SEC eyes stricter disclosure rules for firms with gov’t projects
The Securities and Exchange Commission (SEC) is looking to tighten disclosure rules for firms handling government projects after fund managers raised concerns over transparency in flood control spending.
Bloomberg recently reported that 11 fixed-income investors had written to the SEC and the national treasury in late March, urging stricter rules on use-of-proceeds disclosures.
They are also pushing for greater transparency in infrastructure spending.
The investors are seeking coordinated action from regulators, including clearer measures to strengthen institutional independence as part of anticorruption efforts, as well as improved standards for selecting and evaluating projects.
SEC Chair Francis Lim stressed that existing rules already follow global standards, although regulators are prepared to strengthen oversight.
“On the disclosures, our regulations adopted global standards. Nonetheless, we welcome feedback and remain committed to upholding market integrity and investor confidence,” Lim told the Inquirer.
Lim said the SEC was already studying proposals to classify companies with significant government contracts as “corporations vested with public interest.”
“For example, we were already discussing categorizing companies … as companies vested with public interest so that we can impose corporate governance requirements,” he said.
These would include governance and audit committees, as well as periodic reporting on how government funds are used, similar to initial public offering disclosures.
SEC Commissioner Rogelio Quevedo also said the regulator had already been reviewing potential reforms even before receiving the fund managers’ appeal.
To address gaps, the SEC is crafting a broader definition of “corporations vested with public interest,” expanding oversight beyond listed firms.
“Under the regulatory power of the SEC, we are contemplating on a definition of corporations vested with public interest,” Quevedo added.
He flagged concerns over firms with large government contracts but minimal capitalization, particularly in flood control projects.
“We have noted that flood control companies have billions of contracts. But the capitalization is only P1 million,” he said.
Quevedo added that sustainability-linked financing is also being used in such projects, reinforcing the need for stricter oversight.
The proposed reforms aim to close regulatory gaps and ensure greater accountability, particularly for companies managing public funds or large infrastructure projects.
