GUIDELINES FOR THE TRANSITION TO

PAS No. 39 - FINANCIAL INSTRUMENTS

 

 

  1. COVERAGE

The following companies, which are required to submit interim or quarterly reports to the Commission, shall be covered by these guidelines:

  1. Issuers which have sold a class of its securities pursuant to a registration under Section 12 of the Securities Regulation Code (formerly, Revised Securities Act). However, to the extent specified in an order to be issued by the Commission, registered investment companies or mutual funds shall not be covered by this Circular;

  2. An issuer with a class of securities listed for trading in an Exchange;

  3. A public company or any entity with assets of at least Fifty Million Pesos (P50,000,000.00) and having Two Hundred (200) or more holders each holding at least One hundred (100) shares of a class of its equity securities;

  4. Financing companies;

  5. Pre-need companies (as to Trust Fund and other corporate investments);

  6. Investment houses;

  7. Brokers and dealers of securities;

  8.  Universal Banks registered as underwriters of securities

  1. GUIDELINES

  1. Interim or quarterly reports which shall become due for submission in 2005 need not yet reflect compliance with PAS No. 39.

  2. The covered companies, which have transactions in financial instruments shall, in addition to the requirements of SRC Rule 68.1 or Rule 68, include the following information in their Quarterly Reports for the quarters ending June 30 and September 30, 2005 or their interim reports beginning June 30, 2005:

  1. Classification of their financial instruments as to:

  1. Loans and Receivables;

  2. Held to Maturity

  3. Available for sale Securities;

  4. Financial Assets at Fair Value through Profit and Loss;

  5. Financial Liabilities at Fair Value through Profit and Loss;

  1. Discussion of the conversion plan which shall include a description of the following procedures:

  1. Review of all contracts to identify any imbedded derivatives;

  2. Evaluation of financial risk exposures relative to the adoption of the standard and the manner of managing the risks;

  3. Development of fair valuation capabilities;

  4. Assessment of the impact on financial ratios and loan covenants;

  5. For large entities, whether there is a need to establish a transition team:

  6. Information to interested or affected parties.

  1. Any intention to avail of the “hedge accounting” privilege under PAS No. 39 and the timing thereof, including the required hedging documentation and process requirements.

  1. The classification of financial instruments shall be consistently observed;

  2. Companies which have no financial instruments in their accounts shall briefly indicate such fact in their 2005 quarterly or interim reports.

 

 

 

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