Republic of the Philippines
Securities and Exchange Commission

 

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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:

SRC Provisions

Violations

Penalty for Violation*

First Offense

Second Offense**

Third Offense**

Fourth Offense**

Sections 8 and 12

OFFERING OF SECURITIES TO THE PUBLIC WITHOUT PRIOR REGISTRATION OR PERMIT

P10,000per transaction or 1/10 of 1% of the aggregate issuance, whichever is higher.

P20.000 per transaction or 2/10 of 1% of the aggregate issuance, whichever is higher.

P60,000per transaction or 6/10 of 1% of the aggregate issuance, whichever is higher.

P240.000 per transaction or 24/10 of 1% of the aggregate issuance, whichever is higher.

Section 10

LATE FILING OF NOTICE OF EXEMPTION PURSUANT TO SRC RULE10.1(K) (In case of listed companies only)

50,000

100,000

300,000

600,000 and suspension of registration

NON-COMPLIANCE WITH DISCLOSURE REQUIREMENTS UNDER SRC RULE 10.1

10,000

20,000

60,000

120,000 and suspension of registration

Section 14

FAILURE TO AMEND REGISTRATION STATEMENT IN ACCORDANCE WITH SRC RULE 14

50,000 or 0.5/10 of 1% of the aggregate amount of securities sold under the new terms, whichever is higher.

100,000 or 1/10 of 1% of the aggregate amount of securities sold under the new terms, whichever is higher.

300,000 or 3/10 of 1% of the aggregate amount of securities sold under the new terms, whichever is higher.

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

Section 17.1

LATE OR INCOMPLETE FILING OF CURRENT REPORT (SEC FORM 17-C)

P50.000 ,or 0.5/10 of 1% of Consolidated Net Income / Revenue, whichever is higher.

P100,000 or 1/10 of 1% of Consolidated Net Income / Revenue, whichever is higher.

P300.000 or 3/10 of 1% of Consolidated Net Income / Revenue, whichever is higher.

P600,000 or 6/10 of 1% of Consolidated Net Income / Revenue, whichever is higher, and suspension of registration

LATE OR INCOMPLETE FILING OF QUARTERLY REPORT (SEC FORM 17-Q)

75,000 or 1/10 of 1% of Consolidated Net Income / Revenue, whichever is higher.

150,000 or 2/10 of 1% of Consolidated Net Income / Revenue, whichever is higher,

450,000 or 6/10 of 1% of Consolidated Net Income / Revenue, whichever is higher.

900,000 or 9/10 of 1% of Consolidated Net Income / Revenue, whichever is higher, and suspension of registration

LATE OR INCOMPLETE FILING OF ANNUAL REPORT (SEC FORM 17-A)

100,000 or 1/10 of 1% of Consolidated Net Income / Revenue, whichever is higher.

200,000 or 2/10 of 1% of Consolidated Net Income / Revenue, whichever is higher.

600,000 or 6/10 of 1% of Consolidated Net Income / Revenue, whichever is higher.

1,200,000 or 12/10 of 1% of Consolidated Net Income / Revenue, whichever is higher, and suspension of registration

Section 18

LATE OR INCOMPLETE FILING OF REPORTS BY 5% OR MORE HOLDERS OF EQUITY SECURITIES (SECFORM18-AOR 18-AS)

50,000 or 0.5/10 of 1% of the maximum aggregate purchase price of acquired securities, whichever is higher.

100,000 or1/10of1%of the maximum aggregate purchase price of acquired securities, whichever is higher.

300,000 or 3/10 of 1% of the maximum aggregate purchase price of acquired securities, whichever is higher.

900,000 or 9/10 of 1% of Consolidated Net Income / Revenue, whichever is higher, and suspension of registration

Section 19.1

LATE OR INCOMPLETE FILING OF TENDER OFFER REPORT (SEC FORM 19-1) OR FAILURE TO COMPLY WITH ANY REQUIREMENT OF SRC RULE 19-1

100,000 or 1/10 of 1%of the maximum aggregate purchase price of acquired securities, whichever is higher.

200,000 or 2/10 of 1% of the maximum aggregate purchase price of acquired securities, whichever is higher.

600,000 or 6/10 of 1% of the maximum aggregate purchase price of acquired securities, whichever is higher.

1,200,000 or 12/10 of 1% of Consolidated Net Income / Revenue, whichever is higher, and suspension of registration

Section 20 [in relation with 17.1(b)]

LATE OR INCOMPLETE FILING OF INFORMATION STATEMENT (SEC FORM 20-IS) OR FAILURE TO COMPLY WITH ANY REQUIREMENT OF SRC RULE 20

100,000 or 1/10 of 1% of Consolidated Net Income / Revenue, whichever is higher.

200,000 or 2/10 of 1% of Consolidated Net Income / Revenue, whichever is higher.

600,000 or 6/10 of 1% of Consolidated Net Income / Revenue, whichever is higher.

1,200,000 or 12/10 of 1% of Consolidated Net  Income / Revenue, whichever is higher, and suspension of registration

Section 22

FAILURE TO OBSERVE MINIMUM INTERNAL CONTROLS AND RECORD KEEPING SYSTEM

P100,000 or 1/10 of 1% of Consolidated Net Income / Revenue, whichever is higher.

P200,000 or 2/10 of 1% of Consolidated Net Income / Revenue, whichever is higher.

P600.000 or 6/10 of 1% of Consolidated Net Income / Revenue, whichever is higher.

P1,200,000 or 12/10 of 1% of Consolidated Net Income / Revenue, whichever is higher, and suspension of registration

Section 23

LATE OR INCOMPLETE FILING OF STATEMENT OF BENEFICIAL OWNERSHIP (SEC FORM 23-A OR B)

50,000 or 0.5/10 of 1% of the maximum aggregate purchase price of acquired securities, whichever is higher.

100,000 or 1/10 of 1% of the maximum aggregate purchase price of acquired securities, whichever is higher.

300,000 or 3/10 of 1% of the maximum aggregate purchase price of acquired securities, whichever is higher.

900,000 or 9/10 of 1% of the maximum aggregate purchase price of acquired securities, whichever is higher.

DIRECTORS / OFFICERS

Qualifying or not more than shares (100) shares

10,000

20,000

60,000

180,000

More than 100 shares but less than 5% of the outstanding equity security

20,000

40,000

120,000

360,000

More than 5% but less than 10%

35,000

70,000

210,000

630,000

Section 38

FAILURE TO ELECT INDEPENDENT DIRECTOR(S)

OR

ELECTION OF AN UNQUALIFIED INDEPENDENT DIRECTOR

100,000or 1/10 of 1% of Consolidated Net Income / Revenue, whichever is higher.

200,000 or 2/10 of 1% of Consolidated Net Income / Revenue, whichever is higher.

600,000 or 6/10 of 1% of Consolidated Net Income / Revenue, whichever is higher.

1,200,000 or 12/10 of 1% of Consolidated Net Income / Revenue, whichever is higher, and suspension of registration

Section 54

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.)

100,000 or 1/10 of 1% of Consolidated Net Income / Revenue, whichever is higher.

200,000 or 2/10 of 1% of Consolidated Net Income / Revenue, whichever is higher.

600,000 or 6/10 of 1% of Consolidated Net Income / Revenue, whichever is higher.

1,200,000 or 12/10 of 1% of Consolidated Net Income / Revenue, whichever is higher, and suspension of registration

 

 

ICA Provisions

Violations

Penalty for Violation*

First Offense

Second Offense**

Third Offense**

Fourth Offense**

Sections 7 and 24

VIOLATION OF REGISTRATION REQUIREMENTS

P10,000 per violation or 1/10 of 1%ofthe aggregate issuance, whichever is higher.

P20.000 per violation or 2/10 of 1% of the aggregate issuance, whichever is higher.

P60.000 per violation or 6/10 of 1% of the aggregate issuance, whichever is higher.

P240.000 per violation or 24/10 of 1% of the aggregate issuance, whichever is higher

Section 8

ELECTION OF CERTAIN INELIGIBLE AFFILIATED PERSONS AND UNDERWRITERS

50,000 or 0.5/10 of 1% of Consolidated Net Income / Revenue, whichever is higher.

100,000 or 1/10 of 1% of Consolidated Net Income / Revenue, whichever is higher.

300,000 or 3/10 of 1% of Consolidated Net Income / Revenue, whichever is higher.

600,000 or 6/10 of 1% of Consolidated Net Income / Revenue, whichever is higher, and suspension of registration

Section 9

UNAUTHORIZED AFFILIATIONS OF DIRECTORS, OFFICERS AND EMPLOYEES

50,000

100,000

300,000

900,000

Section 10

PROHIBITED OFFERS TO EXCHANGE SECURITIES

10,000 per transaction or 1/10 of 1% of the aggregate issuance, whichever is higher.

20,000 per transaction or 2/10 of 1% of the aggregate issuance, whichever is higher.

60,000 per transaction or 6/10 of 1% of the aggregate issuance, whichever is higher.

240,000 per transaction or 24/10 of 1% of the aggregate issuance, whichever is higher, and suspension of registration

Section 11

UNAUTHORIZED OR ILLEGAL ACTIVITIES OF INVESTMENT COMPANIES

50,000 or 0.5/10 of 1% of Consolidated Net Income / Revenue, whichever is higher.

100,000 or 1/10 of 1% of Consolidated Net Income / Revenue, whichever is higher.

300,000 or 3/10 of 1% of Consolidated Net Income / Revenue, whichever is higher.

600,000 or 6/10 of 1% of Consolidated Net Income / Revenue, whichever is higher, and suspension of registration

Section 12

 

UNAUTHORIZED CHANGES IN INVESTMENT POLICY (Imposable on responsible directors and officers)

50,000

100,000

300,000

900,000

Section 14

UNAUTHORIZED CONTRACTS OF ADVISERS AND UNDERWRITERS (Imposable on responsible directors and officers)

50,000

100,000

300,000

900,000 and five (5) years disqualification as an investment adviser even with a written contract.

Sections 22 and 23; ICA Rule 35-1 (e)

VIOLATION OF REQUIREMENTS ON DISTRIBUTION, REDEMPTION, AND REPURCHASE OF SECURITIES

50,000 or 0.5/10 of 1% of Consolidated Net Income / Revenue, whichever is higher.

100,000 or 1/10 of 1% of Consolidated Net Income / Revenue, whichever is higher.

300,000 or 3/10 of 1% of Consolidated Net Income / Revenue, whichever is higher.

600,000 or 6/10 of 1% of Consolidated Net Income / Revenue, whichever is higher and suspension of registration

Section 26

EXCESSIVE PERIODIC PAYMENT PLAN

50,000 or 0.5/10 of 1% of Consolidated Net Income / Revenue, whichever is higher.

100,000 or 1/10 of 1% of Consolidated Net Income / Revenue, whichever is higher.

300,000 or 3/10 of 1% of Consolidated Net Income / Revenue, whichever is higher.

600,000 or 6/10 of 1% of Consolidated Net Income / Revenue, whichever is higher and suspension of registration

Sections 25, 27 & 30;

ICA Rule 35-1(e)(3)

FAILURE TO SUBMIT REQUIRED REPORTS UNDER THESE SECTIONS AND/OR TO PUBLISH DAILY PRICES

P50.000 or 0.5/10 of 1% of Consolidated Net Income / Revenue, whichever is higher.

P100,000 or 1/10 of 1% of Consolidated Net Income / Revenue, whichever is higher.

P300.000 or 3/10 of 1%-of Consolidated Net Income / Revenue, whichever is higher

P600,000 or 6/10 of 1% of Consolidated Net Income / Revenue, whichever is higher and suspension of registration

Section 32

MIS- REPRESENTATIONS

100,000 or 1/10 of 1% of Consolidated Net Income / Revenue, whichever is higher.

200,000 or 2/10 of 1% of Consolidated Net Income / Revenue, whichever is higher.

600,000 or 6/10 of 1% of Consolidated Net Income / Revenue, whichever is higher.

1,200,000 or 12/10 of 1% of Consolidated Net Income / Revenue, whichever is higher and suspension of registration

ICA Rule 35-1 (d)

VIOLATION OF RECITED INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS

100,000 or 1/10 of 1% of Consolidated Net Income / Revenue, whichever is higher.

200,000 or 2/10 of 1% of Consolidated Net Income / Revenue, whichever is higher.

600,000 or 6/10 of 1% of Consolidated Net Income / Revenue, whichever is higher.

1,200,000 or 12/10 of 1% of Consolidated Net Income / Revenue, whichever is higher and suspension of registration

ICA Rule 35-1 (c)(2)

 

NON-DEPOSIT OF SALES PROCEEDS TO A CUSTODIAN BANK

 

10,000 per transaction or 1/10 of 1% of the aggregate issuance, whichever is higher.

20,000 per transaction or 2/10 of 1% of the aggregate issuance, whichever is higher.

60,000 per transaction or 6/10 of 1% of the aggregate issuance, whichever is higher.

240,000 per transaction or 24/10 of 1% of the aggregate issuance, whichever is higher, and suspension of registration

ICA Rule 35-1 (c)(3)

REDEMPTION OF ORIGINAL CAPITAL FOR LESS THAN 12 MONTHS

50,000 or 0.5/10 of 1% of Consolidated Net Income / Revenue, whichever is higher.

100,000 or 1/10 of 1% of Consolidated Net Income / Revenue, whichever is higher.

300,000 or 3/10 of 1% of Consolidated Net Income / Revenue, whichever is higher.

P600,000 or 6/10 of 1% of Consolidated Net Income / Revenue, whichever is higher and suspension of registration

ICA Rule 35-1 (i)(2)

LATE FILING OF MONTHLY SALES/REDEMPTION REPORT

50,000 or 0.5/10 of 1% of Consolidated Net Income / Revenue, whichever is higher.

100,000 or 1/10 of 1% of Consolidated Net Income / Revenue, whichever is higher.

300,000 or 3/10 of 1% of Consolidated Net Income / Revenue, whichever is higher.

P600.000 or 6/10 of 1% of Consolidated Net Income / Revenue, whichever is higher and suspension of registration

ICA Rule 35-1 (e)(3)

FAILURE TO EFFECT REDEMPTION REQUEST WITHIN 7 BANKING DAYS

50,000 per transaction or 0.5/10 of 1% of Consolidated Net Income / Revenue, whichever is higher.

100,000 per transaction or 1/10 of 1% of Consolidated Net Income / Revenue, whichever is higher.

300,000 per transaction or 3/10 of 1% of Consolidated Net Income / Revenue, whichever is higher.

P600.000 or 6/10 of 1% of Consolidated Net Income / Revenue, whichever is higher and suspension ot registration

 

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.