Among the measures that the SEC is looking at will require exclusive recreational and sports clubs to place in escrow proceeds from the sale of their club shares.
An SEC committee looking into the operations of leisure clubs said fund withdrawals can only be made upon presentation of the company’s work progress report.
The committee added only 50 percent of the monthly membership dues should be collected if the project is partly operational with available basic amenities like bathroom and cafeteria. The full amount will then be required once the project has been fully completed, the committee said.
In addition, the committee also wants leisure clubs to properly notify its club members of any increase in fees.
"For the benefit of secondary markets, proper notices and other communications on the charging of fees must be posted on the bulletin boards situated at conspicuous place/s at the site," the committee said.
The SEC committee likewise wants leisure clubs to establish procedures to ensure that prospective club members are properly qualified before the actual sale of shares is executed.
The creation of the working committee was spurred by complaints received by the SEC from a number of investors.
The team is composed of top SEC officials led by Justina Callangan, who heads the Corporation Finance Department; Jose P. Aquino of the Markets Regulation Department; Emil P. Aquino of the Non-Traditional Securities Department; Company Registration and Monitoring Department director Benito Cataran, and SEC general accountant Roberto Manabat.
Most of the complaints received by the SEC were the exorbitant fees being charged by several leisure clubs even when there are no basic facilities to offer just yet.
Investors also complained about the failure of these leisure clubs to meet their timetable for completion of recreational facilities. As a come-on, membership clubs make promises to offer various ammenities like swimming pools, sauna, golf courses, basketball courts, gym, and other sports facilities.
Another problem cited is the charging of transfer fees by these clubs once a shareholder or member decides to sell his shares to another.
Recreational clubs are comprised of groups of individuals who share common recreational pursuit, although membership in a club is open to anyone in a community.