By Franchette M Acosta, Senior Partner, Villaraza & Angangco
E: fm.acosta@thefirmva.com | www.thefirmva.com
The Philippine Reclamation Authority (PRA) issued on 18 April 2018 Guidelines for joint venture agreements (JVAs) with private sector entities (PSEs). The Guidelines govern all JVAs formed for the development and disposition of PRA’s existing properties and projects, whether owned, administered or controlled by PRA. The JVAs must be entered into only for activities directly and immediately related to the primary purpose of the PRA to dispose government assets. The Guidelines do not cover reclamation or to be reclaimed lands that are still part of the public domain.
The PRA will have the option to enter into incorporated or unincorporated joint ventures. If the parties choose to incorporate the JV, the following parameters must be observed:
- The JV company shall be incorporated as a stock corporation pursuant to the Corporation Code of the Philippines;
- Ownership and nationality restrictions must be observed;
- The PRA’s equity contribution in the JV company shall be no more than 50% of the corporation’s outstanding capital stock;
- The PRA may contribute equipment, land, utility franchise, development rights, leasehold rights, intellectual property and cash;
- The PSE cannot dispose its shares in the JV company without the express written consent of the PRA;
- The PRA shall be entitled to seats in the governing body in proportion to its investment;
- The PRA and PSE shall be entitled to dividends;
- The corporate term of the JV company shall not exceed 50 years;
- The PRA can withdraw its investment prior to the expiration of its corporate term, in accordance with initial public offering or other competitive process.
To the extent possible, an unincorporated JVA should embody these parameters.
The choice of JV partner under the Guidelines shall be the product of a competitive process, whether through competitive bidding or negotiated process in case of an unsolicited proposal or failure of a competitive bid.
Notably, a qualified PSE is required to submit a statement waiving any right to seek a writ of injunction or prohibition or restraining order against PRA to prevent or restrain the qualification proceedings, the award of the contract to a successful PSE, and carrying out of the awarded contract.
The following summary of portions of the Philippine Reclamation Authority Guidelines and Procedures for Entering into Joint Venture Agreements with Private Sector Entities is for information purposes only and is not intended to constitute legal advice.