Question & AnswerQ&A (Republic Act No. 11523)
The short title of Republic Act No. 11523 is "Financial Institutions Strategic Transfer (FIST) Act."
The State's policy is to develop and maintain a sound financial sector, address non-performing assets problems of the financial sector, encourage private sector investments in NPAs, eliminate barriers in acquiring NPAs, assist rehabilitation of distressed businesses, and improve financial system liquidity.
A FISTC is a stock corporation organized under the Revised Corporation Code of the Philippines that acquires non-performing assets from financial institutions for strategic transfer and management.
FIs include the Bangko Sentral ng Pilipinas (BSP), banks, financing companies, investment houses, lending companies, accredited microfinance NGOs, insurance companies, government financial institutions (GFIs), government-owned or controlled corporations (GOCCs), and other BSP-licensed credit-granting entities.
IUIs are participation certificates, debt instruments, or similar instruments issued by a FISTC and subscribed by permitted investors under an approved FISTC plan, excluding those issued to selling FIs as settlement for transferred NPAs.
A true sale is a transaction where the selling FI transfers full legal and beneficial title to the NPAs to a FISTC without recourse, relinquishes control, isolates the assets from its creditors, and holds no more than 10% ownership in the FISTC.
A FISTC can invest in or acquire NPAs from FIs, manage and dispose of those assets, restructure debts, engage third-party services, issue IUIs, borrow money, guarantee credit, demand data packages from FIs, and advance funds for debt restructuring among others.
The FISTC must have a minimum authorized capital stock of Five hundred million pesos (P500,000,000), a minimum subscribed capital stock of One hundred twenty-five million pesos (P125,000,000), and a minimum paid-up capital of Thirty-one million two hundred fifty thousand pesos (P31,250,000).
Tax exemptions and fee privileges on the transfer of NPAs from FIs to FISTCs are available for a period not exceeding two years from the effectivity of the Act and may extend to five years for transfers from FISTCs to third parties or for dation in payment by borrowers.
Violations can result in fines from One hundred thousand to Two hundred thousand pesos, imprisonment from six to twelve years, or both. Juridical persons may face suspension or revocation of approved FISTC plans, fines up to One million pesos plus daily penalties, and other sanctions. Public officials may also face disqualification and aliens may be deported after serving penalties.