The official, who requested not to be named, said that aside from taking over the management of CAP, the corporate watchdog is considering other options, including imposing administrative and/or criminal charges against the pre-need firm.
The same official said the SEC will conduct a comprehensive audit into the books and records of CAP to determine the pre-need firm’s compliance with securities rules.
CAP has been given until Monday next week to explain why no sanctions should be imposed against it for its failure to comply with rules governing the pre-need industry, including the infusion of fresh capital to reduce its trust fund deficit which currently stands at over P17 billion.
SEC records showed that CAP’s trust fund stood at only P4.7 billion as of end-March this year.
CAP was also found to have been remiss in filing reportorial requirements with the SEC.
The collegial body of the SEC earlier approved a proposal for a management takeover of CAP following a careful review of the terminal report prepared by an SEC oversight committee. The creation of the management committee (mancom) was necessary to prevent further erosion of the pre-need firm’s assets, which according to the SEC official, are mostly made up of real estate properties.
Apart from supervising the operations of CAP, the mancom’s role would also include preserving the assets of the company, securing all records, and studying the viability of continuing CAP’s business.
The SEC is now working on the composition of the mancom.
The SEC en banc’s decision took into account CAP’s failure to beef up its trust fund and the mounting complaints the regulator has received against the company.
The mancom will be tasked with drafting a settlement plan that would allocate the remaining funds of the company not only among planholders with maturing obligations but also of those planholders availing of payments in the future.
However, CAP earlier assured planholders it would not default in its obligations and that it remains committed to delivering services promised to investors.
"In spite of the problems caused by the unrestrained tuition increases, CAP is not giving up nor running away from the problem. We have been paying and still continue paying tuition fees," CAP’s first vice president Bobby Café earlier said.
CAP said it expects to receive around P1 billion in equity infusion from European-based fund manager International Global Capital Holdings
According to Cafe, CAP is also in talks with a local financial services group for the possible infusion of another P1 billion in fresh equity.