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Securities Regulation Code: Purpose

The Securities Regulation Code aims to protect investors through disclosure requirements and prohibiting fraudulent practices. It requires companies to regularly submit material financial information and for the SEC to monitor securities transactions. It defines securities and investment contracts and outlines registration and reporting requirements for public companies. It also prohibits insider trading and establishes rules for mandatory tender offers for significant acquisitions of publicly traded companies.

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21 views3 pages

Securities Regulation Code: Purpose

The Securities Regulation Code aims to protect investors through disclosure requirements and prohibiting fraudulent practices. It requires companies to regularly submit material financial information and for the SEC to monitor securities transactions. It defines securities and investment contracts and outlines registration and reporting requirements for public companies. It also prohibits insider trading and establishes rules for mandatory tender offers for significant acquisitions of publicly traded companies.

Uploaded by

Maissy
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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SECURITIES REGULATION CODE

Purpose: SRC or RA No. 8799 aims to protect the investing public primarily through a system of disclosure &
provide punishment for fraudulent practices.

1 Requiring full disclosure of information


2 Requires to Regularly submitting material information
Protection of the public 3 Monitoring of the securities
4 Prohibiting & penalizing fraudulent practices & transactions
5 Providing the SEC the power & functions

SECURITIES
are shares, participation or interests in a corporation or in a commercial enterprise or profit-making venture &
evidences by a certificate, contract, instruments, whether written or electronic in character.

Investment contract
Requisites:
1 an investment of money
2 In a common enterprises
3 With the expectation of profits
4 Primarily from the efforts of others

REGISTRATION & REPORTORIAL REQUIREMENTS


The SRC provides that securities shall not be sold or offered for sale or distribution w/n the PH, w/o a registration
statement duly file and approved by the SEC

Filing of SWORN Payment of 1/10 of 1% of PUBLICATION in 2


REGISTRATION STATEMENT aggregate price newspapers for 2 cons weeks

PROSPECTUS under
w/n 45 days after, the SEC
oath
decides

Securities EXEMPT from registration: (GGRIB)


G any sec issued or guaranteed by the Governement
G any sec issued or guaranteed by the Gov't of any country
R cert issued by Receiver or by Trustee
I any sec issued under the supervision & regulation of the Office of the Insurance Commision, Housing & Land Use
Rule Regulatory Board, or the BIR
B any sec issued by a Bank expect its own shares of stock

Transactions EXEMPT from registration: (BISCEPS SMILE)


B Broker's transactions
I Isolated transaction
S distribution of Stock dividend
C right of Conversion
E Exclusive Sale
P Private Placement
S Subscriptions prior to the incorporation to increase in its authorized capital stocks
S sale to Sophisticated buyers
M Mortgage-backed securities
I at any Judicial sale in Insolvency or bankruptcy
L to Liquidate a bonafide debt
E Exchange of securities by the issuer w/ the existing security holders exclusively
Annual report
REPORTORIAL REQ.
Other periodical reports for interim fiscal periods & current reports

w/c has sold a class of its securities pursuant to a registration


shall apply to an issuer: w/ a class of securities listed for trading in an exchange
assets of at least 50M or w/c prescribed by SEC
w/ and having 200 or more holders
each holding at least 100 share of a class

FILING OF GENERAL INFORMATION SHEET (GIS)


ALL corpo shall file their GIS w/n 30 calendar days from:
1 Stock corpo - date of annual stockholders' meeting
2 Non-stock - date of annual members' meeting
3 Foreign Corpo - anniversary date of the issuance of SEC license

FILING OF ANNUAL FINANCIAL STATEMENT (AFS)


Depeding on the last numerical digit of their SEC registration or license # in
using Calendar year accordance w/ the schedule set by the SEC.

On or before the first day stated in the coding schedule

GR: 120 calendar days from the end of the fiscal year
using Fiscal year
XPNs: i. Broker dealers - 110 calendar days from the end of the fiscal year
ii. Listed co. & public co. - 105 days from the end of the fiscal year

*AFS other than conso FS, shall have the stamped "received by the BIR" or its authorized banks,
unless BIR alows an alternative proof of submission for its authorized banks.

INSIDER TRADING AND OTHER FRAUDULENT TRANSACTIONS


Insider Trading:
committed whenever an insider, in possession of a material non-public information, transacts on the securities.
MNPI
info that will affect the price of security or would influence a person in deciding
whether to buy, sell, or hold security w/c is not available to the public
Insider: (DIRLeG)
D Director or officer of the issuer or a person controlling the issuer
I Issuer
R a person whose Relationship or former Relationship to the issuer gives or gave him access to MNPI
Le a person who Learns such info by a communication from any of the foregoing insiders
G a Gov't employee, or dir., or officer of an exchange, clearing agency, and/or self-regulatory org who has access
to MNPI

XPNs:
1)when he can prove that the info was not gained from an insider
2) If the other party is identified and that he:
a. Disclosed info
b. Had reason to believe that the other party is also in possession of the info

Presumptions:
a purchase or sale of a security of the issuer made by an insider or such insider's spouse or relatives by affinity or
consanguinity w/n 2nd degree, legitimate or common-law, shall be presumed to have been effected while in
possession of MNPI if transacted:
1 After such info came into existence;
2 But prior to dissemenation of such info to the public & lapse of reasonable time for the market to
absorb such info
MANDATORY TENDER OFFER RULE
Tender offer:
is an offer by a person or group of persons to the SH of a corpo to tender their shares for purchase.

Purpose:
Seeks to protect minority SH and provide them w/ a fair price for their share company.

Mandatory Tender Offer:


1 applies to any person who intends to acquire AT LEAST 35% over a period of 12 months of any class of any
equity security
a. Listed corpo
b. Corpo with: Assets of at least P50M
Having at least 200 SH who each have at least 100 shares

2 acquisition w/c will result in ownership of OVER 50% of the total outsanding equity securities of the public
company

Transactions EXEMPT from mandatory tender offer requirement: (COMPIFU)


C purchase of Corporate rehabilitation under court supervision
O Purchase thru an Open market at the prevailing market price
M Merger or consolidation
P purchase in connection with Privatization undertaken by the gov't
I any purchase of shares from an Increase in authorized capital stock
F purchase in connection w/ Foreclosure proceedings involving a duly constituted pledge or sec arrangement
U any purchase of share from the Unissued capital stock provided wil not result to a 50% or more ownership

Process:
1 Offeror will make an announcement in a newspaper prior to the commencement of the offer
2 At least 2 business days prior to the date of the commencement of the tender offer:
a. File SEC Form 19-1 w/ the SEC including all exhibits thereto & pay the prescribed filing fees
b. Hand deliver a copy of such class form including all exhibits to the target company at its principal executive
office & to each Exchange
3 Report the results of the tender offer by filing w the commission, not later than 10 calendar days after the
termination of the tender offer, copies of the final amendments to the form.

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