MANILA, Philippines - The Securities and Exchange Commission has firmed up its new rules that will subject property valuators to more stringent application and operational requirements.
In a memorandum, the corporate regulator issued the final exposure draft of the Guidelines on Property Valuations that aim to enhance the reliability and quality of property appraisal reports.
The service of appraisal firms are essential in the transfer of property, be it tangible or intangible, between companies.
Specifically, the SEC said appraisal firms should be registered in the Philippines, with its property valuers being Filipino citizens. The real estate appraiser should also be professionally licensed by the Professional Regulation Commission.
Under existing rules, public companies and secondary licensees of SEC that are planning to receive or transfer property in exchange for shares of stock are required to hire property valuators.
With the revised rules, the SEC also required listed firms’ subsidiaries that will receive property to hire valuators.
“Issuers of securities to the public or public companies that propose to transfer their property to another entity in exchange for shares of stock or cash or property†should also be appraised by accredited valuers, SEC said.
Also required to tap property appraisal firms are listed companies that plan to declare a property dividend.
The new rule comes at the heels of the consolidation of SM Group’s leisure estate, residential and mall development firms under SM Prime Holdings Inc.
The P279-billion transaction allowed SM to create the largest property firm in the Philippines with a market capitalization of $14-billion.
The corporate regulator added operational requirements for property valuation companies.
In the appraisal reports, accredited appraisal company and its valuers should include “the purpose of the appraisal, the description and location of the properties, whether tangible or intangible, and the type of business of the client company.â€
Appraisal firms’ complete name and address, including its SEC accreditation number and validity period, should also be included in the report.
To determine compliance, SEC said it may require an accredited appraisal company to submit a copy of any of its appraisal reports and supporting documents.
“For this purpose, the appraisal company shall indicate in its engagement contracts that it is obligated to provide to the Commission said documents upon its order,†it added.
To remain as an accredited appraisal firm, the SEC said the companies should have all the requisite business permits and license to operate, and at least two licensed valuers and adequate number of technical and administrative personnel for the conduct of valuation.