Rules set on equity for firms

MANILA, Philippines — The proposed equity infusion by the government for large companies hit hardest by the pandemic will come with conditions meant to promote the prudent use of resources.

In a business forum yesterday, acting Socioeconomic Planning Secretary Karl Chua said the conditions include non-payment of dividends, no increase in the salaries of their executives, and no spending on luxury, among others.

Under the proposed Bayanihan II law, large firms can be provided equity infusion to match the amount that banks are willing to lend to them.

This is meant to provide liquidity to firms to ensure they survive and remain viable.

This will be done by forming joint ventures that will be targeted, time bound and subject to conditions.

“For the large firms, we are proposing the creation of a time-bound joint venture with our government financial institutions and the private sector to provide targeted and time-bound equity infusion,” said Chua.

“But there are conditions. For instance, they cannot pay dividends, they cannot increase their executive pay, they cannot spend on luxury. So these are on the plans right now.”

For this, government financial institutions such as the Bangko Sentral ng Pilipinas, Land Bank of the Philippines and the Development Bank of the Philippines will be working with multilateral development institutions and the private sector.