Under Republic Act No. 9136, otherwise known as the Electric Power Industry Reform Act of 2001 (EPIRA), and its Implementing Rules and Regulations (IRR), the ERC was tasked to promulgate the rules and guidelines under which GCs and DUs that are not publicly listed would be required to offer and sell to the public a portion of not less than 15% of their common shares of stocks (“Public Offer Requirement” or POR). Pursuant to this mandate, the ERC issued Resolution No. 09, Series of 2011 on 23 May 2011, adopting the Rules Requiring Generation Companies and Distribution Utilities Which Are Not Publicly Listed to Offer and Sell to the Public a Portion of Not Less Than Fifteen Percent (15%) of Their Common Shares of Stock Pursuant to Section 43(t) of Republic Act No. 9136 and Rule 3, Section 4(m) of its Implementing Rules and Regulations (“POR Rules”).

The current ERC update clarifies that a publicly listed holding company can satisfy the POR for its controlled GC or DU, provided that ownership and control relationships are clearly documented.

ERC Resolution No. 17, Series of 2025 also clarified the deadlines for compliance with the POR, which originally under the EPIRA was within five years from the effectivity of the EPIRA (for existing companies) and five years from the issuance of their certificate of compliance (COC) for new companies.

In more detail

Despite several amendments to the POR Rules, the ERC observed that many companies encounter challenges in complying with the POR. The ERC also noted that compliance with the POR has not yet reached the level of traction that it had envisioned. Consequently, to ensure the uninterrupted supply of electricity, the ERC has been constrained to issue Provisional Authorities to Operate (PAO), subject to the submission of sworn undertakings to comply with the POR.

In order to streamline the enforcement of the POR and align with the requirements of the Philippine Stock Exchange (PSE) for public listing, the following amendments were introduced:

Definition of terms

1. “Control” is now defined as the power to determine the management or policies of a corporation, whether through ownership of voting shares, by contract, or otherwise, consistent with the definition under existing securities and corporate laws.
2. The definition of “Holding Company” was also expanded to refer to a juridical person:
   1. Holding a substantial portion of the voting stocks of a GC or DU enough to Control or influence the management, policies or affairs of such GC or DU; or
   2. Whose primary purpose is to have Controlling interest in other companies.

A Holding Company also includes companies that have an indirect Control or ownership of another company through one or more intermediary companies.

Compliance with the POR via Holding Companies

ERC Resolution No. 17, Series of 2025 states that a publicly listed Holding Company shall be deemed to satisfy the POR on behalf of its controlled GC or DU, provided that the ownership structure and control relationships, direct and indirect, are clearly established, documented and certified by the corporate secretary or authorized officer attesting to the accuracy of the information submitted to the ERC.

Period of Public Offering

1. For GCs – Either of the following:
   1. Within five years from issuance of its COC, provided that the GC is already compliant with the PSE’s prevailing listing requirements pertaining to the following:
      1. Track record of profitable operations
      2. Positive stockholders’ equity
      3. Market capitalization
      4. Operating history
      5. Minimum capital requirement
      6. Minimum number of stockholders
      7. Such other requirements ERC may impose; or
   2. Within five years from the time the GC is able to comply with the requirements for listing with the PSE
2. For DUs – Within five years from the time the DU qualifies for listing based on the requirements for listing with the PSE, or the effectivity of ERC Resolution No. 17, Series of 2025, whichever comes later.

Within 30 days from the time a GC or DU possesses all the applicable requirements for listing with the PSE, it must report such fact to the ERC and, within the same period, initiate its application for listing with the PSE.

Compliance monitoring

All GCs and DUs that are not yet compliant with the POR are required to submit a verified declaration attesting to the following:

1. Financial performance for the last three years
2. Stockholders’ equity
3. Market capitalization
4. Operating history
5. Authorized capital stock
6. Number of stockholders
7. Other material facts proving that the company is not yet qualified to list with the PSE

The verified declaration must be submitted to the ERC on the 15^th of January of each year.

Failure to comply with the above reporting requirements may result in administrative liability and the imposition of fines and penalties. These may include the cancellation of a GC’s COC or PAO, or a DU’s Certificate of Public Convenience and Necessity, as well as the issuance of a closure order by the ERC.

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