Establishes Maharlika Investment Fund

Law Summary

Definitions of Key Terms

Advisory Board: Provides guidance to the MIC Board.
Board of Directors: Governs MIC.
Divestment: Transfer or disposal of property interests excluding close relatives.
Founding Government Financial Institutions (GFIs): Land Bank of the Philippines (LBP) and Development Bank of the Philippines (DBP).
Independent Director: A director free from conflicts of interest.
Maharlika Investment Corporation (MIC): Government-owned corporation managing the MIF.
Maharlika Investment Fund (MIF): The fund created under the Act.
Regular Director: Full-time MIC Board member appointed by the President.
Santiago Principles: International best practice standards for Sovereign Wealth Funds.

Establishment and Corporate Structure of MIC

MIC created as the sole vehicle to manage MIF investments to generate optimal returns and boost economic growth.
MIC headquartered in Metro Manila with possible branches domestically and abroad.
Authorized capital stock of PHP 500 billion divided into common and preferred shares, with initial subscriptions from the National Government, LBP, and DBP.
Capitalization sources include BSP dividends, PAGCOR income shares, proceeds from privatization, royalties, and special assessments.
MIC’s corporate powers include entering contracts, owning properties, issuing bonds, and compromising claims within prescribed limits.

Functions of MIC

Diversify investments locally and globally.
Manage and invest initial and future fund contributions.
Accept investment mandates aligned with development goals.
Develop expertise in finance, risk management, and good governance.
Adhere to Santiago Principles and international transparency standards.

Financial Instruments and Bond Issuance

MIC may issue bonds, debentures, and other securities domestically or internationally.
Such bonds are payable from MIC assets but are not guaranteed by the Philippine government.

Administrative and Operational Expenses

Expenses capped at 2% of funds under management, with targets to reduce overhead costs over time.

Maharlika Investment Fund (MIF) Establishment and Objectives

MIF formed from MIC capitalization, investments from selective GFIs and the National Government.
Social security and public health insurance entities are prohibited from investing.
Investments limited to 25% of respective GFIs’ net worth.
MIF aims for socioeconomic development through strategic, profitable investments maintaining liquidity, safety, and yield.

Allowable Investments

Investments include cash, foreign currencies, sovereign and corporate bonds, equities, Sukuk bonds, joint ventures, real estate and infrastructure aligned with national priorities, health, education and sustainable development projects, loans and guarantees supporting economic development.
Investments must align with sustainability principles.

Joint Ventures and Transparency

Joint ventures and co-investments must be regulated with terms prescribed by the MIC Board.
Transparency ensured through regular public disclosure of joint venture terms and financial operations on the MIC website.

Prohibited Investments

MIC is barred from investing in areas prohibited by Philippine law or international conventions to which the country is a party.

Investment Policy Formulation

The MIC Board shall establish comprehensive investment and risk management policies promoting ESG principles, risk limits, performance standards, and international best practices.
Priority on government infrastructure and developmental projects with high return and developmental impact.
All policies and updates are to be publicly available on the MIC website.

Safeguards and Disclosure

Investment activity governed by risk management limits and procedures overseen by the Board and Advisory Body.
Financial liability guarantees require proper authority; no automatic government guarantee.
Third-party fees and charges related to the management of the Fund are charged to the MIF.

Governance Structure

Board of Directors consists of 9 members: Secretary of Finance (Chair), MIC President & CEO (Vice-Chair), LBP and DBP CEOs, two Regular Directors, and three Independent Directors.
Directors serve fixed terms with qualifications in governance, finance, or investments; disqualified persons include those convicted or found liable for fraud or corruption.
Directors required to hold fidelity bonds.
Board powers include directing MIC management, approving policies, setting criteria, overseeing investments, issuing debt instruments, appointing officials, and governance oversight.
Risk Management Committee established from Board members and senior MIC executives.
Advisory Body composed of key economic officials advises the Board but does not manage MIC.

Board Meetings and Procedures

Meetings held at least bi-weekly; quorum requires majority presence.
Decisions made by majority vote.
Records of meetings preserved digitally or in original form.

Management Officials

President & CEO manages operations, risk, and financial performance; appointed by the President for a 3-year term.
Chief Investment and Operations Officer manages investment policies and team.

Applicability of Laws

MIC subject to the GOCC Governance Act, Government Procurement Reform Act (with exceptions for investment-related professional services), and other applicable laws.
Personnel secondment and designation rules for staff contribution.

Financial Reporting and Audit

Financial statements aligned with financial reporting standards.
Internal auditor appointed by the Board, independent from management.
External auditor engaged annually for independent audit.
COA conducts audits including special audits every five years.

Disposal of Assets

MIC’s disposal of investment assets is exempt from existing laws regulating government asset disposal.

Oversight and Transparency

A Joint Congressional Oversight Committee monitors compliance and receives quarterly confidential investment reports.
Public access to documents including investment details, board members’ SALNs, and audit reports.
Records maintained as per national archives and relevant securities and corporate laws.

Dispute Resolution

Disputes relating to investments resolved first by negotiation, failing which by international arbitration systems.
Oversight committee updated on dispute statuses.

Offenses and Penalties

Directors or officers violating qualifications fined PHP 5 to 7 million, with higher fines if public harmed, plus perpetual disqualification.
Independent auditors certifying misleading financials face fines and imprisonment.
Parties involved in graft or corruption subject to heavy fines, imprisonment, and disqualification.
Protection for whistleblowers with penalties for retaliation.
Liabilities are separate from other criminal or administrative penalties under related laws.
10-year prescription for offenses but recovery rights of unlawfully acquired assets persist.

Appropriations and Funding

Capitalization partly funded by BSP dividends, PAGCOR government income shares, privatization proceeds, and other sources, with safeguards for existing statutory uses.
Funds appropriated solely for MIC capitalization not exceeding 51% government ownership.

Legal Counsel and Corporate Duration

Office of Government Corporate Counsel provides legal support.
MIC exists for 35 years, extendable or repealable by Congress.

Implementation, Supplmentary Application, and Severability

Rules to be promulgated within 90 days.
Revised Corporation Code applies as supplementary law.
Invalid provisions do not affect remainder of the Act.

Repealing Clause and Effectivity

Inconsistent laws repealed or amended.
Act effective immediately upon publication and to be promulgated in Filipino after effectivity.