Conditions for Exemption
- Amendment of the Articles of Incorporation to explicitly state provisions applicable to close corporations under Title XII of the Corporation Code of the Philippines.
- Restriction of issuance of commercial papers exclusively to Directors, Officers, Stockholders, and Related Interests (DOSRI) not exceeding nineteen (19) persons and to institutional lenders, in compliance with SRC Rule 9.2, as amended.
- Inclusion of restrictions on the transfer of shares in the Articles of Incorporation, By-Laws, and Stock Certificates to ensure that shareholding remains closely held.
Regulatory Scope and Compliance
- The exemption applies only to financing companies that comply with the specified conditions.
- The amendment aligns corporate governance requirements with the close corporation structure as defined in the Corporation Code.
Effective Date
- The memorandum circular took effect immediately upon issuance on 27 June 2014.
Legal Significance
- Provides regulatory relief to certain close financing companies while safeguarding shareholder interests through stringent conditions on issuance and transfer of shares.
- Ensures that the close corporation status is respected without compromising transparency and control.
Enforcement and Oversight
- The SEC remains the overseeing authority ensuring compliance with the conditions.
- Failure to comply with the stipulated conditions may result in the loss of exemption and possible regulatory penalties.