CHAPTER I

Title and Definitions

SEC. 1. Title. – This shall be known as “The Securities Regulation Code”.

SEC.  2.  Declaration of State Policy. –  The State shall establish a socially conscious, free market that regulates itself, encourage the widest participation of ownership in enterprises, enhance the democratization of wealth, promote the development of the capital market, protect investors, ensure full and fair disclosure about securities, minimize if not totally eliminate insider trading and other fraudulent or manipulative devices and practices which create distortions in the free market.

To achieve these ends, this Securities Regulation Code is hereby enacted.

SEC.  3. Definition of Terms. -

3.1.      ”Securities” are shares, participation or interests in a corporation or in a commercial enterprise or profit-making venture and evidenced by a certificate, contract, instrument, whether written or electronic in character. It includes:

a)         Shares of stock, bonds, debentures, notes, evidences of indebtedness, asset-backed securities;

b)         Investment contracts, certificates of interest or participation in a profit sharing agreement, certificates of deposit for a future subscription;

c)         Fractional undivided interests in oil, gas or other mineral rights;

d)         Derivatives like option and warrants;

e)         Certificates of assignments, certificates of participation, trust certificates, voting trust certificates or similar instruments;

 f)         Proprietary or non proprietary membership certificates in corporations; and

 g)         Other instruments as may in the future be determined by the Commission.

3.2       “Issuer” is the originator, maker, obligor, or creator of the security.

3.3       “Broker” is a person engaged in the business of buying and selling securities for the account of others.

3.4       “Dealer” means any person who buys and sells securities for his/her own account in the ordinary course of business.

3.5.      “Associated person of a broker or dealer” is an employee thereof who, directly exercises control of supervisory authority, but does not include a salesman, or an agent or a person whose functions are solely clerical or ministerial.

3.6.      “Clearing Agency” is any person who acts as intermediary in making deliveries upon payment to effect settlement in securities transactions.

3.7.     “Exchange” is an organized marketplace or facility that brings together buyers and sellers and executes trades of securities and/or commodities.

3.8.      “Insider” means: (a) the issuer; (b) a director or officer (or person performing similar functions) of, or a person controlling the issuer; (c) a person whose relationship or former relationship to the issuer gives or gave him access to material information about the issuer or the security that is not generally available to the public; (d) a government  employee, or director, or officer of an exchange, clearing agency and/or self-regulatory  organization who has access to material information about an issuer or a security that is not generally available to the public; or (e) a person who learns such information by a communication from any of the foregoing insiders.

3.9.     “Pre-Need Plans” are contracts which provide for the performance of future services or the payment of future monetary considerations at the time of actual need, for which planholders pay in cash or installment at stated prices, with or without interest or insurance coverage and includes life, pension, education, interment, and other plans which the Commission may from time to time approve.

3.10.    “Promoter” is a person who, acting alone or with others, takes initiative in founding and organizing the business or enterprise of the issuer and receives consideration therefore.

3.11.    “Prospectus” is the document made by or on behalf of an issuer, underwriter or dealer to sell or offer securities for sale to the public through a registration statement filed with the Commission. 

3.12.    “Registration statement” is the application for the registration of securities required to be filed with the Commission.

3.13.    “Salesman” is a natural person, employed as such or as an agent, by a dealer, issuer or broker to buy and sell securities.

3.14.    “Uncertificated security” is a security evidenced by electronic or similar records.

3.15.    “Underwriter” is a person who guarantees on a firm commitment and/or declared best effort basis the distribution and sale of securities of any kind by another company.

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