offered continuously or on a delayed basis.

This can be done for a period of up to three years from the effective date of its initial shelf registration statement.