PenCom Clarifies Ownership/Acquisition Restrictions in PFAs & PFCs
The National Pension Commission (PenCom) has issued an important addendum to the Circular on Shareholding/Ownership in more than one Licensed Pension Fund Administrator (PFA) or Pension Fund Custodian (PFC). The addendum reiterated that ownership restrictions apply across all forms of acquisitions.
PenCom said the original Circular addressed concerns arising from mergers and acquisitions outside the pension sector, which led to individuals or entities holding equities of 5% or more in multiple PFAs or PFCs. Thus, to uphold transparency, governance, and fiduciary responsibility, PenCom introduced restrictions via the Circular in September 2015, to prevent conflicts of interest from such overlapping ownership.
PenCom disclosed that its attention has now been drawn to arguments suggesting that the restriction imposed by the Circular applies only to ownership from mergers and acquisitions and not direct investments or new licensing. It has been further argued that the restriction should not apply to entities not directly licensed by PenCom.
PenCom by this Addendum, hereby clarifies and affirms that the ownership restriction provided by the Circular of September 2015 applies regardless of how the stake is acquired, whether through mergers, acquisitions within or outside the pension sector, direct investment, new licensing or other means howsoever.
PenCom concluded that the objective is to ensure that no shareholder or applicant company should have direct or indirect ownership/shareholding of 5% and above in more than one PFA or PFC. This include affiliates, holding companies, subsidiaries, related parties of the shareholder as well as its Directors, employees, spouses and family members of the shareholder or new applicant company.
Why This Matters
Strengthening Fiduciary Integrity:
By closing loopholes regarding ownership origin, PenCom ensures that no individual or entity can wield undue influence across multiple pension platforms.
Upholding Temperance in Governance:
Overlapping stakes in PFAs or PFCs could impair objective decision-making. This addendum safeguards against such risks.
Ensuring Sector Stability:
A transparent shareholding structure contributes to trust and bolsters the long-term stability of the pension industry.
Closing Thoughts
This addendum reinforces PenCom’s commitment to ensuring a robust, transparent, and conflict-free pension system.
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