Beruflich Dokumente
Kultur Dokumente
8799)
Purpose:
1. To establish a socially conscious, free market that regulates itself
2. To encourage the widest participation of ownership in enterprises
3. To enhance the democratization of wealth
4. To promote the development of the capital market
5. To protect investors
6. To ensure full and fair disclosure about securities
7. To minimize if not totally eliminate insider trading and other fraudulent or
manipulative devices and practices which create distortions in the free market.
1. Market Regulation Department- develops the criteria for all market participants
and supervises to ensure compliance with registration requirements and endorses
infractions of the Code and rules and regulations to the Compliance and
Enforcement Department.
2. Corporation Finance Department- registers securities before they are offered for
sale or sold to the public and ensures that the information needed about the
securities are adequate.
3. Non-Traditional Securities and Instruments Department- registers and licenses
non-traditional securities and instrument including, but not limited to, pre-need
plans, commodity future contracts, proprietary or non-proprietary membership
certificates and other similar instruments.
4. Company Registration and Monitoring Department- registers domestic
corporations, partnerships and associations, including representative offices and
foreign corporations intending to do business in the Philippines.
5. Compliance and Enforcement Department- ensures compliance by all market
participants, issuers and individuals and takes appropriate enforcement action
against them for legal infraction of the Code and other relevant laws, rules and
regulations implemented by the Commission.
Commission
- Shall hold meetings at least once a week for the conduct of business or as
often as may be necessary upon the call of the Chairperson or upon the
request of (3) commissioners.
- Notice of meeting shall be given to all commissioners and the presence of 3
commissioners shall constitute a quorum.
- In the absence of the Chairperson, the Senior Commissioner shall act as
presiding officer of the meeting.
- May delegate any of its functions to any department for purposes of
efficiency.
Section 5 of RA 8799 states that: “The commission shall act with transparency and
shall have the powers and functions provided by this code, Presidential Decree No.
902-A, the Corporation Code, the Investment Houses law, the Financing Company Act
and other existing laws. Pursuant thereto the Commission shall have, among others,
the following powers and functions:
(a) Have jurisdiction and supervision over all corporations, partnership or associations
who are the grantees of primary franchises and/or a license or a permit issued by the
Government;
(b) Formulate policies and recommendations on issues concerning the securities
market, advise Congress and other government agencies on all aspect of the
securities market and propose legislation and amendments thereto;
(c) Approve, reject, suspend, revoke or require amendments to registration statements,
and registration and licensing applications;
(d) Regulate, investigate or supervise the activities of persons to ensure compliance;
(e) Supervise, monitor, suspend or take over the activities of exchanges, clearing
agencies and other SROs;
(f) Impose sanctions for the violation of laws and rules, regulations and orders, and
issued pursuant thereto;
(g) Prepare, approve, amend or repeal rules, regulations and orders, and issue
opinions and provide guidance on and supervise compliance with such rules,
regulation and orders;
(h) Enlist the aid and support of and/or deputized any and all enforcement agencies of
the Government, civil or military as well as any private institution, corporation, firm,
association or person in the implementation of its powers and function under its Code;
(i) Issue cease and desist orders to prevent fraud or injury to the investing public;
(j) Punish for the contempt of the Commission, both direct and indirect, in accordance
with the pertinent provisions of and penalties prescribed by the Rules of Court;
(k) Compel the officers of any registered corporation or association to call meetings of
stockholders or members thereof under its supervision;
(l) Issue subpoena duces tecum and summon witnesses to appear in any proceedings
of the Commission and in appropriate cases, order the examination, search and
seizure of all documents, papers, files and records, tax returns and books of accounts
of any entity or person under investigation as may be necessary for the proper
disposition of the cases before it, subject to the provisions of existing laws;
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(m) Suspend, or revoke, after proper notice and hearing the franchise or certificate of
registration of corporations, partnership or associations, upon any of the grounds
provided by law; and
(n) Exercise such other powers as may be provided by law as well as those which may
be implied from, or which are necessary or incidental to the carrying out of, the express
powers granted the Commission to achieve the objectives and purposes of these laws.
The law protects the public who wishes to invest in securities as follows:
a. The law requires full disclosure of information to the public regarding the securities that
are being offered and the issuers, including the filing of and approval of the registration
statement and the approval of the prospectus.
b. A continuing duty to regularly submit material information to the SEC.
c. Close monitoring of the securities and other circumstances that may affect the same as
well as the persons involved including brokers, issuers, the exchange itself, etc. in
order to ensure compliance with pertinent laws and regulations.
d. Prohibiting and penalizing different fraudulent practices and transactions.
e. Providing the SEC with powers and functions.
Definition of terms:
a. Securities – are share, participation or interests in a corporation or in a commercial
enterprise or profit-making venture and evidenced by a certificate, contract, instrument,
whether written or electronic in character. It includes: a. shares of stocks, bonds,
debentures, notes, evidences of indebtedness, asset-backed securities; b. investment
contracts, certificates of interest or participation in a profit sharing agreement,
certificates of deposit for a future subscription; c. fractional undivided interests in oil,
gas or other mineral rights; d. derivatives like option and warrants; e. certificates of
assignments, certificates of participation, trust certificates, voting trust certificates or
similar instruments; f. proprietary or non-proprietary membership certificates in
corporations; and other instruments as may in the future be determined by the
Commission.
b. Issuer – is the originator, maker, obligor, or creator of the security.
c. Broker – is a person engaged in the business of buying and selling securities for the
account of others.
d. Dealer – means any person who buys and sells securities for his/her own account in
the ordinary course of business.
e. Clearing Agency – is any person who acts as intermediary in making deliveries upon
payment to effect settlement in securities transactions.
f. Exchange – is an organized marketplace or facility that brings together buyers and
sellers and executes trades of securities and/or commodities.
g. Pre-Need Plans – are contracts which provide for the performance of future services
or the payment of future monetary considerations at the time of actual need, for which
planholders pay in cash or installment at stated prices, with or without interest or
insurance coverage and includes life, pension, education, interment, and other plans
which the Commission may from time to time approve.
h. Promoter – is a person who, acting alone or with others, takes initiative in founding
and organizing the business or enterprise of the issuer and receives consideration
therefore.
i. Prospectus – is the document made by or on behalf of an issuer, underwriter or dealer
to sell or offer securities for sale to the public through a registration statement filed with
the Commission.
j. Registration statement – is the application for the registration of securities required to
be filed with the Commission.
k. Uncertificated security – is a security evidenced by electronic or similar records.
l. Underwriter – is a person who guarantees on a firm commitment and/or declared best
effort basis the distribution and sale of securities of any kind by another company.
m. Investment contracts – a contract, transaction or scheme (collectively “contract”)
whereby a person invests his money in a common enterprise and is led to expect
profits primarily from the efforts of others.
n. Derivatives – financial investment, including options and warrants whose value
depends on the interest in or performance of an underlying security, but which does not
require any investment of principal in the underlying security.
o. Options – are contracts that give the buyer the right, but not the obligation, to buy or
sell an underlying security at a predetermined price, called the exercise or strike price,
on or before a predetermined date, called the expiry date, which can only be extended
in accordance with Exchange rules.
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p. Call options – are rights to buy.
q. Put options – are rights to sell.
r. Warrants – are rights to subscribe or purchase new shares or existing shares in a
company, on or before a predetermined date, called the expiry date, which can only be
extended in accordance with Exchange rules. Warrants generally have a longer
exercise period than options.
s. Commodity futures contract – means a contract providing for the making or taking
delivery at a prescribed time in the future of a specific quantity and quality of a
commodity or the cash value thereof, which is customarily offset prior to the delivery
date, and includes standardized contracts having the indicia of commodities futures,
commodity options and commodity leverage, or margin contracts.
t. Commodity – means any goods, articles, services, rights and interests, including any
group or index of any of the foregoing, in which commodity interests contracts are
presently or in the future dealt in.
u. Put – is a transferable option or offer to deliver a given number of shares of stock at a
stated price at any given time during a stated period.
v. Call – is transferable option to buy a specified number of shares at a stated price.
w. Straddle – is a combination put and call.
x. Insider – means (a) the issuer; (b) a director or officer (or person performing similar
functions) of, or a person controlling the issuer; (c) a person whose relationship or
former relationship to the issuer gives or gave him access to material information about
the issuer or the security that is not generally available to the public; (d) a government
employee, or director, or officer of an exchange, clearing agency and/or self-regulatory
organization who has access to material information about an issuer or a security that
is not generally available to the public; or (e) a person who learns such information by
a communication from any of the foregoing insiders.
y. Material non-public information – An information is “material non-public” if: (a) it has
not been generally disclosed to the public and would likely affect the market price of
the security after being disseminated to the public and the lapse of a reasonable time
for the market to absorb the information; or (b) would be considered by a reasonable
person important under the circumstances in determining his course of action whether
to buy, sell or hold a security.
General Rule: Securities shall not be sold or offered for sale or for distribution within the PH
without a registration statement duly filed with and approved by the Commission. Information
regarding the securities must be available to public or prospective purchaser.
The SEC may conditionally approve the Registration Statement under such terms as it
may deem necessary.
A record of the Registration of Securities shall be kept in Register Securities and it
must be available to the public for inspection.
SEC may audit financial statement, assets and other information of firm for registration
of its securities to attract investors.
EXEMPT SECURITIES
Sec. 9.2 of the Securities Regulation Code provides that: “The Commission may, by
rule or regulation after public hearing, add to the foregoing any class of securities if it
finds that the enforcement of this Code with respect to such securities is not necessary
in the public interest and for the protection of investors.”
*Reason: The issuer is a trusted and regulated officer.
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EXEMPT TRANSACTIONS
Sec. 10.2 of the Securities Regulation Code provides that: “The Commission may exempt
other transactions, if it finds that the requirements of registration under this Code is not
necessary in the public interest or for the protection of the investors such as by the reason of
the small amount involved or the limited character of the public offering.”
Sec. 10.3 of the Securities Regulation Code provides that: “Any person applying for an
exemption under this Section, shall file with the Commission a notice identifying the exemption
relied upon on such form and at such time as the Commission by the rule may prescribe and
with such notice shall pay to the Commission fee equivalent to one-tenth (1/10) of one percent
(1%) of the maximum value aggregate price or issued value of the securities.”
1. Issuer must file a Registration Statement in the main office of the SEC, containing the
necessary information and supporting documents as well as prospectus required or
permitted to be delivered.
2. Written information from an expert, depending on the necessity thereof or their
applicability to the class of securities sought to be registered.
3. Information must include the effect of the securities issue on ownership, on the mix of
ownership, especially foreign and local ownership.
4. Shall be signed by the issuer’s executive officer, its principal accounting officer, its
principal operating officer and other persons with similar functions accompanied by a
duly verified resolution of the board of directors of the issuer of the corporation, the
written consent of the expert named as having certified any part of the RS or any
document used, and a written certification by such selling shareholders as to the
accuracy of any part of the RS contributed to by such selling shareholders shall be
filed.
5. Fees- shall pay to the SEC a fee of not more than one-tenth (1/10) of 1% of the
maximum aggregate price at which such securities are proposed to be offered.
6. Notice and Publication of the RS by the issuer, at his own expense, in 2 newspapers of
general circulation in the PH, once a week for 2 consecutive weeks, reciting that a RS
for the sale of such securities has been filed and the info about the RS are open for
public inspection at reasonable hours of business, and a copy, photostatic or otherwise
shall be furnished to interested parties.
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7. The SEC may compel the production of all the books and papers of such issuer, and
may administer oaths to and examine the officers of such the issuer or any other
person connected.
Within 45 days after filing the RS, the SEC shall declare the RS effective or rejected
unless applicant is allowed to amend the objectionable portions of the RS.
Shall declare effective if it finds that the RS with all the docs necessary are complete
and requirements have been complied with.
SEC may impose such terms and conditions as may be necessary or appropriate for
the protection of the investors.
Upon effectivity, issuer shall state in every prospectus that all Registration
Requirements have been met and that all info are true and correct.
Aby untrue statement or omission of material fact shall constitute a fraud.
REPORTORIAL REQUIREMENTS
1. Periodic and other reports of the issuer
Every issuer who:
Has sold any class of its securities pursuant to a registration
Has a class of securities listed for trading on an exchange
With assets of at least Php 50M and having 200 or more holders each holding
at least 100 share each of a class of security
SHALL FILE
o Annual and periodic reports to the SEC
o Shall also file with the Exchange where securities are listed a copy of reports
filed with SEC
o Shall and furnish each holder of such equity security the annual report.
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Tender Offer
Q: When may the SEC exempt a person from the mandatory tender offer requirement?
A: Upon written application, the SEC may exempt from the requirement to make a mandatory
tender offer the following proposed purchases of equity shares of a public company:
a. The purchase of newly issued shares from unissued capital stock
b. In connection with foreclosure proceeding involving a duly constituted pledge or
security arrangement where the acquisition is made by the debtor or creditor
c. Purchases in connection with privatization undertaken by the government of the
Philippines
d. Purchases in connection with corporate rehabilitation under court supervision.
Reportorial Requirements
Every person who is,
i. Directly or indirectly the beneficial owner of more than 10% of any class of equity
securities
ii. A director or an officer of the issuer of such security
SHALL FILE:
a. Within 10 days after he becomes a beneficial owner, a statement containing the
amount of all equity securities of such issuer of which he is the beneficial owner to the
SEC and the exchange where it may be listed.
b. Within 10 days after the close of each calendar month thereafter, a statement
indicating his ownership at the close of the calendar month as have occurred during
such calendar month.
Acts that are considered unlawful with respect to the purchase and sale of securities:
Sec. 26 of the Securities Regulation Code states that: “It shall be unlawful for any person,
directly or indirectly, in connection with the purchase or sale of any securities to:
INSIDER TRADING
“INSIDER” means,
1. The issuer
2. Director/officer/person controlling the issuer
3. A person whose relationship or former relationship to the issuer gives or gave him
access to nonpublic info about the issuer and he security.
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4. Gov’t employee/director/officer of an exchange, clearing agency and/or self-regulating
organization who has access to material nonpublic info about the issuer an the
security.
5. A person who learns such info by a communication from any of the foregoing insiders.
Sec. 27.1 of the Securities Regulation Code states that: “It shall be unlawful for an insider to
sell or buy a security of the issuer, while in possession of material information with respect to
the issuer or the security that is not generally available to the public, unless:
a. The insider proves that the information was not gained from such relationship.
b. If the other party selling to or buying from the insider (or his agent) is identified the
insider proves;
c. That he discloses the info to the other party
d. That he need reason to believe that the other party otherwise is also in possession of
the information.
Provided, however, That this presumption shall be rebutted upon a showing by the purchaser
or seller that he was aware of the material non-public information at the time of the purchase
or sale.”
- After due notice and hearing, the SEC determines the applicant or registrant.
a. Has willfully violated any provision of this code.
b. Has willfully made or caused to be made a materiality false or misleading
statement.
c. Has failed to satisfy the qualifications or requirements for registration.
d. Has been convicted, by a competent judicial or administrative body of an
offense involving moral turpitude, fraud, embezzlement, counterfeiting, theft,
estafa, misappropriation.
e. Is enjoined or restrained by a competent judicial or administrative body from
engaging in securities, commodities etc. or from willfully violating laws
governing such activities.
f. Subject to an order of a competent judicial or administrative body refusing,
revoking or suspending any registration etc.
g. Subject to an order of suspension of a self-regulatory organization expelling
him from membership.
h. Willfully violated any provision of securities commodities etc.
i. Judicially declared insolvent.
- Not allowed to buy/sell securities if broker/dealer and all the relatives of the
foregoing within the 4th civil degree of consanguinity or affinity, is at the same
time holding office in said issuer corporation as a director, president, vice
president, manager, comptroller, secretary, etc.
- No broker or dealer shall effect any transaction in securities to ensure fair and
honest dealings.
REGISTRATION OF EXCHANGES
Exchange- is an organized market place or facility that brings together buyers and
sellers and executes trade of securities and/or commodities.
REGISTRATION
- Filing an application for registration containing info and supporting docs as the
commission by rule shall prescribe, including:
o Undertaking to comply and enforce by its members with the provisions
of this Code, its IRR and the rules of an Exchange.
o Organizational chart of the Exchange, rules and procedure and a list of
its officers and members.
o Copies of the rules of the Exchange
o Undertaking that in the event of a member firm becomes insolvent that it
cannot readily meet the demands of its customers for the delivery of
securities and/or payment of sales proceeds, commission, take over the
operation of the insolvent member firm and immediately proceed to
settle the member firms liabilities to its customers.
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- Within 90 days, the SEC may issue an order either granting or denying
registration unless Exchange shall withdraw its registration.
CLEARING AGENCY
- a person or company that facilitates the clearing and settlement of trades
ADMINISTRATIVE SANCTIONS
1. Suspension and revocation of any registration for the offering of securities
2. Fine of not less than 10,000 pesos nor more than 1,000,000 pesos plus not more
than 2,000 pesos for each day of continuing violation.
3. Violations of Sec.19.2(Tender offers), 24 (manipulative acts), 26 (Fraudulent
transactions), 27 (Insider’s duty to disclose when trading), disqualification from
being an officer, member of Board of Directors or others with similar functions,
failed to submit reportorial requirements etc.
4. Violation of Sec. 24, fine of not more than three times the profit gained or loss
avoided as result of the purchase, sale or communication prescribed by such
section.
5. Other penalties that the SEC may prescribe.
PENALTIES
1. Fine of not less than 50,000 pesos nor more than 5,000,000 pesos or
imprisonment of not less than 7 years nor more than 21 years or both in the
discretion of the court.
2. If the offender is a corporation, partnership or association or other judicial entity, the
penalty may in the discretion of the court be imposed upon such juridical entity and
upon the officer or officers of the corporation, partnership, association or entity
responsible for the violation, and if such officer is an alien, he shall in addition to
the penalties prescribed, be deported without further proceedings after service of
sentence.
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