Regulation of Investment Houses in the Philippines

Applies to any enterprise engaging in the underwriting of securities of other corporations.
Does not restrict enterprises from buying and selling short-term securities.

"Underwriting": Guaranteeing the distribution and sale of securities issued by another corporation.
"Securities": Written evidences of ownership, interest, participation, or indebtedness in an enterprise, including those under the Securities Act.

Investment Houses must be organized as stock corporations.
SEC will register only if:
- All legal requirements are met.
- No conflict with public interest and economic growth.
- Reasonable assurance of financial prudence based on capital, organization, and staff integrity.
SEC consults the Central Bank Monetary Board for compliance review.
Registration requirements include articles of incorporation, background of key personnel, projected assets and liabilities, and operation program.
Enterprises already operating as Investment Houses must file information with SEC within six months.

Majority of voting stock must be Filipino-owned.
For corporate shareholders, citizenship determined by the owners of the corporate stock.
Majority of the Board of Directors must be Filipino citizens.

Directors/officers cannot concurrently hold similar positions in banks (with limited exceptions).
No Investment House may engage in banking operations.

Underwrite and distribute securities of corporations and government.
Participate in syndicates for purchasing, selling, and distributing securities.
Act as financial consultants, investment advisers, brokers, and portfolio managers.
Promote economic development ventures and assist in corporate restructuring.
Conduct researches and own property necessary for their operations.
Design employee benefits plans.
Engage in related activities unless prohibited by special laws.
Others not covered by the Decree may still engage in certain specified activities.

Investment Houses must coordinate their credit policies with the Monetary Board's general credit policies.

Semi-annual reports on operations and financial condition must be submitted to the SEC and Central Bank.
Reports must be sworn by the chief accountant and verified by the president.
SEC may require inclusion of underwriting commitments as contingent accounts.

SEC and Central Bank to promulgate implementing rules within six months of the Decree's approval.

Investment Houses are subject to Central Bank regulations on non-bank financial intermediaries.
Monetary Board may regulate fund acceptance, marketing methods, placement terms, and use of funds.
Monetary Board may permit quasi-banking functions under conditions including certification and additional regulations.
Monetary Board may conduct special examinations and issue cease-and-desist orders for non-compliance.
Violations may result in fines and other penalties.

Investment Houses may operate as a dealer or broker without separate licensing under the Securities Act.

Existing Investment Houses must comply with the Decree within one year (except information sheet within six months).

SEC may impose fines up to 200 pesos per day or suspend registration for violations.
Officers or directors authorizing violations are solidarily liable.
Additional fines up to 20,000 pesos or imprisonment up to 5 years or both may be imposed by courts.

Invalidity of any provision or application shall not affect other provisions that can be given effect independently.