SEC exempts more entities from registering securities

List of qualified buyers of securities also expanded in SRC implementing rules

THE Securities and Exchange Commission (SEC) has approved the proposed exemption of securities offered by financial and multilateral institutions from registration under the Securities Regulations Code (SRC), and has expanded the list of qualified buyers of securities.

In a memorandum circular released on Thursday, the agency said that the Commission En Banc on April 20 had approved the proposed amendments to SRC Rules 9 and 10.

“The law provides for certain exceptions to the registration requirements laid down under Sections 8 and 12 for securities issued or guaranteed by, among others, the Philippine government, the government of any country with diplomatic relations with the Philippines, banks except their own shares of stock, multilateral financial entities established through a treaty or any other binding agreement involving the Philippines,” the commission said.

SRC Rules 9 and 10 were amended to reflect the changes.

Section 8 of the SRC requires securities sold and distributed in the country to be registered and approved by the SEC, while Section 12 outlines the procedures for registration.

Under the amended rules, securities issued by financial entities authorized by the commission and the Bangko Sentral ng Pilipinas (BSP), and those issued to the BSP through its open market or through rediscounted operations are included in the exemption.

Multilateral financial entities looking to sell securities are still required to issue an offering circular detailing information on the issuer and the security, background on the institution, and details on the guarantee.

Other evidence of indebtedness will be exempt from registration requirements, as long as these meet the following criteria: issued to not more than 19 non-institutional lenders, payable to a specific person, not negotiable nor assignable and held on to maturity, and securities not exceeding P150 million.

“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 the Code with respect to such securities is not necessary in the public interest and for the protection of investors,” the SEC said.

However, provisions on the purchase, sale, distribution, and settlement of securities will still be implemented. Provisions on fraud, and civil and other liabilities will also apply.

Meanwhile, securities issued and sold to qualified buyers listed under SRC Rule 10.1.3 will also be exempt from Sections 8 and 12 of the Code.

“The SEC will now consider as qualified buyers registered securities dealers, accounts managed by a registered broker under a discretionary arrangement, and registered investment companies, such as mutual fund companies,” the corporate watchdog said.

The exemption covers provident funds or pension funds of a government agency or by government or private corporations, which are managed by an entity authorized by the commission or the BSP, and unit trust corporations established according to the BSP’s rules and regulations.

Other exempt qualified buyers are the following: funds established and covered by a trust or investment management agreement with qualified buyers, authorized pre-need companies, authorized collective investment schemes, listed entities engaging in professional fund management services, and foreign entities matching aforementioned descriptions.

“The commission may also determine as qualified buyers, by rule or order, such other persons on the basis of such factors as financial sophistication, net worth, knowledge, and experience in financial and business matters, or amount of assets under management,” the SEC said. — Keren Concepcion G. Valmonte

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