Here’s the second part of the article that we published yesterday and will focus on stockholders’ rights and protection of minority stockholders’ interests.
The Board shall respect the rights of stockholders as provided in the CCP: right to vote, pre-emptive right, inspect corporate books and accounts, right to information, right to dividends and appraisal rights.
For appraisal rights, it involves valuation, liquidation and sale of assets.
In reporting to the meeting, the Board should be transparent and fair in the conduct of meetings and should report before the meetings. They should promote the rights of shareholders and remove impediments to the exercise of their rights.
Stockholders should be encouraged to personally attend meetings/ apprised of their right to appoint a proxy who shall not be unduly restricted. Any doubt about the validity of the proxy should be resolved in favour of stockholders.
In a preparation, which is 15 days to prepare, the Board should provide adequate venue for them to seek redress for breach of their rights. They take steps to remove excesses of unnecessary costs and other administrative impediments to their meaningful participation in the meeting.
The Board should give timely and accurate information to the shareholders before meetings and should give minority shareholders the right to propose the holding of meetings and items for discussions.
The Governance Self-Rating System may be created by the Board to measure the performance of of the Board and Management in accordance with the criteria provided for in this Code. They should follow internal rules and take initiative.
Transparency should be given in disclosing the earning results, acquisition and disposition of assets, off balance sheet transactions, related party transactions, and direct and indirect remunerations of board members and management.
Real Estate Appraisal is a very important job of real estate services because no two or more properties are alike. Due to its importance, the Real Estate Appraiser should be a professional, as required by the Philippine law, in tendering written report and advice on the value of a property.
The Republic Act 9646, sec. 3 (a) defines that “Appraiser, also known as Valuer, refers to a person who conducts valuation/appraisal; specifically , one who possesses the necessary qualifications, license, ability, and experience to execute or direct the valuation/appraisal of real property.”
Also, in Section 3 of the Real Estate Service Act Law (RESA Law), it states that “The act of rendering an opinion of value is the person who shall be licensed under the Professional Regulation Commission and the Professional Board of Real Estate Service.”
As further defined on sec. 3 (g) Real Estate Practitioners shall refer to and consist of the following:
Real Estate Consultant- a duly registered and licensed natural person who, for a professional fee, compensation or other valuable consideration, offers or renders professional advice and judgment on (i) the acquisition, enhancement, preservation, utilization or disposition of lands or improvements thereon; and (ii) the conception, planning, management and development of real estate projects.
Real Estate Appraiser- a duly registered and licensed NATURAL PERSON who, for a Professional fee compensation or other valuable consideration, performs or renders, or offers to perform services in estimating and arriving at an opinion of or acts as an expert on real estate values, such services of which shall be finally rendered by the preparation of the report in acceptable written form.
My Advocacy is the proper recognition, accreditation, acceptance, and due respect given to the privileged professional.
I am referring to the Sec. 2 of R.A. 9646, stating that the Declaration of Policy states that the State recognizes the vital role of real estate practitioners in the social, political, economic development and progress of the country by promoting the real estate market, stimulating economic activity and enhancing government income from real property-based transactions.
It is therefore my concern and responsibility, as member of the Board of Real Estate Service to see to it that this law is properly followed. However, there is a dilemma whereby government agencies, corporations, including the Banko Sentral ng Pilipinas (BSP) and the Security and Exchange Commission (SEC) to accredit only Corporate Practice.
The SEC requirements for the accreditation of Real Estate Appraisers under SEC Memorandum No. 4, series of 2010, entitled, “Guidelines on Property Valuations, states that an appraisal company is defined as a corporation or partnership engaged in the appraisal business and employs a property valuer to conduct valuations of properties of its clients. The Circular also requires that for valuation of real properties relative to transaction of a REIT, the appraisal company or property valuer shall use the income capitalization approach, as provided for in paragraphs 5.12.2 to 5.12.6 of GN1-Real Property Valuations of the Property Valuations Standards.
For BSP, the following requirements are required for BSP Accreditation: SEC Accreditation, GIS (General Information Sheet), latest Audited Financial Statement, Mayor’s permit, BIR Certification, Tax Clearance/Registration, ITR, Business Permit, PARA (or maybe even IPREA whichever you are affiliated with) Certification of Good Standing, List of Officers and Technical Personnel including curriculum vitae and certifications, Company Profile, Scope of Services, List of Present Clientele, Minimum of 5 years existing company with licensed officer, and have rendered professional service to at least one commercial bank and two public companies.
I view these requirements as prejudice and discriminating to the Real Estate Appraisers because according to Section 32 of R.A. 9646, the conditions for Corporate Practice of the Real Estate Service are:
(a) No partnership or corporation shall engage in the business of real estate service unless it is duly registered with SEC and the persons authorized to act for the partnership or corporation are all duly registered and licensed real estate brokers, appraisers or consultants, as the case may be. The partnership or corporation shall regularly submit a list of its real estate service practitioners to the Commission and to the SEC as part of its annual reportorial requirements.
Since this is a profession whose subject is the person, it is logical that these corporations and/ or partnerships be owned, managed and controlled by duly licensed real estate appraisers. Just in the case of accountants, lawyers, medical doctors, it is the professional who owns, runs and manages the corporation. It is a professional service, not a trade or business.
The practice that is being done today is that corporations are formed, owned, managed, controlled by a majority of shareholders that are not professionals, nor do they have the appropriate license. The appraisal practice due to the SEC regulations has made it almost impossible to reform valuations as an individual. Presently, there are about 3,000 licensed real estate appraisers but only ten corporations are accredited.
This situation allowed investors to use (or even abuse) the individual appraiser as mere employees. Yet, by using their license, these owners and shareholders of appraisal companies absolve themselves from any responsibility.
If anything goes wrong, the Board of Directors and management will “wash their hands” and claim that they had nothing to do with the Appraisal Report and therefore defend themselves from litigation, legal cases, and complaints from clients.
So strict rules and guidelines in the corporate practice of rendering Real Estate Appraisal Services should be implemented.
I’m urging that the Appraisal Associations like the Institute of Real Estate Appraisers Inc. (IPREA) and the Philippine Association of Real Estate Appraisers Inc. (PARA), together with other Real Estate Associations and groups to join us in this advocacy in order to implement the Real Estate Service Act.
It is not only for the interest of our professional real estate practitioners but for the good of our economy, society and nation. For the wealth of our country is measured by true, single, fair market valuation, rendered by the Filipino professional real estate appraiser that is globally competitive and with competence of International Standards.