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SEC
MEMORANDUM CIRCULAR NO. 2
Series
of 2003
REVISED SCALE OF FINES
To further
rationalize the penalties being imposed by the Commission, and to ensure strict
compliance with the Securities Regulation Code ("SRC")
and its Implementing Rules and Regulations, and the Investment Company Act (ICA)
and its implementing rules and regulations, the Commission in its meeting of
February 11, 2003, approved the following scale of fines:
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SRC
Provisions
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Violations
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Penalty
for Violation*
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First
Offense
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Second Offense**
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Third
Offense**
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Fourth
Offense**
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Sections 8 and 12
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OFFERING OF SECURITIES TO THE PUBLIC
WITHOUT PRIOR REGISTRATION OR PERMIT
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P10,000per
transaction or 1/10 of 1% of the aggregate issuance, whichever is higher.
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P20.000
per transaction or 2/10 of 1% of the aggregate issuance, whichever is
higher.
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P60,000per
transaction or 6/10 of 1% of the aggregate issuance, whichever is higher.
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P240.000
per transaction or 24/10 of 1% of the aggregate issuance, whichever is
higher.
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Section
10
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LATE
FILING OF NOTICE OF EXEMPTION PURSUANT TO SRC RULE10.1(K) (In case of
listed companies only)
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50,000
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100,000
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300,000
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600,000
and suspension of registration
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NON-COMPLIANCE
WITH DISCLOSURE REQUIREMENTS UNDER SRC RULE 10.1
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10,000
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20,000
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60,000
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120,000
and suspension of registration
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Section
14
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FAILURE
TO AMEND REGISTRATION STATEMENT IN ACCORDANCE WITH SRC RULE 14
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50,000
or 0.5/10 of 1% of the aggregate amount of securities sold under the new
terms, whichever is higher.
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100,000 or 1/10 of 1% of the aggregate amount of securities sold under the new terms,
whichever is higher.
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300,000
or 3/10 of 1% of the aggregate amount of securities sold under the new
terms, whichever is higher.
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600,000
or 6/10 of 1% of the aggregate amount of securities sold under the new
terms, whichever is higher, and suspension of registration
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Section
17.1
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LATE
OR INCOMPLETE FILING OF CURRENT REPORT (SEC FORM 17-C)
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P50.000
,or 0.5/10 of 1% of Consolidated Net Income / Revenue, whichever is higher.
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P100,000
or 1/10 of 1% of Consolidated Net Income / Revenue, whichever is higher.
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P300.000
or 3/10 of 1% of Consolidated Net Income / Revenue, whichever is higher.
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P600,000
or 6/10 of 1% of Consolidated Net Income / Revenue, whichever is higher, and
suspension of registration
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LATE
OR INCOMPLETE FILING OF QUARTERLY REPORT (SEC FORM 17-Q)
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75,000
or 1/10 of 1% of Consolidated Net Income / Revenue, whichever is higher.
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150,000
or 2/10 of 1% of Consolidated Net Income / Revenue, whichever is higher,
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450,000
or 6/10 of 1% of Consolidated Net Income / Revenue, whichever is higher.
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900,000
or 9/10 of 1% of Consolidated Net Income / Revenue, whichever is higher, and
suspension of registration
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LATE
OR INCOMPLETE FILING OF ANNUAL REPORT (SEC FORM 17-A)
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100,000
or 1/10 of 1% of Consolidated Net Income / Revenue, whichever is higher.
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200,000
or 2/10 of 1% of Consolidated Net Income / Revenue, whichever is higher.
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600,000
or 6/10 of 1% of Consolidated Net Income / Revenue, whichever is higher.
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1,200,000
or 12/10 of 1% of Consolidated Net Income / Revenue, whichever is higher,
and suspension of registration
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Section
18
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LATE
OR INCOMPLETE FILING OF REPORTS BY 5% OR MORE HOLDERS OF EQUITY SECURITIES
(SECFORM18-AOR 18-AS)
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50,000
or 0.5/10 of 1% of the maximum aggregate purchase price of acquired
securities, whichever is higher.
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100,000
or1/10of1%of the maximum aggregate purchase price of acquired securities,
whichever is higher.
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300,000
or 3/10 of 1% of the maximum aggregate purchase price of acquired
securities, whichever is higher.
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900,000
or 9/10 of 1% of Consolidated Net Income / Revenue, whichever is higher, and
suspension of registration
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Section
19.1
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LATE
OR INCOMPLETE FILING OF TENDER OFFER REPORT (SEC FORM 19-1) OR FAILURE TO
COMPLY WITH ANY REQUIREMENT OF SRC RULE 19-1
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100,000 or 1/10 of 1%of the maximum aggregate purchase price of acquired securities,
whichever is higher.
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200,000
or 2/10 of 1% of the maximum aggregate purchase price of acquired
securities, whichever is higher.
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600,000
or 6/10 of 1% of the maximum aggregate purchase price of acquired
securities, whichever is higher.
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1,200,000
or 12/10 of 1% of Consolidated Net Income / Revenue, whichever is higher,
and suspension of registration
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Section
20 [in relation with 17.1(b)]
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LATE
OR INCOMPLETE FILING OF INFORMATION STATEMENT (SEC FORM 20-IS) OR FAILURE
TO COMPLY WITH ANY REQUIREMENT OF SRC RULE 20
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100,000
or 1/10 of 1% of Consolidated Net Income / Revenue, whichever is higher.
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200,000
or 2/10 of 1% of Consolidated Net Income / Revenue, whichever is higher.
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600,000
or 6/10 of 1% of Consolidated Net Income / Revenue, whichever is higher.
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1,200,000
or 12/10 of 1% of Consolidated Net Income / Revenue,
whichever is higher, and suspension of registration
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Section
22
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FAILURE
TO OBSERVE MINIMUM INTERNAL CONTROLS AND RECORD KEEPING SYSTEM
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P100,000
or 1/10 of 1% of Consolidated Net Income / Revenue, whichever is higher.
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P200,000
or 2/10 of 1% of Consolidated Net Income / Revenue, whichever is higher.
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P600.000
or 6/10 of 1% of Consolidated Net Income / Revenue, whichever is higher.
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P1,200,000
or 12/10 of 1% of Consolidated Net Income / Revenue, whichever is higher,
and suspension of registration
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Section
23
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LATE
OR INCOMPLETE FILING OF STATEMENT OF BENEFICIAL OWNERSHIP (SEC FORM 23-A OR
B)
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50,000
or 0.5/10 of 1% of the maximum aggregate purchase price of acquired
securities, whichever is higher.
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100,000
or 1/10 of 1% of the maximum aggregate purchase price of acquired
securities, whichever is higher.
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300,000
or 3/10 of 1% of the maximum aggregate purchase price of acquired
securities, whichever is higher.
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900,000
or 9/10 of 1% of the maximum aggregate purchase price of acquired
securities, whichever is higher.
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DIRECTORS / OFFICERS
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Qualifying
or not more than shares (100) shares
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10,000
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20,000
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60,000
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180,000
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More
than 100 shares but less than 5% of the outstanding equity security
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20,000
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40,000
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120,000
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360,000
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More
than 5% but less than 10%
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35,000
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70,000
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210,000
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630,000
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Section
38
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FAILURE
TO ELECT INDEPENDENT DIRECTOR(S)
OR
ELECTION
OF AN UNQUALIFIED INDEPENDENT DIRECTOR
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100,000or
1/10 of 1% of Consolidated Net Income / Revenue, whichever is higher.
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200,000
or 2/10 of 1% of Consolidated Net Income / Revenue, whichever is higher.
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600,000
or 6/10 of 1% of Consolidated Net Income / Revenue, whichever is higher.
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1,200,000
or 12/10 of 1% of Consolidated Net Income / Revenue, whichever is higher,
and suspension of registration
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Section
54
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MIS- REPRESENTATION,
MISLEADING STATEMENTS, OMISSION OF A MATERIAL FACT IN ANY FILINGS REQUIRED
TO BE SUBMITTED
(This
is in addition to the penalty on the principal report, if any.)
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100,000
or 1/10 of 1% of Consolidated Net Income / Revenue, whichever is higher.
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200,000
or 2/10 of 1% of Consolidated Net Income / Revenue, whichever is higher.
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600,000
or 6/10 of 1% of Consolidated Net Income / Revenue, whichever is higher.
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1,200,000
or 12/10 of 1% of Consolidated Net Income / Revenue, whichever is higher,
and suspension of registration
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ICA Provisions
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Violations
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Penalty
for Violation*
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First
Offense
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Second Offense**
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Third
Offense**
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Fourth
Offense**
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Sections
7 and 24
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VIOLATION
OF REGISTRATION REQUIREMENTS
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P10,000
per violation or 1/10 of 1%ofthe aggregate issuance, whichever is higher.
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P20.000
per violation or 2/10 of 1% of the aggregate issuance, whichever is
higher.
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P60.000
per violation or 6/10 of 1% of the aggregate issuance, whichever is
higher.
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P240.000
per violation or 24/10 of 1% of the aggregate issuance, whichever is
higher
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Section
8
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ELECTION
OF CERTAIN INELIGIBLE AFFILIATED PERSONS AND UNDERWRITERS
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50,000
or 0.5/10 of 1% of Consolidated Net Income / Revenue, whichever is higher.
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100,000
or 1/10 of 1% of Consolidated Net Income / Revenue, whichever is higher.
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300,000
or 3/10 of 1% of Consolidated Net Income / Revenue, whichever is higher.
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600,000
or 6/10 of 1% of Consolidated Net Income / Revenue, whichever is higher, and
suspension of registration
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Section
9
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UNAUTHORIZED
AFFILIATIONS OF DIRECTORS, OFFICERS AND EMPLOYEES
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50,000
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100,000
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300,000
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900,000
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Section
10
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PROHIBITED
OFFERS TO EXCHANGE SECURITIES
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10,000
per transaction or 1/10 of 1% of the aggregate issuance, whichever is higher.
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20,000
per transaction or 2/10 of 1% of the aggregate issuance, whichever is
higher.
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60,000
per transaction or 6/10 of 1% of the aggregate issuance, whichever is
higher.
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240,000
per transaction or 24/10 of 1% of the aggregate issuance, whichever is
higher, and suspension of registration
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Section
11
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UNAUTHORIZED
OR ILLEGAL ACTIVITIES OF INVESTMENT COMPANIES
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50,000
or 0.5/10 of 1% of Consolidated Net Income / Revenue, whichever is higher.
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100,000
or 1/10 of 1% of Consolidated Net Income / Revenue, whichever is higher.
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300,000
or 3/10 of 1% of Consolidated Net Income / Revenue, whichever is higher.
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600,000
or 6/10 of 1% of Consolidated Net Income / Revenue, whichever is higher, and
suspension of registration
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Section
12
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UNAUTHORIZED
CHANGES IN INVESTMENT POLICY (Imposable on responsible directors and
officers)
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50,000
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100,000
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300,000
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900,000
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Section
14
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UNAUTHORIZED
CONTRACTS OF ADVISERS AND UNDERWRITERS (Imposable on responsible directors
and officers)
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50,000
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100,000
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300,000
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900,000
and five (5) years disqualification as an investment adviser even with a
written contract.
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Sections
22 and 23; ICA Rule 35-1 (e)
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VIOLATION
OF REQUIREMENTS ON DISTRIBUTION, REDEMPTION, AND REPURCHASE OF SECURITIES
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50,000
or 0.5/10 of 1% of Consolidated Net Income / Revenue, whichever is higher.
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100,000
or 1/10 of 1% of Consolidated Net Income / Revenue, whichever is higher.
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300,000
or 3/10 of 1% of Consolidated Net Income / Revenue, whichever is higher.
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600,000
or 6/10 of 1% of Consolidated Net Income / Revenue, whichever is higher and
suspension of registration
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Section
26
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EXCESSIVE
PERIODIC PAYMENT PLAN
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50,000
or 0.5/10 of 1% of Consolidated Net Income / Revenue, whichever is higher.
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100,000
or 1/10 of 1% of Consolidated Net Income / Revenue, whichever is higher.
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300,000
or 3/10 of 1% of Consolidated Net Income / Revenue, whichever is higher.
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600,000
or 6/10 of 1% of Consolidated Net Income / Revenue, whichever is higher and
suspension of registration
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Sections 25, 27 & 30;
ICA Rule 35-1(e)(3)
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FAILURE TO SUBMIT REQUIRED
REPORTS UNDER THESE SECTIONS AND/OR TO PUBLISH DAILY PRICES
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P50.000 or 0.5/10 of 1% of
Consolidated Net Income / Revenue, whichever is higher.
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P100,000 or 1/10 of 1% of
Consolidated Net Income / Revenue, whichever is higher.
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P300.000 or 3/10 of 1%-of
Consolidated Net Income / Revenue, whichever is higher
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P600,000 or 6/10 of 1% of
Consolidated Net Income / Revenue, whichever is higher and suspension of
registration
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Section 32
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MIS- REPRESENTATIONS
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100,000 or 1/10 of 1% of
Consolidated Net Income / Revenue, whichever is higher.
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200,000 or 2/10 of 1% of
Consolidated Net Income / Revenue, whichever is higher.
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600,000 or 6/10 of 1% of
Consolidated Net Income / Revenue, whichever is higher.
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1,200,000 or 12/10 of 1% of
Consolidated Net Income / Revenue, whichever is higher and suspension of
registration
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ICA Rule 35-1 (d)
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VIOLATION OF RECITED
INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS
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100,000 or 1/10 of 1% of
Consolidated Net Income / Revenue, whichever is higher.
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200,000 or 2/10 of 1% of
Consolidated Net Income / Revenue, whichever is higher.
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600,000 or 6/10 of 1% of
Consolidated Net Income / Revenue, whichever is higher.
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1,200,000 or 12/10 of 1% of
Consolidated Net Income / Revenue, whichever is higher and suspension of
registration
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ICA Rule 35-1 (c)(2)
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NON-DEPOSIT OF SALES
PROCEEDS TO A CUSTODIAN BANK
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10,000 per transaction or
1/10 of 1% of the aggregate issuance, whichever is higher.
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20,000 per transaction or
2/10 of 1% of the aggregate issuance, whichever is higher.
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60,000 per transaction or
6/10 of 1% of the aggregate issuance, whichever is higher.
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240,000 per transaction or
24/10 of 1% of the aggregate issuance, whichever is higher, and suspension
of registration
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ICA Rule 35-1 (c)(3)
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REDEMPTION OF ORIGINAL
CAPITAL FOR LESS THAN 12 MONTHS
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50,000 or 0.5/10 of 1% of
Consolidated Net Income / Revenue, whichever is higher.
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100,000 or 1/10 of 1% of
Consolidated Net Income / Revenue, whichever is higher.
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300,000 or 3/10 of 1% of
Consolidated Net Income / Revenue, whichever is higher.
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P600,000 or 6/10 of 1% of
Consolidated Net Income / Revenue, whichever is higher and suspension of
registration
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ICA Rule 35-1 (i)(2)
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LATE FILING OF MONTHLY
SALES/REDEMPTION REPORT
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50,000 or 0.5/10 of 1% of
Consolidated Net Income / Revenue, whichever is higher.
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100,000 or 1/10 of 1% of
Consolidated Net Income / Revenue, whichever is higher.
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300,000 or 3/10 of 1% of
Consolidated Net Income / Revenue, whichever is higher.
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P600.000 or 6/10 of 1% of
Consolidated Net Income / Revenue, whichever is higher and suspension of
registration
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ICA Rule 35-1 (e)(3)
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FAILURE TO EFFECT
REDEMPTION REQUEST WITHIN 7 BANKING DAYS
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50,000 per transaction or
0.5/10 of 1% of Consolidated Net Income / Revenue, whichever is higher.
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100,000 per transaction or
1/10 of 1% of Consolidated Net Income / Revenue, whichever is higher.
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300,000 per transaction or
3/10 of 1% of Consolidated Net Income / Revenue, whichever is higher.
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P600.000 or 6/10 of 1% of
Consolidated Net Income / Revenue, whichever is higher and suspension ot
registration
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The imposition
of the foregoing penalties shall be without prejudice to other administrative
sanctions or to the filing of criminal charges against the person/s
responsible for the violation.
This
Circular shall take effect fifteen (15) days from publication in a newspaper of
general circulation in the Philippines.
Signed on behalf of the Commission on
February 19 . 2003, Mandaluyong
City, Philippines.
(Original
Signed)
LILIA
R. BAUTISTA
Chairperson
*Amount of net income/revenue shall be based on
the latest audited financial statements of the company.
'**
Violation within the same year, except for violation of Sections 8,12 and 17(2)(a)[Annual
Report], 19, 20 and 22 where it shall be counted regardless of the commission
beyond one year.
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