Rules on Investment Companies in the Philippines

Must be organized as a stock corporation complying with Corporation Code of the Philippines.
Required minimum subscribed and paid-up capital is at least P50 million; lower capital requirements may be granted to groups under common management.
All board members must be Filipino citizens.
All shares must be common and voting shares.
Articles of Incorporation for open-end companies must include waiver of pre-emptive rights.
Securities issuance must comply with Revised Securities Act registration.

Minimum investment amount per investor is P5,000 unless otherwise prescribed by the Commission.
Securities must be sold on a cash basis; installment sales are prohibited.
All proceeds must be held by a custodian bank.
Original proponents cannot transfer their shares within 12 months of registration.
Open-end companies may establish redemption centers approved by the Commission.

Investment objectives and plans must be clearly stated in the prospectus, classified by risk level, term, investment focus, and mode.
Changes in investment objectives require approval by majority of shareholders.
Maximum investment per single enterprise is capped at 10% of the company’s net asset value, excluding government obligations.
Investments should maintain at least 10% liquid/semi-liquid assets for open-end companies.
Prohibited from short selling, margin purchases, commodity futures, precious metals, and unlimited liability investments.
Operational expenses capped at 10% of total investment fund or net worth.
Borrowings permitted only with at least 300% asset coverage; corrective actions required if coverage falls below.
Prohibition on participation in underwriting selling groups except own capital stock.
Restrictions on securities transactions with officers, directors, investment advisers/managers, or related firms.

Investors have redemption rights as per the terms and prospectus.
Redemption price based on next calculated net asset value per share after cutoff time (12:00 noon daily).
Daily net asset value must be computed, posted publicly, and published in newspapers.
Net asset value calculations require Commission approval for changes.
Payments for redemption made within seven banking days.
The Commission may suspend redemptions when necessary for public interest or investor protection.

Directors must be Filipino citizens.
Directors and officers must not possess any statutory disqualifications under the Act.
Advisory boards may be created.

Must file an application with the Commission before acting.
Requirements include minimum unimpaired net worth of P10 million, curriculum vitae of directors, and audited financial statements for three years.
Registration disapproved for applicants with prior false statements, convictions involving moral turpitude, or violations of securities laws.

Only commercial banks authorized by Bangko Sentral ng Pilipinas to perform trust functions may act as custodians.
Custodians may serve as transfer agents or dividend disbursing agents but cannot perform investment advisory or management roles for the same investment company.

Investment companies must file monthly reports with the Commission within 10 days of each month.
Reports must include total sales, redemptions, shares outstanding, shares sold and redeemed during the month, and ownership percentages by Filipinos.

Fees prescribed under the Investment Company Act, Revised Securities Act, and those imposed by the Commission apply to registration and securities issuance.

The Commission may impose sanctions for violations of the Act or Rules, including false or misleading statements in registration or periodic reports.
Sanctions may also apply for refusal to allow lawful examination of corporate affairs.
Sanctions are discretionary and provided by law.