QuestionsQuestions (Republic Act No. 9182)
The official title is "The Special Purpose Vehicle (SPV) Act of 2002."
The policy is to develop and maintain a sound financial sector, address non-performing asset problems, encourage private investment in NPAs, eliminate barriers to NPA acquisition, rehabilitate distressed businesses for economic growth, and improve financial system liquidity.
NPAs consist of Non-Performing Loans (NPLs) and Real and Other Properties Owned or Acquired (ROPOAs) by financial institutions.
A True Sale means the selling financial institution transfers NPAs to an SPV without recourse for cash or property, relinquishing effective control, legally isolating the NPAs from its creditors, with no direct or indirect management of the SPV by the FI, and the selling FI owning not more than 5% of the SPV.
SPVs can invest in or acquire NPAs, engage third parties for management, rent or sell NPAs, restructure or condone debts, enter into dation en pago, foreclose properties, issue IUIs, borrow money, guarantee credit, advance funds, and entrust asset servicing to third parties.
An SPV must have a minimum authorized capital stock of P500 million, a minimum subscribed capital of P125 million, and a minimum paid-up capital of P31.25 million.
Any person may acquire or hold IUIs with a minimum amount of P10 million, except that the SPV cannot acquire IUIs of another SPV, and selling FI’s related parties are prohibited from acquiring IUIs in the SPV that acquired the FI’s NPAs.
Transfers of NPAs or dation en pago transactions are exempt from documentary stamp tax, capital gains tax, creditable withholding income taxes, and value-added or gross receipts tax. They also enjoy 50% reduction of certain mortgage and foreclosure fees.
Any person who abuses tax exemptions shall be subject to penalties under Section 25, including fines from P50,000 to P1,000,000, imprisonment from 6 years and 1 day to 12 years, refunding double the amount of taxes evaded plus 12% annual interest, and other penalties such as license suspension or deportation for aliens.
All sales or transfers of NPAs to an SPV shall be in the nature of a true sale after proper notice and approval; GFIs and GOCCs shall also be subject to existing laws on asset disposition.
Privileges on NPA transfers to the SPV last for two years from the effectivity of the IRR; transfers by the SPV to a third party enjoy privileges for up to five years from acquisition.
A Congressional Oversight Committee (COC) composed of members from the Senate and the House of Representatives is created to oversee the Act's implementation.
The SPV Plan must include investment policies, contribution plan, IUI features and amounts, rights of IUI holders, trustee and agent agreements, external auditor details, roles of advisors and managers, financial reporting forms, distribution policies, modification methods, liquidation methods, credit enhancements, and other required info.
They face fines of P50,000 to P1 million, imprisonment from 6 years and 1 day to 12 years, or both; corporations' officers who participated or allowed the act can also be penalized including possible license suspension or revocation.