QuestionsQuestions (EXECUTIVE ORDER NO. 235)
It is titled the “Investment Houses Law,” governing the establishment, operation, and regulation of investment houses in the Philippines, particularly their underwriting of securities and related activities.
Any enterprise that engages in the underwriting of securities of other corporations is considered an Investment House and is subject to PD No. 129 and other pertinent laws.
No. It expressly states that nothing precludes other enterprises from engaging in the mere buying and selling of short-term securities of other persons or enterprises.
Underwriting is the act of guaranteeing the distribution and sale of securities issued by another corporation. Securities are written evidences of ownership, interest, or participation, or indebtedness; they include the instruments enumerated in Section 2 of the Securities Act (Commonwealth Act No. 83, as amended).
Investment Houses must be organized in the form of stock corporations.
SEC must not register unless satisfied that: (a) requirements of PD No. 129 and other laws/regulations are complied with; (b) the enterprise will not conflict with public interest and economic growth; and (c) capital, organization, direction/administration, and the integrity/experience/expertise of organizers and managerial staff provide reasonable assurance of financial prudence.
The SEC must consult the Monetary Board of the Central Bank of the Philippines when determining compliance with the public interest/economic growth and financial prudence-related grounds (and in consultation regarding compliance determinations).
At least three copies of the proposed articles; a sworn statement of educational background/experience of organizers, directors, and managerial staff plus concurrent positions in other financial/banking institutions; a projected statement of assets and liabilities; a tentative one-year program of operation (including investment direction and volume); and such other information as SEC may require.
Within six months from the effectivity of PD No. 129, they must file an information sheet with the SEC containing data that SEC may require to determine whether they meet PD No. 129 requirements.
Majority of the voting stock must be owned by Philippine citizens; majority of the board members must also be Philippine citizens.
Except as authorized by the Monetary Board, no director or officer of an Investment House may concurrently be a director or officer of a bank. In no event can a person be authorized to be concurrently an officer of an Investment House and of a bank.
No. PD No. 129 states that no Investment House shall engage in banking operations as defined in Section 2 of Republic Act No. 337, as amended.
Examples include: (1) arranging distribution of securities on a guaranteed basis; (2) participating in syndicates for purchase/sale/distribution on guaranteed basis; (3) dealing as a soliciting dealer or selling group member in tender offers/block sales/exchange offers; (4) acting as broker/financial consultant/investment adviser; (5) acting as portfolio manager and/or financial agent (not as trustee of trust property); among others stated in Section 7.
At least P20,000,000 pesos.
They must submit to the SEC and the Central Bank a semi-annual report of operations and financial condition, signed under oath by the chief accountant and verified by the president. SEC may require underwriting commitments to be included as contingent accounts in financial statements.
The Monetary Board may determine whether Investment Houses may perform quasi-banking functions. It may require them to incorporate as an Investment House and may impose conditions precedent such as obtaining a certificate of authority. If permitted, it may impose further regulations (e.g., liquidity reserve, capital-to-risk assets ratios, interest rate ceilings) and may order special examination.
Upon finding non-compliance, the Monetary Board shall issue a cease-and-desist order. Failure to comply subjects the Investment House to a fine not exceeding P200 per day for every day of violation, without prejudice to penalties under Section 16 of PD No. 129.
SEC may impose a fine not exceeding P200 per day and/or suspend the Investment House’s certificate of registration. The officer/director who ordered or authorized the violation is solidarily liable. Separately, any person/director/officer who violates may be punished by a fine up to P20,000 or imprisonment up to five years, or both.
Yes. The Central Bank issued Circular No. 378 (Aug. 15, 1973) prescribing policy guidelines, and the SEC issued Rules and Regulations dated July 9, 1973 to implement the provisions of PD No. 129.