QuestionsQuestions (Republic Act No. 8799)
The policy is to establish a socially conscious, free market that regulates itself; encourage the widest participation of ownership; democratize wealth; promote capital market development; protect investors; ensure full and fair disclosure; and minimize or totally eliminate insider trading and other fraudulent or manipulative devices/practices that distort the free market.
“Securities” are shares or interests in corporations or profit-making ventures evidenced by certificates, contracts, or instruments (written or electronic). Expressly included are shares, bonds, debentures, notes, evidences of indebtedness, asset-backed securities; investment contracts; certificates of deposit for future subscription; fractional undivided interests in mineral rights; derivatives like options/warrants; voting/trust/voting trust certificates; membership certificates; and other instruments as the Commission may determine.
An insider includes: (a) the issuer; (b) a director/officer (or person performing similar functions) of the issuer or a person controlling the issuer; (c) a person whose relationship/former relationship to the issuer gives access to material nonpublic information; (d) a government employee or exchange/clearing/self-regulatory organization official who has access to such information; and (e) a person who learns such information by communication from any of the foregoing insiders.
Securities shall not be sold or offered for sale/distributed within the Philippines without a registration statement duly filed with and approved by the Commission. Prior to sale, information on the securities must be made available to each prospective purchaser in the form and substance prescribed by the Commission.
Examples include: (1) securities issued/guaranteed by the Government of the Philippines or political subdivision/agency/instrumentality; (2) securities issued/guaranteed by a foreign government/state/province on reciprocity (with possible disclosure conditions); (3) certificates issued by a receiver or trustee in bankruptcy duly approved; (4) securities/derivatives whose sale/transfer is supervised by the Insurance Commission, Housing and Land Use Regulatory Board, or Bureau of Internal Revenue; and (5) securities issued by a bank except its own shares.
Examples include: judicial sales or sales by executors/administrators/guardians/receivers/trustees in bankruptcy; foreclosure/ordinary-course sale by pledgee/mortgagee to liquidate a bona fide debt; isolated transactions not in repeated/successive like character; stock dividends/distributions out of surplus; sale of capital stock to own stockholders exclusively; conversion exchanges subject to conditions; broker transactions executed on registered exchanges/trading markets; and sales to fewer than 20 persons in the Philippines in any 12-month period.
If necessary, the Commission may issue an order suspending the offer and sale pending investigation. It states grounds; it is binding on notified persons but confidential (not published). Upon issuance, no further offer/sale may be made until lifted or set aside; otherwise the sale is void.
Within 45 days from filing (or later date consented to by issuer), the Commission must declare the registration statement effective or rejected, unless the applicant is allowed to amend per Section 14. If on its face complete and requirements are complied with, the Commission enters an order declaring it effective and may impose protective terms/conditions.
If the issuer states under oath in every prospectus that all registration requirements have been met and information is true/correct, any untrue statement of fact, or any omission to state a material fact required or necessary to make statements not misleading, constitutes fraud.
Grounds include insolvency declared judicially; violations of the Code/rules/Commission orders; fraudulent or about-to-be-fraudulent transactions; false or misleading material representations in prospectus; failure to comply with conditions for registration; incomplete/inaccurate registration statement or untrue/misleading facts/omissions; and when issuer/officers/directors/controlling persons/underwriters are convicted (guilty plea or otherwise) of offenses involving moral turpitude and/or fraud, or enjoined/restrained for securities-related law violations.
No person may sell or offer pre-need plans to the public except under Commission rules/regulations. Such rules include registration of pre-need plans; licensing of sellers; required disclosures; advertising guidelines; uniform accounting; reports/recordkeeping; capital/bonding/financial responsibility; and trust funds for benefit payments.
If any person acquires beneficial ownership of more than 5% of a class (or lesser percent as Commission prescribes) for issuers covered by Section 17.2, the person must, within 10 days (or time set by Commission), submit a sworn statement to the issuer, the exchange where traded, and the Commission. It must include identity/background, purpose/plan if control is intended, number of shares beneficially owned and rights to acquire, and details of contracts/arrangements/understandings regarding securities.
A tender offer is required when a person or group acting in concert intends to acquire at least 15% of any class of equity security of a listed corporation, or of certain asset/stockholder corporations, or intends to acquire at least 30% of such equity over a 12-month period (with the conditions described).
It is unlawful to make any untrue statement of material fact or omit a material fact necessary to make statements not misleading, or to engage in fraudulent, deceptive, or manipulative acts/practices in connection with tender offers and related solicitations/recommendations in opposition or favor.
It is unlawful for an insider to sell or buy while in possession of material nonpublic information unless the insider proves (a) the information was not gained from their insider relationship; or (b) if the counterparty is identified, the insider proved either disclosure to the other party or reasonable belief that the other party already had the information. Trades by listed close relatives within 2nd degree are presumed affected while in possession if transacted after information came into existence but before dissemination and lapse of reasonable time, subject to rebuttal.