Business World

SEC approves exemption of more entities from registerin­g securities

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

- Keren Concepcion G. Valmonte

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. —

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