CHAPTER II

Registration of Investment Companies

Sec. 6. Registration Requirement for Investment Companies. –

(a)    An investment company is permitted to engage, directly or indirectly, in any of the following acts in the Philippines only if registered under Section 7:

1.      Offer for sale, sell or deliver after sale any security, or any interest in a security, whether or not the issuer is the investment company.

2.      Purchase, redeem, retire or otherwise acquire, or attempt to acquire, any security, or any interest in a security, whether or not the issuer is the investment company.

(b)    A registered investment company shall not act as an underwriter of the securities of another person.

(c)    A registered investment company may engage in the acts enumerated in paragraphs (1) and (2) of Subsection (a) without obtaining a separate license as a dealer under the SRC.

(d)    A promoter of or underwriter for an investment company shall not engage in the acts enumerated in paragraphs (1) and (2) of Subsection (a) in the Philippines in respect of any security issued by the company, and no underwriter for an investment company shall sell or purchase for the account of the company in the Philippines the security of any issuer, unless the company is registered under Section 7.

 (e)    The Commission may, by rule or order, require that a portion of the funds raised by an investment company organized under the laws of a foreign country in the Philippines be invested in the Philippines.  The Commission may, by rule or order, also impose such other conditions in connection with any offer or sale by any such investment company of its securities in the Philippines that it finds necessary or appropriate in the public interest or for the protection of investors.

Sec. 7. Registration Procedure for Investment Companies. –

 (a)    An investment company may register under this Act by filing a registration statement under the SRC and the rules and regulations issued under the SRC, except that, instead of the information and documents required by Sections 8 and 12 of the SRC and the rules and regulations under them, it shall file a registration statement, including a prospectus, containing such information and documents as the Commission may prescribe by rule or regulation under this subsection.  The registration statement shall include the following:

1.       A statement in bold letters on the outside front cover page of the prospectus as follows:  "[Name of company] is registered with the Securities and Exchange Commission as an investment company under the Investment Company Act of 2001.  A registration statement relating to the sale or offering of the [name of product] has been filed under Section 7 of that Act.  The Commission has not passed upon the accuracy or adequacy of this prospectus.”

2.       A description of the investment company and its classification.

3.       The fundamental investment policies of the investment company, including its investment objectives, investment concentration by issuer or industry group, liquidity standards, and portfolio mix.

4.      Terms and pricing of the securities to be offered by the investment company, sales load, minimum purchase requirements, income distribution policy, and procedures for the purchase and sale of the securities.

5.       Risk factors.

6.       For mutual funds, the method and basis of computation of net asset value, manner and method of redemption, authorized redemption centers, and redemption charges, if any.

7.       The maximum sales load.

8.       The names and business experience for the past five years and compensation of the directors, officers and promoters of the investment company, including past and present affiliations, and extent of participation or ownership in the common stock or debt securities issued or to be issued by the investment company.

9.       The names, business experience, affiliations, and principal responsibilities of the investment advisers, principal distributors and principal underwriters of the investment company, and the fees and other compensation to be paid to each of them.

10.     The names of the custodian, independent auditor and legal counsel of the investment company.

11.     A statement whether any person subject to Subsection 29 has a disability listed in that subsection.

12.     Audited financial statements for the last fiscal year, if applicable, and for the quarter ended as of a date not earlier than 90 days before the date of the filing of the registration statement.

13.    Schedule of investments indicating issuer, cost and market value.

14.    The articles of incorporation and by-laws of the investment company.

15.     Any proposed investment advisory contract, the proposed custodian agreement and, in the case of a mutual fund, any proposed contract with a principal distributor.

16.     Evidence that the investment company is, or when registered will be, in compliance with the structural and capital requirements set out in Section 12.

(b)    Within 45 days after the filing of a registration statement, or such later date to which the investment company has consented, the Commission shall declare the registration statement effective or rejected, unless the investment company is allowed to amend the registration statement as provided in Section 14 of the SRC.  The Commission shall enter an order declaring the registration statement to be effective if it finds that the registration statement, together with all attached documents, is on its face complete and that there has been compliance with the registration requirements.  The Commission may impose such terms and conditions as may be necessary or appropriate in the public interest or for the protection of investors.  Despite paragraph 12.5(b) of the SRC and the rules and regulations under it, the order of the Commission granting registration shall become effective when it is entered.

(c)    The Commission may reject a registration statement and refuse registration of a security, or revoke the effectivity of a registration statement and the registration of a security after due notice and hearing by issuing an order to that effect, setting forth its findings, if it finds any of the following:

1.      The investment company made or caused to be made a materially false or misleading statement in its registration statement, or omitted to state in its registration statement a material fact that was required to be stated.

2.      The investment company or any of its affiliated persons, investment advisers, principal distributors, principal underwriters, promoters or custodian has violated any provision of this Act, the SRC, or any rules or regulations of the Commission.

3.       Any person subject to Subsection 29(a) has a disability listed in that subsection and has not been exempted by the Commission under Subsection 29(b).

4.      The investment company has not paid the registration fee prescribed by the Commission.

 (d)    Section 13 of the SRC, dealing with rejection and revocation of registration of securities, Section 14 of the SRC, dealing with amendments to the registration statement, and section 15 of the SRC, dealing with suspension  of registration, together with the rules and regulations under them, apply to investment companies registered under this Act, except that an amended registration statement shall become effective in accordance with Subsection (b).  Subsection 15.1 of the SRC shall also apply to a ground for revocation of registration specified in this Act.  The reference in Subsections 15.1 and 15.2 of the SRC to notification of the issuer, underwriter, dealer or broker participating in an offering shall apply similarly to a principal distributor participating in an offering.

(e)    Whenever the Commission, on its own motion or upon application, finds that a registered investment company has ceased to be an investment company, it shall so declare by order and, upon the taking effect of the order, the company’s registration under this Act shall cease to be in effect.

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