Registration of Securities
SEC. 8. Requirement of Registration of Securities.
Securities shall not be sold or offered for sale or distribution within
the Philippines, without a registration statement duly filed with and approved
by the Commission. Prior to such sale, information on the securities, in such
form and with such substance as the Commission may prescribe, shall be made
available to each prospective purchaser.
may conditionally approve the registration statement under such terms as it may deem necessary.
may specify the terms and conditions under which any written communication,
including any summary prospectus, shall be deemed not to constitute an offer
for sale under this Section.
A record of the
registration of securities shall be kept in a Register of Securities in which
shall be recorded orders entered by the Commission with respect to such
securities. Such register and all
documents or information with respect to the securities registered therein
shall be open to public inspection at reasonable hours on business days.
may audit the financial statements, assets and other information of a firm
applying for registration of its securities whenever it deems the same
necessary to insure full disclosure or to protect the interest of the investors
and the public in general.
SEC. 9. Exempt
The requirement of registration under Subsection 8.1
shall not as a general rule apply to any of the following classes of
Any security issued
or guaranteed by the Government of the Philippines, or by any political
subdivision or agency thereof, or by any person controlled or supervised by,
and acting as an instrumentality of said Government.
Any security issued
or guaranteed by the government of any country with which the Philippines
maintains diplomatic relations, or by any state, province or political
subdivision thereof on the basis of reciprocity: Provided, That the Commission may require compliance with the form
and content of disclosures the Commission may prescribe.
by a receiver or by a trustee in bankruptcy duly approved by the proper
Any security or its
derivatives the sale or transfer of which, by law, is under the supervision and
regulation of the Office of the Insurance Commission, Housing and Land Use
Regulatory Board, or the Bureau of Internal Revenue.
Any security issued
by a bank except its own shares of stock.
may, by rule or regulation after public hearing, add to the foregoing any class
of securities if it finds that the enforcement of this Code with respect to
such securities is not necessary in the public interest and for the protection
SEC. 10. Exempt
The requirement of registration under Subsection 8.1
shall not apply to the sale of any security in any of the following
At any judicial
sale, or sale by an executor, administrator, guardian or receiver or trustee in
insolvency or bankruptcy.
By or for the
account of a pledge holder, or mortgagee or any other similar lien holder
selling or offering for sale or delivery in the ordinary course of business and
not for the purpose of avoiding the provisions of this Code, to liquidate a bona fide debt, a security pledged in
good faith as security for such debt.
transaction in which any security is sold, offered for sale, subscription or
delivery by the owner thereof, or by his representative for the owner’s
account, such sale or offer for sale, subscription or delivery not being made
in the course of repeated and successive transactions of a like character by
such owner, or on his account by such representative and such owner or
representative not being the underwriter of such security.
The distribution by
a corporation, actively engaged in the business authorized by its articles of
incorporation, of securities to its stockholders or other security holders as a
stock dividend or other distribution out of surplus.
The sale of capital
stock of a corporation to its own stockholders exclusively, where no commission
or other remuneration is paid or given directly or indirectly in connection
with the sale of such capital stock.
The issuance of
bonds or notes secured by mortgage upon real estate or tangible personal
property, where the entire mortgage together with all the bonds or notes
secured thereby are sold to a single purchaser at a single sale.
The issue and
delivery of any security in exchange for any other security of the same issuer
pursuant to a right of conversion entitling the holder of the security
surrendered in exchange to make such conversion: Provided, That the security so surrendered has been registered
under this Code or was, when sold, exempt from the provisions of this Code, and
that the security issued and delivered in exchange, if sold at the conversion
price, would at the time of such conversion fall within the class of securities
entitled to registration under this Code. Upon such conversion the par value of the security surrendered in such
exchange shall be deemed the price at which the securities issued and delivered
in such exchange are sold.
transactions, executed upon customer’s orders, on any registered Exchange or
other trading market.
shares of the capital stock of a corporation prior to the incorporation thereof
or in pursuance of an increase in its authorized capital stock under the
Corporation Code, when no expense is incurred, or no commission, compensation
or remuneration is paid or given in connection with the sale or disposition of
such securities, and only when the purpose for soliciting, giving or taking of
such subscriptions is to comply with the requirements of such law as to the
percentage of the capital stock of a corporation which should be subscribed
before it can be registered and duly incorporated, or its authorized capital
The exchange of
securities by the issuer with its existing security holders exclusively, where
no commission or other remuneration is paid or given directly or indirectly for
soliciting such exchange.
The sale of
securities by an issuer to fewer than twenty (20) persons in the Philippines
during any twelve-month period.
The sale of
securities to any number of the following qualified buyers:
Pension fund or
retirement plan maintained by the Government of the Philippines or any
political subdivision thereof or managed by a bank or other persons authorized
by the Bangko Sentral to engage in
Such other person
as the Commission may by rule determine as qualified buyers, on the basis of
such factors as financial sophistication, net worth, knowledge, and experience
in financial and business matters, or amount of assets under management.
10.2. The Commission
may exempt other transactions, if it finds that the requirements of
registration under this Code is not necessary in the public interest or for the
protection of the investors such as by reason of the small amount involved or
the limited character of the public offering.
10.3. Any person
applying for an exemption under this
Section, shall file with the Commission a notice identifying the exemption
relied upon on such form and at such time as the Commission by rule may
prescribe and with such notice shall pay to the Commission a fee equivalent to
one-tenth (1/10) of one percent (1%) of the maximum aggregate price or issued
value of the securities.
SEC. 11. Commodity Futures Contracts. - No person shall offer, sell or enter into commodity futures
contracts except in accordance with rules, regulations and orders the
Commission may prescribe in the public interest. The Commission shall promulgate rules and regulations involving
commodity futures contracts to protect investors to ensure the
development of a fair and transparent commodities market.
SEC. 12. Procedure for Registration of Securities.
12.1. All securities
required to be registered under Subsection 8.1 shall be registered through the
filing by the issuer in the main office of the Commission, of a sworn
registration statement with respect to such securities, in such form and
containing such information and documents as the Commission shall prescribe.
The registration statement shall include any prospectus required or permitted
to be delivered under Subsections 8.2, 8.3 and 8.4.
12.2. In promulgating
rules governing the content of any registration statement (including any
prospectus made a part thereof or annexed thereto), the Commission may require
the registration statement to contain such information or documents as it may, by rule, prescribe. It may
dispense with any such requirement, or may require additional information or
documents, including written information from an expert, depending on the
necessity thereof or their applicability to the class of securities sought to
12.3. The information
required for the registration of any kind, and all securities, shall include,
among others, the effect of the securities issue on ownership, on the mix of
ownership, especially foreign and local ownership.
12.4. The registration
statement shall be signed by the issuer’s executive officer, its principal operating officer, its principal financial
officer, its comptroller, principal accounting officer, its corporate secretary
or persons performing similar functions accompanied by a duly verified
resolution of the board of directors of the issuer corporation. The written consent of the expert named as
having certified any part of the registration statement or any document used in
connection therewith shall also be filed. Where the registration statement
includes shares to be sold by selling shareholders, a written certification by
such selling shareholders as to the accuracy of any part of the registration
statement contributed to by such selling shareholders shall also be filed.
of the registration statement, the issuer shall pay to the Commission a fee of
not more than one-tenth (1/10) of one per
centum (1%) of the maximum aggregate price at which such securities are
proposed to be offered. The Commission shall prescribe by rule diminishing fees
in inverse proportion to the value of the aggregate price of the offering.
Notice of the
filing of the registration statement shall be immediately published by the
issuer, at its own expense, in two (2)
newspapers of general circulation in the Philippines, once a week for two (2)
consecutive weeks, or in such other manner as the Commission by rule shall
prescribe, reciting that a registration statement for the sale of such security
has been filed, and that the aforesaid registration statement, as well as the
papers attached thereto are open to inspection at the Commission during
business hours, and copies thereof, photostatic or otherwise, shall be furnished to interested parties at such
reasonable charge as the Commission may prescribe.
forty-five (45) days after the date of filing of the registration statement, or
by such later date to which the issuer has consented, the Commission shall
declare the registration statement effective or rejected, unless the applicant
is allowed to amend the registration statement as provided in Section 14
hereof. The Commission shall enter an
order declaring the registration statement to be effective if it finds that the
registration statement together with all the other papers and documents
attached thereto, is on its face complete and that the requirements have been
complied with. The Commission may
impose such terms and conditions as may be necessary or appropriate for the
protection of the investors.
12.7. Upon effectivity
of the registration statement, the issuer shall state under oath in every
prospectus that all registration requirements have been met and that all
information are true and correct as represented by the issuer or the one making
the statement. Any untrue statement of fact or omission to state a material
fact required to be stated therein or necessary to make the statement therein
not misleading shall constitute fraud.
SEC. 13. Rejection
and Revocation of Registration of Securities.
13.1. The Commission may
reject a registration statement and refuse registration of the security
thereunder, or revoke the effectivity of a registration statement and the
registration of the security thereunder after due notice and hearing by issuing
an order to such effect, setting forth its findings in respect thereto, if it
a) The issuer:
judicially declared insolvent;
Has violated any
of the provisions of this Code, the rules promulgated pursuant thereto, or any
order of the Commission of which the issuer has notice in connection with the
offering for which a registration statement has been filed;
Has been or is
engaged or is about to engage in fraudulent transactions;
Has made any
false or misleading representation of material facts in any prospectus
concerning the issuer or its securities;
(v) Has failed to comply with any requirement
that the Commission may impose as a condition for registration of the security
for which the registration statement has been filed; or
statement is on its face incomplete or inaccurate in any material respect or
includes any untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading; or
The issuer, any
officer, director or controlling person of the issuer, or person performing
similar functions, or any underwriter has been convicted, by a competent
judicial or administrative body, upon plea of guilty, or otherwise, of an
offense involving moral turpitude and/or fraud or is enjoined or restrained by
the Commission or other competent judicial or administrative body for violations
of securities, commodities, and other related laws.
For purposes of this
subsection, the term “competent judicial or administrative body” shall include
a foreign court of competent jurisdiction as provided for under the Rules of Court.
may compel the production of all the books and papers of such issuer, and may
administer oaths to, and examine the officers of such issuer or any other
person connected therewith as to its business and affairs.
If any issuer
shall refuse to permit an examination to be made by the Commission, its refusal
shall be ground for the refusal or revocation of the registration of its
Commission deems it necessary, it may issue an order suspending the offer and
sale of the securities pending any investigation. The order shall state the grounds for taking such action, but
such order of suspension although binding upon the persons notified thereof,
shall be deemed confidential, and shall not be published. Upon the issuance of the suspension order,
no further offer or sale of such security shall be made until the same is
lifted or set aside by the Commission. Otherwise, such sale shall be void.
issuance of such order shall be given to the issuer and every dealer and broker
who shall have notified the Commission of an intention to sell such security.
statement may be withdrawn by the issuer only with the consent of the
SEC. 14. Amendments
to the Registration Statement.
14.1. If a registration statement is on
its face incomplete or inaccurate in any material respect, the Commission shall
issue an order directing the amendment of the registration statement. Upon compliance with such order, the amended
registration statement shall become effective in accordance with the procedure
mentioned in Subsection 12.6 hereof.
filed prior to the effective date of the registration statement shall
recommence the forty-five (45) day period within which the Commission shall act
on a registration statement. An
amendment filed after the effective date of the registration statement shall
become effective only upon such date as determined by the Commission.
If any change
occurs in the facts set forth in a registration statement, the issuer shall
file an amendment thereto setting forth the change.
If, at any time,
the Commission finds that a registration statement contains any false statement
or omits to state any fact required to be stated therein or necessary to make
the statements therein not misleading, the Commission may conduct an
examination, and, after due notice and hearing, issue an Order suspending the
effectivity of the registration statement. If the statement is duly amended, the suspension order may be lifted.
In making such
examination the Commission or any officer or officers designated by it may
administer oaths and affirmations and shall have access to, and may demand the
production of, any books, records or documents relevant to the examination. Failure of the issuer, underwriter, or any
other person to cooperate, or his obstruction or refusal to undergo an
examination, shall be a ground for the issuance of a suspension order.
SEC. 15. Suspension of Registration.
at any time, the information contained in the registration statement filed is
or has become misleading, incorrect, inadequate or incomplete in any material
respect, or the sale or offering for sale of the security registered thereunder
may work or tend to work a fraud, the Commission may require from the issuer
such further information as may in its judgment be necessary to enable the
Commission to ascertain whether the registration of such security should be
revoked on any ground specified in this Code. The Commission may also suspend the right to sell and offer for sale
such security pending further investigation, by entering an order specifying
the grounds for such action, and by notifying the issuer, underwriter, dealer
or broker known as participating in such offering.
15.2. The refusal to
furnish information required by the Commission may be a ground for the issuance
of an order of suspension pursuant to Subsection 15.1. Upon the issuance of any such order and
notification to the issuer, underwriter, dealer or broker known as
participating in such offering, no further offer or sale of any such security
shall be made until the same is lifted or set aside by the Commission. Otherwise, such sale shall be void.
15.3. Upon issuance of
an order of suspension, the Commission shall conduct a hearing. If the Commission determines that the sale
of any security should be revoked, it shall issue an order prohibiting sale of
Until the issuance of
a final order, the suspension of the right to sell, though binding upon the
persons notified thereof, shall be deemed confidential, and shall not be
published, unless it shall appear that the order of suspension has been
violated after notice. If, however, the
Commission finds that the sale of the security will neither be fraudulent nor
result in fraud, it shall forthwith issue an order revoking the order of
suspension, and such security shall be restored to its status as a registered
security as of the date of such order of suspension.