Investors in pre-need firms face SEC scrutiny
April 11, 2005
Byline: ANA MARIE MACUJA
Investors buying into pre-need companies should be placed under thorough review by the Securities and Exchange Commission (SEC), an official from the corporate regulator said.
According to an official from the SEC, investors should undergo a background check to make sure they are legitimate and really have the funds to run a business.
The official said this is a loophole that needs to be addressed considering the possibility that there may be individuals or companies that will pose as investors but will actually just drain a companys funds.
The official added this was the case of Asian Diamond, Inc., a financially troubled pre-need firm which allowed the entry of a Singaporean national, Bryan Wee Poh Aun in 2002.
The new investor committed to revive the companys business and infuse the necessary funds to make the company in compliance with the paid-up capital requirement of the Commission.
However the takeover of the management led by the Singaporean national proved to be a wrong move for the company as Asian Diamonds finances were even drained by the new investor, the SEC official said.
In fact, an Oversight Committee earlier formed by the SEC has recommended for the filing of criminal charges against Bryan Wee Poh Aun and other responsible officers of the company.
The failure of Asian Diamond to get another investor and replenish its funds within the required period caused the company to be liquidated. This was the decision made by the Oversight Committee which was later approved by the SEC.
Given these circumstances, the SEC official said the entry of a potential foreign investor into Vantage Pension should be placed under review. “There should be a background check on this foreign investor,” the official said.
“The problem is as long as there is money, we think it is ok already. Then we find out that they are just a shell company. This is one area that the SEC should look into. Sad to say this is one of the weak areas of the current rules. This should be addressed, maybe the Insurance Commission will be the one to handle this. We would make this as one of our inputs to them when they takeover the pre-need industry,” the official added.
Vantage Pension was once an active pre-need firm but decided to suspend its operations in the 1990s. Now the company wants to resume its operations in the light of an investor coming in.
But in order to resume its operations Vantage Pension has to put up P50 million in paid-up capital as required under the New Pre-Need Rules.
The SEC rules provide a P100 million paid-up capital requirement for companies selling three plan types(education, pension and life), P75 million for companies selling two plan types and P50 million for those selling only one plan type.(AMM)
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