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REPUBLICACTNO.8799
SECURITIESREGULATIONCODE
CHAPTERI
TitleandDefinitions
SECTION1.Title.–Thisshallbeknownas“TheSecuritiesRegulationCode”.
SEC.2.DeclarationofStatePolicy.–TheStateshallestablishasociallyconscious,freemarketthatregulatesitself,encouragethewidestparticipationofownershipinenterprises,enhancethedemocratizationofwealth,promotethedevelopmentofthecapitalmarket,protectinvestors,ensurefullandfairdisclosureaboutsecurities,minimizeifnottotallyeliminateinsidertradingandotherfraudulentormanipulativedevicesandpracticeswhichcreatedistortionsinthefreemarket.
Toachievetheseends,thisSecuritiesRegulationCodeisherebyenacted.
SEC.3.DefinitionofTerms.–
3.1.“Securities”areshares,participationorinterestsinacorporationorinacommercialenterpriseorprofit‐makingventureandevidencedbyacertificate,contract,instrument,whetherwrittenorelectronicincharacter.Itincludes:
(a)Sharesofstock,bonds,debentures,notes,evidencesofindebtedness,asset‐backedsecurities;
(b)Investmentcontracts,certificatesofinterestorparticipationinaprofitsharingagreement,certificatesofdepositforafuturesubscription;
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(c)Fractionalundividedinterestsinoil,gasorothermineralrights;
(d)Derivativeslikeoptionandwarrants;
(e)Certificatesofassignments,certificatesofparticipation,trustcertificates,votingtrustcertificatesorsimilarinstruments;
(f)Proprietaryornonproprietarymembershipcertificatesincorporations;and
(g)OtherinstrumentsasmayinthefuturebedeterminedbytheCommission.
3.2“Issuer”istheoriginator,maker,obligor,orcreatorofthesecurity.
3.3“Broker”isapersonengagedinthebusinessofbuyingandsellingsecuritiesfortheaccountofothers.
3.4“Dealer”meansanypersonwhobuysandsellssecuritiesforhis/herownaccountintheordinarycourseofbusiness.
3.5.“Associatedpersonofabrokerordealer”isanemployeethereofwho,directlyexercisescontrolofsupervisoryauthority,butdoesnotincludeasalesman,oranagentorapersonwhosefunctionsaresolelyclericalorministerial.
3.6.“ClearingAgency”isanypersonwhoactsasintermediaryinmakingdeliveriesuponpaymenttoeffectsettlementinsecuritiestransactions.
3.7.“Exchange”isanorganizedmarketplaceorfacilitythatbringstogetherbuyersandsellersandexecutestradesofsecuritiesand/orcommodities.
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3.8.“Insider”means:(a)theissuer;(b)adirectororofficer(orpersonperformingsimilarfunctions)of,orapersoncontrollingtheissuer;(c)apersonwhoserelationshiporformerrelationshiptotheissuergivesorgavehimaccesstomaterialinformationabouttheissuerorthesecuritythatisnotgenerallyavailabletothepublic;(d)agovernmentemployee,ordirector,orofficerofanexchange,clearingagencyand/orself‐regulatoryorganizationwhohasaccesstomaterialinformationaboutanissuerorasecuritythatisnotgenerallyavailabletothepublic;or(e)apersonwholearnssuchinformationbyacommunicationfromanyoftheforegoinginsiders.
3.9.“Pre‐NeedPlans”arecontractswhichprovidefortheperformanceoffutureservicesorthepaymentoffuturemonetaryconsiderationsatthetimeofactualneed,forwhichplanholderspayincashorinstallmentatstatedprices,withorwithoutinterestorinsurancecoverageandincludeslife,pension,education,interment,andotherplanswhichtheCommissionmayfromtimetotimeapprove.
3.10.“Promoter”isapersonwho,actingaloneorwithothers,takesinitiativeinfoundingandorganizingthebusinessorenterpriseoftheissuerandreceivesconsiderationtherefor.
3.11.“Prospectus”isthedocumentmadebyoronbehalfofanissuer,underwriterordealertoselloroffersecuritiesforsaletothepublicthrougharegistrationstatementfiledwiththeCommission.
3.12.“Registrationstatement”istheapplicationfortheregistrationofsecuritiesrequiredtobefiledwiththeCommission.
3.13.“Salesman”isanaturalperson,employedassuchorasanagent,byadealer,issuerorbrokertobuyandsellsecurities.
3.14.“Uncertificatedsecurity”isasecurityevidencedbyelectronicorsimilarrecords.
3.15.“Underwriter”isapersonwhoguaranteesonafirmcommitmentand/ordeclaredbesteffortbasisthedistributionandsaleofsecuritiesofanykindbyanothercompany.
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CHAPTERII
SecuritiesandExchangeCommission
SEC.4.AdministrativeAgency.‐
4.1.ThisCodeshallbeadministeredbytheSecuritiesandExchangeCommission(hereafterthe“Commission”)asacollegialbody,composedofaChairpersonandfour(4)Commissioners,appointedbythePresidentforatermofseven(7)yearseachandwhoshallserveassuchuntiltheirsuccessorshallhavebeenappointedandqualified.ACommissionerappointedtofillavacancyoccurringpriortotheexpirationofthetermforwhichhis/herpredecessorwasappointed,shallserveonlyfortheunexpiredportionofsuchterm.TheincumbentChairpersonandCommissionersattheeffectivityofthisCode,shallservetheunexpiredportionoftheirtermsunderPresidentialDecreeNo.902‐A.Unlessthecontextindicatesotherwise,theterm“Commissioner”includestheChairperson.
4.2.TheCommissionersmustbenatural‐borncitizensofthePhilippines,atleastforty(40)yearsofagefortheChairpersonandatleastthirty‐five(35)yearsofagefortheCommissioners,ofgoodmoralcharacter,ofunquestionableintegrity,ofknownprobityandpatriotism,andwithrecognizedcompetenceinsocialandeconomicdisciplines:Provided,ThatthemajorityofCommissioners,includingtheChairperson,shallbemembersofthePhilippineBar.
4.3.TheChairpersonisthechiefexecutiveofficeroftheCommission.TheChairpersonshallexecuteandadministerthepolicies,decisions,ordersandresolutionsapprovedbytheCommissionandshallhavethegeneralexecutivedirectionandsupervisionoftheworkandoperationoftheCommissionandofitsmembers,bodies,boards,offices,personnelandallitsadministrativebusiness.
4.4.ThesalaryoftheChairpersonandtheCommissionersshallbefixedbythePresidentofthePhilippinesbasedonanobjectiveclassificationsystem,atasumcomparabletothemembersoftheMonetaryBoardandcommensuratetotheimportanceandresponsibilitiesattachedtotheposition.
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4.5.TheCommissionshallholdmeetingsatleastonceaweekfortheconductofbusinessorasoftenasmaybenecessaryuponcalloftheChairpersonorupontherequestofthree(3)Commissioners.ThenoticeofthemeetingshallbegiventoallCommissionersandthepresenceofthree(3)Commissionersshallconstituteaquorum.IntheabsenceoftheChairperson,themostseniorCommissionershallactaspresidingofficerofthemeeting.
4.6.TheCommissionmay,forpurposesofefficiency,delegateanyofitsfunctionstoanydepartmentorofficeoftheCommission,anindividualCommissionerorstaffmemberoftheCommissionexceptitsrevieworappellateauthorityanditspowertoadopt,alterandsupplementanyruleorregulation.
TheCommissionmayreviewuponitsowninitiativeoruponthepetitionofanyinterestedpartyanyactionofanydepartmentoroffice,individualCommissioner,orstaffmemberoftheCommission.
SEC.5.PowersandFunctionsoftheCommission.‐5.1.TheCommissionshallactwithtransparencyandshallhavethepowersandfunctionsprovidedbythisCode,PresidentialDecreeNo.902‐A,theCorporationCode,theInvestmentHousesLaw,theFinancingCompanyActandotherexistinglaws.PursuanttheretotheCommissionshallhave,amongothers,thefollowingpowersandfunctions:
(a)Havejurisdictionandsupervisionoverallcorporations,partnershipsorassociationswhoarethegranteesofprimaryfranchisesand/oralicenseorpermitissuedbytheGovernment;
(b)Formulatepoliciesandrecommendationsonissuesconcerningthesecuritiesmarket,adviseCongressandothergovernmentagenciesonallaspectsofthesecuritiesmarketandproposelegislationandamendmentsthereto;
(c)Approve,reject,suspend,revokeorrequireamendmentstoregistrationstatements,andregistrationandlicensingapplications;
(d)Regulate,investigateorsupervisetheactivitiesofpersonstoensurecompliance;
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(e)Supervise,monitor,suspendortakeovertheactivitiesofexchanges,clearingagenciesandotherSROs;
(f)Imposesanctionsfortheviolationoflawsandtherules,regulationsandordersissuedpursuantthereto;
(g)Prepare,approve,amendorrepealrules,regulationsandorders,andissueopinionsandprovideguidanceonandsupervisecompliancewithsuchrules,regulationsandorders;
(h)Enlisttheaidandsupportofand/ordeputizeanyandallenforcementagenciesoftheGovernment,civilormilitaryaswellasanyprivateinstitution,corporation,firm,associationorpersonintheimplementationofitspowersandfunctionsunderthisCode;
(i)Issueceaseanddesistorderstopreventfraudorinjurytotheinvestingpublic;
(j)PunishforcontemptoftheCommission,bothdirectandindirect,inaccordancewiththepertinentprovisionsofandpenaltiesprescribedbytheRulesofCourt;
(k)Compeltheofficersofanyregisteredcorporationorassociationtocallmeetingsofstockholdersormembersthereofunderitssupervision;
(l)IssuesubpoenaducestecumandsummonwitnessestoappearinanyproceedingsoftheCommissionandinappropriatecases,ordertheexamination,searchandseizureofalldocuments,papers,filesandrecords,taxreturns,andbooksofaccountsofanyentityorpersonunderinvestigationasmaybenecessaryfortheproperdispositionofthecasesbeforeit,subjecttotheprovisionsofexistinglaws;
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(m)Suspend,orrevoke,afterpropernoticeandhearingthefranchiseorcertificateofregistrationofcorporations,partnershipsorassociations,uponanyofthegroundsprovidedbylaw;and
(n)Exercisesuchotherpowersasmaybeprovidedbylawaswellasthosewhichmaybeimpliedfrom,orwhicharenecessaryorincidentaltothecarryingoutof,theexpresspowersgrantedtheCommissiontoachievetheobjectivesandpurposesoftheselaws.
5.2.TheCommission’sjurisdictionoverallcasesenumeratedunderSection5ofPresidentialDecreeNo.902‐AisherebytransferredtotheCourtsofgeneraljurisdictionortheappropriateRegionalTrialCourt:Provided,thattheSupremeCourtintheexerciseofitsauthoritymaydesignatetheRegionalTrialCourtbranchesthatshallexercisejurisdictionoverthesecases.TheCommissionshallretainjurisdictionoverpendingcasesinvolvingintra‐corporatedisputessubmittedforfinalresolutionwhichshouldberesolvedwithinone(1)yearfromtheenactmentofthisCode.TheCommissionshallretainjurisdictionoverpendingsuspensionofpayments/rehabilitationcasesfiledasof30June2000untilfinallydisposed.
SEC.6.IndemnificationandResponsibilitiesofCommissioners.‐6.1.TheCommissionshallindemnifyeachCommissionerandotherofficialsoftheCommission,includingpersonnelperformingsupervisionandexaminationfunctionsforallcostsandexpensesreasonablyincurredbysuchpersonsinconnectionwithanycivilorcriminalactions,suitsorproceedingstowhichtheymaybeormadeapartybyreasonoftheperformanceoftheirfunctionsorduties,unlesstheyarefinallyadjudgedinsuchactionsorproceedingstobeliableforgrossnegligenceormisconduct.
Intheeventofsettlementorcompromise,indemnificationshallbeprovidedonlyinconnectionwithsuchmatterscoveredbythesettlementastowhichtheCommissionisadvisedbyexternalcounselthatthepersonstobeindemnifieddidnotcommitanygrossnegligenceormisconduct.
Thecostsandexpensesincurredindefendingtheaforementionedaction,suitorproceedingmaybepaidbytheCommissioninadvanceofthefinaldispositionofsuchaction,suitorproceedinguponreceiptofanundertakingbyoronbehalfoftheCommissioner,officeroremployeetorepaytheamountadvancedshouldit
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ultimatelybedeterminedbytheCommissionthathe/sheisnotentitledtobeindemnifiedasprovidedinthissubsection.
6.2.TheCommissioners,officersandemployeesoftheCommissionwhowillfullyviolatethisCodeorwhoareguiltyofnegligence,abuseoractsofmalfeasanceorfailtoexerciseextraordinarydiligenceintheperformanceoftheirdutiesshallbeheldliableforanylossorinjurysufferedbytheCommissionorotherinstitutionsasaresultofsuchviolation,negligence,abuse,malfeasance,orfailuretoexerciseextraordinarydiligence.SimilarresponsibilityshallapplytotheCommissioners,officersandemployeesoftheCommissionfor(1)thedisclosureofanyinformation,discussionorresolutionoftheCommissionofaconfidentialnature,orabouttheconfidentialoperationsoftheCommission,unlessthedisclosureisinconnectionwiththeperformanceofofficialfunctionswiththeCommissionorwithpriorauthorizationoftheCommissioners;or(2)theuseofsuchinformationforpersonalgainortothedetrimentofthegovernment,theCommissionorthirdparties:Provided,however,ThatanydataorinformationrequiredtobesubmittedtothePresidentand/orCongressoritsappropriatecommittee,ortobepublishedundertheprovisionsofthisCodeshallnotbeconsideredconfidential.
SEC.7.Reorganization.‐7.1.ToachievethegoalsofthisCode,consistentwithCivilServicelaws,theCommissionisherebyauthorizedtoprovideforitsreorganization,tostreamlineitsstructureandoperations,upgradeitshumanresourcecomponentandenableittomoreefficientlyandeffectivelyperformitsfunctionsandexerciseitspowersunderthisCode.
7.2.AllpositionsoftheCommissionshallbegovernedbyacompensationandpositionclassificationsystemsandqualificationstandardsapprovedbytheCommissionbasedonacomprehensivejobanalysisandauditofactualdutiesandresponsibilities.ThecompensationplanshallbecomparablewiththeprevailingcompensationplanintheBangkoSentralngPilipinasandothergovernmentfinancialinstitutionsandshallbesubjecttoperiodicreviewbytheCommissionnomorethanonceeverytwo(2)yearswithoutprejudicetoyearlymeritreviewsorincreasesbasedonproductivityandefficiency.TheCommissionshall,therefore,beexemptfromlaws,rules,andregulationsoncompensation,positionclassificationandqualificationstandards.TheCommissionshall,however,endeavortomakeitssystemconformascloselyaspossiblewiththeprinciplesundertheCompensationandPositionClassificationActof1989(RepublicActNo.6758,asamended).
CHAPTERIII
RegistrationofSecurities
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SEC.8.RequirementofRegistrationofSecurities.–8.1.SecuritiesshallnotbesoldorofferedforsaleordistributionwithinthePhilippines,withoutaregistrationstatementdulyfiledwithandapprovedbytheCommission.Priortosuchsale,informationonthesecurities,insuchformandwithsuchsubstanceastheCommissionmayprescribe,shallbemadeavailabletoeachprospectivepurchaser.
8.2.TheCommissionmayconditionallyapprovetheregistrationstatementundersuchtermsasitmaydeemnecessary.
8.3.TheCommissionmayspecifythetermsandconditionsunderwhichanywrittencommunication,includinganysummaryprospectus,shallbedeemednottoconstituteanofferforsaleunderthisSection.
8.4.ArecordoftheregistrationofsecuritiesshallbekeptinaRegisterofSecuritiesinwhichshallberecordedordersenteredbytheCommissionwithrespecttosuchsecurities.Suchregisterandalldocumentsorinformationwithrespecttothesecuritiesregisteredthereinshallbeopentopublicinspectionatreasonablehoursonbusinessdays.
8.5.TheCommissionmayauditthefinancialstatements,assetsandotherinformationofafirmapplyingforregistrationofitssecuritieswheneveritdeemsthesamenecessarytoinsurefulldisclosureortoprotecttheinterestoftheinvestorsandthepublicingeneral.
SEC.9.ExemptSecurities.‐
9.1.TherequirementofregistrationunderSubsection8.1shallnotasageneralruleapplytoanyofthefollowingclassesofsecurities:
(a)AnysecurityissuedorguaranteedbytheGovernmentofthePhilippines,orbyanypoliticalsubdivisionoragencythereof,orbyanypersoncontrolledorsupervisedby,andactingasaninstrumentalityofsaidGovernment.
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(b)AnysecurityissuedorguaranteedbythegovernmentofanycountrywithwhichthePhilippinesmaintainsdiplomaticrelations,orbyanystate,provinceorpoliticalsubdivisionthereofonthebasisofreciprocity:Provided,ThattheCommissionmayrequirecompliancewiththeformandcontentofdisclosurestheCommissionmayprescribe.
(c)Certificatesissuedbyareceiverorbyatrusteeinbankruptcydulyapprovedbytheproperadjudicatorybody.
(d)Anysecurityoritsderivativesthesaleortransferofwhich,bylaw,isunderthesupervisionandregulationoftheOfficeoftheInsuranceCommission,HousingandLandUseRegulatoryBoard,ortheBureauofInternalRevenue.
(e)Anysecurityissuedbyabankexceptitsownsharesofstock.
9.2.TheCommissionmay,byruleorregulationafterpublichearing,addtotheforegoinganyclassofsecuritiesifitfindsthattheenforcementofthisCodewithrespecttosuchsecuritiesisnotnecessaryinthepublicinterestandfortheprotectionofinvestors.
SEC.10.ExemptTransactions.‐10.1.TherequirementofregistrationunderSubsection8.1.shallnotapplytothesaleofanysecurityinanyofthefollowingtransactions:
(a)Atanyjudicialsale,orsalebyanexecutor,administrator,guardianorreceiverortrusteeininsolvencyorbankruptcy.
(b)Byorfortheaccountofapledgeholder,ormortgageeoranyothersimilarlienholdersellingorofferingforsaleordeliveryintheordinarycourseofbusinessandnotforthepurposeofavoidingtheprovisionsofthisCode,toliquidateabonafidedebt,asecuritypledgedingoodfaithassecurityforsuchdebt.
(c)Anisolatedtransactioninwhichanysecurityissold,offeredforsale,subscriptionordeliverybytheownerthereof,orbyhisrepresentativeforthe
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owner’saccount,suchsaleorofferforsale,subscriptionordeliverynotbeingmadeinthecourseofrepeatedandsuccessivetransactionsofalikecharacterbysuchowner,oronhisaccountbysuchrepresentativeandsuchownerorrepresentativenotbeingtheunderwriterofsuchsecurity.
(d)Thedistributionbyacorporation,activelyengagedinthebusinessauthorizedbyitsarticlesofincorporation,ofsecuritiestoitsstockholdersorothersecurityholdersasastockdividendorotherdistributionoutofsurplus.
(e)Thesaleofcapitalstockofacorporationtoitsownstockholdersexclusively,wherenocommissionorotherremunerationispaidorgivendirectlyorindirectlyinconnectionwiththesaleofsuchcapitalstock.
(f)Theissuanceofbondsornotessecuredbymortgageuponrealestateortangiblepersonalproperty,wheretheentiremortgagetogetherwithallthebondsornotessecuredtherebyaresoldtoasinglepurchaseratasinglesale.
(g)Theissueanddeliveryofanysecurityinexchangeforanyothersecurityofthesameissuerpursuanttoarightofconversionentitlingtheholderofthesecuritysurrenderedinexchangetomakesuchconversion:Provided,ThatthesecuritysosurrenderedhasbeenregisteredunderthisCodeorwas,whensold,exemptfromtheprovisionsofthisCode,andthatthesecurityissuedanddeliveredinexchange,ifsoldattheconversionprice,wouldatthetimeofsuchconversionfallwithintheclassofsecuritiesentitledtoregistrationunderthisCode.Uponsuchconversiontheparvalueofthesecuritysurrenderedinsuchexchangeshallbedeemedthepriceatwhichthesecuritiesissuedanddeliveredinsuchexchangearesold.
(h)Broker’stransactions,executeduponcustomer’sorders,onanyregisteredExchangeorothertradingmarket.
(i)SubscriptionsforsharesofthecapitalstockofacorporationpriortotheincorporationthereoforinpursuanceofanincreaseinitsauthorizedcapitalstockundertheCorporationCode,whennoexpenseisincurred,ornocommission,compensationorremunerationispaidorgiveninconnectionwiththesaleordispositionofsuchsecurities,andonlywhenthepurposeforsoliciting,givingortakingofsuchsubscriptionsistocomplywiththerequirementsofsuchlawastothe
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percentageofthecapitalstockofacorporationwhichshouldbesubscribedbeforeitcanberegisteredanddulyincorporated,oritsauthorizedcapitalincreased.
(j)Theexchangeofsecuritiesbytheissuerwithitsexistingsecurityholdersexclusively,wherenocommissionorotherremunerationispaidorgivendirectlyorindirectlyforsolicitingsuchexchange.
(k)Thesaleofsecuritiesbyanissuertofewerthantwenty(20)personsinthePhilippinesduringanytwelve‐monthperiod.
(l)Thesaleofsecuritiestoanynumberofthefollowingqualifiedbuyers:
(i)Bank;
(ii)Registeredinvestmenthouse;
(iii)Insurancecompany;
(iv)PensionfundorretirementplanmaintainedbytheGovernmentofthePhilippinesoranypoliticalsubdivisionthereoformanagedbyabankorotherpersonsauthorizedbytheBangkoSentraltoengageintrustfunctions;
(v)Investmentcompany;or
(vi)SuchotherpersonastheCommissionmaybyruledetermineasqualifiedbuyers,onthebasisofsuchfactorsasfinancialsophistication,networth,knowledge,andexperienceinfinancialandbusinessmatters,oramountofassetsundermanagement.
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10.2.TheCommissionmayexemptothertransactions,ifitfindsthattherequirementsofregistrationunderthisCodeisnotnecessaryinthepublicinterestorfortheprotectionoftheinvestorssuchasbyreasonofthesmallamountinvolvedorthelimitedcharacterofthepublicoffering.
10.3.AnypersonapplyingforanexemptionunderthisSection,shallfilewiththeCommissionanoticeidentifyingtheexemptionreliedupononsuchformandatsuchtimeastheCommissionbyrulemayprescribeandwithsuchnoticeshallpaytotheCommissionafeeequivalenttoone‐tenth(1/10)ofonepercent(1%)ofthemaximumaggregatepriceorissuedvalueofthesecurities.
SEC.11.CommodityFuturesContracts.‐Nopersonshalloffer,sellorenterintocommodityfuturescontractsexceptinaccordancewithrules,regulationsandorderstheCommissionmayprescribeinthepublicinterest.TheCommissionshallpromulgaterulesandregulationsinvolvingcommodityfuturescontractstoprotectinvestorstoensurethedevelopmentofafairandtransparentcommoditiesmarket.
SEC.12.ProcedureforRegistrationofSecurities.‐
12.1.AllsecuritiesrequiredtoberegisteredunderSubsection8.1shallberegisteredthroughthefilingbytheissuerinthemainofficeoftheCommission,ofaswornregistrationstatementwithrespecttosuchsecurities,insuchformandcontainingsuchinformationanddocumentsastheCommissionshallprescribe.TheregistrationstatementshallincludeanyprospectusrequiredorpermittedtobedeliveredunderSubsections8.2,8.3and8.4.
12.2.Inpromulgatingrulesgoverningthecontentofanyregistrationstatement(includinganyprospectusmadeapartthereoforannexedthereto),theCommissionmayrequiretheregistrationstatementtocontainsuchinformationordocumentsasitmay,byrule,prescribe.Itmaydispensewithanysuchrequirement,ormayrequireadditionalinformationordocuments,includingwritteninformationfromanexpert,dependingonthenecessitythereofortheirapplicabilitytotheclassofsecuritiessoughttoberegistered.
12.3.Theinformationrequiredfortheregistrationofanykind,andallsecurities,shallinclude,amongothers,theeffectofthesecuritiesissueonownership,onthemixofownership,especiallyforeignandlocalownership.
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12.4.Theregistrationstatementshallbesignedbytheissuer’sexecutiveofficer,itsprincipaloperatingofficer,itsprincipalfinancialofficer,itscomptroller,principalaccountingofficer,itscorporatesecretaryorpersonsperformingsimilarfunctionsaccompaniedbyadulyverifiedresolutionoftheboardofdirectorsoftheissuercorporation.Thewrittenconsentoftheexpertnamedashavingcertifiedanypartoftheregistrationstatementoranydocumentusedinconnectiontherewithshallalsobefiled.Wheretheregistrationstatementincludessharestobesoldbysellingshareholders,awrittencertificationbysuchsellingshareholdersastotheaccuracyofanypartoftheregistrationstatementcontributedtobysuchsellingshareholdersshallalsobefiled.
12.5.(a)Uponfilingoftheregistrationstatement,theissuershallpaytotheCommissionafeeofnotmorethanone‐tenth(1/10)ofonepercentum(1%)ofthemaximumaggregatepriceatwhichsuchsecuritiesareproposedtobeoffered.TheCommissionshallprescribebyrulediminishingfeesininverseproportiontothevalueoftheaggregatepriceoftheoffering.
(b)Noticeofthefilingoftheregistrationstatementshallbeimmediatelypublishedbytheissuer,atitsownexpense,intwo(2)newspapersofgeneralcirculationinthePhilippines,onceaweekfortwo(2)consecutiveweeks,orinsuchothermannerastheCommissionbyruleshallprescribe,recitingthataregistrationstatementforthesaleofsuchsecurityhasbeenfiled,andthattheaforesaidregistrationstatement,aswellasthepapersattachedtheretoareopentoinspectionattheCommissionduringbusinesshours,andcopiesthereof,photostaticorotherwise,shallbefurnishedtointerestedpartiesatsuchreasonablechargeastheCommissionmayprescribe.
12.6.Withinforty‐five(45)daysafterthedateoffilingoftheregistrationstatement,orbysuchlaterdatetowhichtheissuerhasconsented,theCommissionshalldeclaretheregistrationstatementeffectiveorrejected,unlesstheapplicantisallowedtoamendtheregistrationstatementasprovidedinSection14hereof.TheCommissionshallenteranorderdeclaringtheregistrationstatementtobeeffectiveifitfindsthattheregistrationstatementtogetherwithalltheotherpapersanddocumentsattachedthereto,isonitsfacecompleteandthattherequirementshavebeencompliedwith.TheCommissionmayimposesuchtermsandconditionsasmaybenecessaryorappropriatefortheprotectionoftheinvestors.
12.7.Uponeffectivityoftheregistrationstatement,theissuershallstateunderoathineveryprospectusthatallregistrationrequirementshavebeenmetandthatall
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informationaretrueandcorrectasrepresentedbytheissuerortheonemakingthestatement.Anyuntruestatementoffactoromissiontostateamaterialfactrequiredtobestatedthereinornecessarytomakethestatementthereinnotmisleadingshallconstitutefraud.
SEC.13.RejectionandRevocationofRegistrationofSecurities.‐13.1.TheCommissionmayrejectaregistrationstatementandrefuseregistrationofthesecuritythereunder,orrevoketheeffectivityofaregistrationstatementandtheregistrationofthesecuritythereunderafterduenoticeandhearingbyissuinganordertosucheffect,settingforthitsfindingsinrespectthereto,ifitfindsthat:
(a)Theissuer:
(i)Hasbeenjudiciallydeclaredinsolvent;
(ii)HasviolatedanyoftheprovisionsofthisCode,therulespromulgatedpursuantthereto,oranyorderoftheCommissionofwhichtheissuerhasnoticeinconnectionwiththeofferingforwhicharegistrationstatementhasbeenfiled;
(iii)Hasbeenorisengagedorisabouttoengageinfraudulenttransactions;
(iv)Hasmadeanyfalseormisleadingrepresentationofmaterialfactsinanyprospectusconcerningtheissueroritssecurities;
(v)HasfailedtocomplywithanyrequirementthattheCommissionmayimposeasaconditionforregistrationofthesecurityforwhichtheregistrationstatementhasbeenfiled;or
(b)Theregistrationstatementisonitsfaceincompleteorinaccurateinanymaterialrespectorincludesanyuntruestatementofamaterialfactoromitstostateamaterialfactrequiredtobestatedthereinornecessarytomakethestatementsthereinnotmisleading;or
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(c)Theissuer,anyofficer,directororcontrollingpersonoftheissuer,orpersonperformingsimilarfunctions,oranyunderwriterhasbeenconvicted,byacompetentjudicialoradministrativebody,uponpleaofguilty,orotherwise,ofanoffenseinvolvingmoralturpitudeand/orfraudorisenjoinedorrestrainedbytheCommissionorothercompetentjudicialoradministrativebodyforviolationsofsecurities,commodities,andotherrelatedlaws.
Forpurposesofthissubsection,theterm“competentjudicialoradministrativebody”shallincludeaforeigncourtofcompetentjurisdictionasprovidedforundertheRulesofCourt.
13.2.TheCommissionmaycompeltheproductionofallthebooksandpapersofsuchissuer,andmayadministeroathsto,andexaminetheofficersofsuchissueroranyotherpersonconnectedtherewithastoitsbusinessandaffairs.
13.3.IfanyissuershallrefusetopermitanexaminationtobemadebytheCommission,itsrefusalshallbegroundfortherefusalorrevocationoftheregistrationofitssecurities.
13.4.IftheCommissiondeemsitnecessary,itmayissueanordersuspendingtheofferandsaleofthesecuritiespendinganyinvestigation.Theordershallstatethegroundsfortakingsuchaction,butsuchorderofsuspensionalthoughbindinguponthepersonsnotifiedthereof,shallbedeemedconfidential,andshallnotbepublished.Upontheissuanceofthesuspensionorder,nofurtherofferorsaleofsuchsecurityshallbemadeuntilthesameisliftedorsetasidebytheCommission.Otherwise,suchsaleshallbevoid.
13.5.NoticeofissuanceofsuchordershallbegiventotheissuerandeverydealerandbrokerwhoshallhavenotifiedtheCommissionofanintentiontosellsuchsecurity.
13.6.AregistrationstatementmaybewithdrawnbytheissueronlywiththeconsentoftheCommission.
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SEC.14.AmendmentstotheRegistrationStatement.‐14.1.Ifaregistrationstatementisonitsfaceincompleteorinaccurateinanymaterialrespect,theCommissionshallissueanorderdirectingtheamendmentoftheregistrationstatement.Uponcompliancewithsuchorder,theamendedregistrationstatementshallbecomeeffectiveinaccordancewiththeprocedurementionedinSubsection12.6hereof.
14.2.Anamendmentfiledpriortotheeffectivedateoftheregistrationstatementshallrecommencetheforty‐five(45)dayperiodwithinwhichtheCommissionshallactonaregistrationstatement.AnamendmentfiledaftertheeffectivedateoftheregistrationstatementshallbecomeeffectiveonlyuponsuchdateasdeterminedbytheCommission.
14.3.Ifanychangeoccursinthefactssetforthinaregistrationstatement,theissuershallfileanamendmenttheretosettingforththechange.
14.4.If,atanytime,theCommissionfindsthataregistrationstatementcontainsanyfalsestatementoromitstostateanyfactrequiredtobestatedthereinornecessarytomakethestatementsthereinnotmisleading,theCommissionmayconductanexamination,and,afterduenoticeandhearing,issueanOrdersuspendingtheeffectivityoftheregistrationstatement.Ifthestatementisdulyamended,thesuspensionordermaybelifted.
14.5.InmakingsuchexaminationtheCommissionoranyofficerorofficersdesignatedbyitmayadministeroathsandaffirmationsandshallhaveaccessto,andmaydemandtheproductionof,anybooks,recordsordocumentsrelevanttotheexamination.Failureoftheissuer,underwriter,oranyotherpersontocooperate,orhisobstructionorrefusaltoundergoanexamination,shallbeagroundfortheissuanceofasuspensionorder.
SEC.15.SuspensionofRegistration.‐15.1.If,atanytime,theinformationcontainedintheregistrationstatementfiledisorhasbecomemisleading,incorrect,inadequateorincompleteinanymaterialrespect,orthesaleorofferingforsaleofthesecurityregisteredthereundermayworkortendtoworkafraud,theCommissionmayrequirefromtheissuersuchfurtherinformationasmayinitsjudgmentbenecessarytoenabletheCommissiontoascertainwhethertheregistrationofsuchsecurityshouldberevokedonanygroundspecifiedinthisCode.
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TheCommissionmayalsosuspendtherighttosellandofferforsalesuchsecuritypendingfurtherinvestigation,byenteringanorderspecifyingthegroundsforsuchaction,andbynotifyingtheissuer,underwriter,dealerorbrokerknownasparticipatinginsuchoffering.
15.2.TherefusaltofurnishinformationrequiredbytheCommissionmaybeagroundfortheissuanceofanorderofsuspensionpursuanttoSubsection15.1.Upontheissuanceofanysuchorderandnotificationtotheissuer,underwriter,dealerorbrokerknownasparticipatinginsuchoffering,nofurtherofferorsaleofanysuchsecurityshallbemadeuntilthesameisliftedorsetasidebytheCommission.Otherwise,suchsaleshallbevoid.
15.3.Uponissuanceofanorderofsuspension,theCommissionshallconductahearing.IftheCommissiondeterminesthatthesaleofanysecurityshouldberevoked,itshallissueanorderprohibitingsaleofsuchsecurity.
Untiltheissuanceofafinalorder,thesuspensionoftherighttosell,thoughbindinguponthepersonsnotifiedthereof,shallbedeemedconfidential,andshallnotbepublished,unlessitshallappearthattheorderofsuspensionhasbeenviolatedafternotice.If,however,theCommissionfindsthatthesaleofthesecuritywillneitherbefraudulentnorresultinfraud,itshallforthwithissueanorderrevokingtheorderofsuspension,andsuchsecurityshallberestoredtoitsstatusasaregisteredsecurityasofthedateofsuchorderofsuspension.
CHAPTERIV
RegulationofPre‐NeedPlans
SEC.16.Pre‐NeedPlans.‐Nopersonshallsellorofferforsaletothepublicanypre‐needplanexceptinaccordancewithrulesandregulationswhichtheCommissionshallprescribe.Suchrulesshallregulatethesaleofpre‐needplansby,amongotherthings,requiringtheregistrationofpre‐needplans,licensingpersonsinvolvedinthesaleofpre‐needplans,requiringdisclosurestoprospectiveplanholders,prescribingadvertisingguidelines,providingforuniformaccountingsystem,reportsandrecordkeepingwithrespecttosuchplans,imposingcapital,bondingandotherfinancialresponsibility,andestablishingtrustfundsforthepaymentofbenefitsundersuchplans.
CHAPTERV
ReportorialRequirements
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SEC.17.PeriodicandOtherReportsofIssuers.‐17.1.EveryissuersatisfyingtherequirementsinSubsection17.2hereofshallfilewiththeCommission:
(a)Withinonehundredthirty‐five(135)days,aftertheendoftheissuer’sfiscalyear,orsuchothertimeastheCommissionmayprescribe,anannualreportwhichshallinclude,amongothers,abalancesheet,profitandlossstatementandstatementofcashflows,forsuchlastfiscalyear,certifiedbyanindependentcertifiedpublicaccountant,andamanagementdiscussionandanalysisofresultsofoperations;and
(b)SuchotherperiodicalreportsforinterimfiscalperiodsandcurrentreportsonsignificantdevelopmentsoftheissuerastheCommissionmayprescribeasnecessarytokeepcurrentinformationontheoperationofthebusinessandfinancialconditionoftheissuer.
17.2.ThereportorialrequirementsofSubsection17.1shallapplytothefollowing:
(a)AnissuerwhichhassoldaclassofitssecuritiespursuanttoaregistrationunderSection12hereof:Provided,however,Thattheobligationofsuchissuertofilereportsshallbesuspendedforanyfiscalyearaftertheyearsuchregistrationbecameeffectiveifsuchissuer,asofthefirstdayofanysuchfiscalyear,haslessthanonehundred(100)holdersofsuchclassofsecuritiesorsuchothernumberastheCommissionshallprescribeanditnotifiestheCommissionofsuch;
(b)AnissuerwithaclassofsecuritieslistedfortradingonanExchange;and
(c)AnissuerwithassetsofatleastFiftymillionpesos(P50,000,000.00)orsuchotheramountastheCommissionshallprescribe,andhavingTwohundred(200)ormoreholderseachholdingatleastOnehundred(100)sharesofaclassofitsequitysecurities:Provided,however,Thattheobligationofsuchissuertofilereportsshallbeterminatedninety(90)daysafternotificationtotheCommissionbytheissuerthatthenumberofitsholdersholdingatleastonehundred(100)sharesisreducedtolessthanOnehundred(100).
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17.3.EveryissuerofasecuritylistedfortradingonanExchangeshallfilewiththeExchangeacopyofanyreportfiledwiththeCommissionunderSubsection17.1hereof.
17.4.Allreports(includingfinancialstatements)requiredtobefiledwiththeCommissionpursuanttoSubsection17.1hereofshallbeinsuchform,containsuchinformationandbefiledatsuchtimesastheCommissionshallprescribe,andshallbeinlieuofanyperiodicalorcurrentreportsorfinancialstatementsotherwiserequiredtobefiledundertheCorporationCode.
17.5.EveryissuerwhichhasaclassofequitysecuritiessatisfyinganyoftherequirementsinSubsection17.2shallfurnishtoeachholderofsuchequitysecurityanannualreportinsuchformandcontainingsuchinformationastheCommissionshallprescribe.
17.6.WithinsuchperiodastheCommissionmayprescribeprecedingtheannualmeetingoftheholdersofanyequitysecurityofaclassentitledtovoteatsuchmeeting,theissuershalltransmittosuchholdersanannualreportinconformitywithSubsection17.5.
SEC.18.ReportsbyFivepercentum(5%)HoldersofEquitySecurities.‐18.1.IneverycaseinwhichanissuersatisfiestherequirementsofSubsection17.2hereof,anypersonwhoacquiresdirectlyorindirectlythebeneficialownershipofmorethanfivepercentum(5%)ofsuchclassorinexcessofsuchlesserpercentumastheCommissionbyrulemayprescribe,shall,withinten(10)daysaftersuchacquisitionorsuchreasonabletimeasfixedbytheCommission,submittotheissuerofthesecurity,totheExchangewherethesecurityistraded,andtotheCommissionaswornstatementcontainingthefollowinginformationandsuchotherinformationastheCommissionmayrequireinthepublicinterestorfortheprotectionofinvestors:
(a)Thepersonalbackground,identity,residence,andcitizenshipof,andthenatureofsuchbeneficialownershipby,suchpersonandallotherpersonsbywhomoronwhosebehalfthepurchasesareeffected;intheeventthebeneficialownerisajuridicalperson,thelinesofbusinessofthebeneficialownershallalsobereported;
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(b)Ifthepurposeofthepurchasesorprospectivepurchasesistoacquirecontrolofthebusinessoftheissuerofthesecurities,anyplansorproposalswhichsuchpersonsmayhavethatwilleffectamajorchangeinitsbusinessorcorporatestructure;
(c)Thenumberofsharesofsuchsecuritywhicharebeneficiallyowned,andthenumberofsharesconcerningwhichthereisarighttoacquire,directlyorindirectly,by:(i)suchperson,and(ii)eachassociateofsuchperson,givingthebackground,identity,residence,andcitizenshipofeachsuchassociate;and
(d)Informationastoanycontracts,arrangements,orunderstandingwithanypersonwithrespecttoanysecuritiesoftheissuerincludingbutnotlimitedtotransfer,jointventures,loanoroptionarrangements,putsorcalls,guaranteesordivisionoflossesorprofits,orproxiesnamingthepersonswithwhomsuchcontracts,arrangements,orunderstandinghavebeenenteredinto,andgivingthedetailsthereof.
18.2.Ifanychangeoccursinthefactssetforthinthestatements,anamendmentshallbetransmittedtotheissuer,theExchangeandtheCommission.
18.3.TheCommission,maypermitanypersontofileinlieuofthestatementrequiredbySubsection17.1hereof,anoticestatingthenameofsuchperson,thesharesofanyequitysecuritiessubjecttoSubsection17.1whichareownedbyhim,thedateoftheiracquisitionandsuchotherinformationastheCommissionmayspecify,ifitappearstotheCommissionthatsuchsecuritieswereacquiredbysuchpersonintheordinarycourseofhisbusinessandwerenotacquiredforthepurposeofanddonothavetheeffectofchangingorinfluencingthecontroloftheissuernorinconnectionwithanytransactionhavingsuchpurposeoreffect.
CHAPTERVI
ProtectionofShareholderInterests
SEC.19.TenderOffers.–19.1.(a)Anypersonorgroupofpersonsactinginconcertwhointendstoacquireatleastfifteenpercent(15%)ofanyclassofanyequitysecurityofalistedcorporationorofanyclassofanyequitysecurityofacorporationwithassetsofatleastFiftyMillionPesos(P50,000,000.00)andhavingtwohundred
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(200)ormorestockholderswithatleastonehundred(100)shareseachorwhointendstoacquireatleastthirtypercent(30%)ofsuchequityoveraperiodoftwelve(12)monthsshallmakeatenderoffertostockholdersbyfilingwiththeCommissionadeclarationtothateffect;andfurnishtheissuer,astatementcontainingsuchoftheinformationrequiredinSection17ofthisCodeastheCommissionmayprescribe.Suchpersonorgroupofpersonsshallpublishallrequestsorinvitationsfortender,ormaterialsmakingatenderofferorrequestingorinvitinglettersofsuchasecurity.CopiesofanyadditionalmaterialsolicitingorrequestingsuchtenderofferssubsequenttotheinitialsolicitationorrequestshallcontainsuchinformationastheCommissionmayprescribe,andshallbefiledwiththeCommissionandsenttotheissuernotlaterthanthetimecopiesofsuchmaterialsarefirstpublishedorsentorgiventosecurityholders.
(b)AnysolicitationorrecommendationtotheholdersofsuchasecuritytoacceptorrejectatenderofferorrequestorinvitationfortendersshallbemadeinaccordancewithsuchrulesandregulationsastheCommissionmayprescribe.
(c)Securitiesdepositedpursuanttoatenderofferorrequestorinvitationfortendersmaybewithdrawnbyoronbehalfofthedepositoratanytimethroughouttheperiodthatthetenderofferremainsopenandifthesecuritiesdepositedhavenotbeenpreviouslyacceptedforpayment,andatanytimeaftersixty(60)daysfromthedateoftheoriginaltenderofferorrequestorinvitation,exceptastheCommissionmayotherwiseprescribe.
(d)Wherethesecuritiesofferedexceedthatwhichapersonorgroupofpersonsisboundorwillingtotakeupandpayfor,thesecuritiesthataresubjectofthetenderoffershallbetakenupasnearlyasmaybeprorata,disregardingfractions,accordingtothenumberofsecuritiesdepositedbyeachdepositor.Theprovisionsofthissubsectionshallalsoapplytosecuritiesdepositedwithinten(10)daysafternoticeofanincreaseintheconsiderationofferedtosecurityholders,asdescribedinparagraph(e)ofthissubsection,isfirstpublishedorsentorgiventosecurityholders.
(e)Whereanypersonvariesthetermsofatenderofferorrequestorinvitationfortendersbeforetheexpirationthereofbyincreasingtheconsiderationofferedtoholdersofsuchsecurities,suchpersonshallpaytheincreasedconsiderationtoeachsecurityholderwhosesecuritiesaretakenupandpaidforwhetherornotsuchsecuritieshavebeentakenupbysuchpersonbeforethevariationofthetenderofferorrequestorinvitation.
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19.2.Itshallbeunlawfulforanypersontomakeanyuntruestatementofamaterialfactoromittostateanymaterialfactnecessaryinordertomakethestatementsmade,inthelightofthecircumstancesunderwhichtheyaremade,notmisleading,ortoengageinanyfraudulent,deceptive,ormanipulativeactsorpractices,inconnectionwithanytenderofferorrequestorinvitationfortenders,oranysolicitationofsecurityholdersinoppositiontoorinfavorofanysuchoffer,request,orinvitation.TheCommissionshall,forthepurposesofthissubsection,defineandprescribemeansreasonablydesignedtoprevent,suchactsandpracticesasarefraudulent,deceptive,ormanipulative.
SEC.20.ProxySolicitations.–20.1.ProxiesmustbeissuedandproxysolicitationmustbemadeinaccordancewithrulesandregulationstobeissuedbytheCommission;
20.2.Proxiesmustbeinwriting,signedbythestockholderorhisdulyauthorizedrepresentativeandfiledbeforethescheduledmeetingwiththecorporatesecretary.
20.3.Unlessotherwiseprovidedintheproxy,itshallbevalidonlyforthemeetingforwhichitisintended.Noproxyshallbevalidandeffectiveforaperiodlongerthanfive(5)yearsatonetime.
20.4.Nobrokerordealershallgiveanyproxy,consentorauthorization,inrespectofanysecuritycarriedfortheaccountofacustomer,toapersonotherthanthecustomer,withouttheexpresswrittenauthorizationofsuchcustomer.
20.5.Abrokerordealerwhoholdsoracquirestheproxyforatleasttenpercentum(10%)orsuchpercentageastheCommissionmayprescribeoftheoutstandingshareoftheissuer,shallsubmitareportidentifyingthebeneficialownerwithinten(10)daysaftersuchacquisition,foritsownaccountorcustomer,totheissuerofthesecurity,totheExchangewherethesecurityistradedandtotheCommission.
SEC.21.FeesforTenderOffersandCertainProxySolicitations.‐AtthetimeoffilingwiththeCommissionofanystatementrequiredunderSection19foranytenderofferorSection72.2forissuerrepurchases,orSection20forproxyorconsent
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solicitation,theCommissionmayrequirethatthepersonmakingsuchfilingpayafeeofnotmorethanone‐tenth(1/10)ofonepercentum(1%)of:
21.1.TheproposedaggregatepurchasepriceinthecaseofatransactionunderSections20or72.2;or
21.2.Theproposedpaymentincash,andthevalueofanysecuritiesorpropertytobetransferredintheacquisition,mergerorconsolidation,orthecashandvalueofanysecuritiesproposedtobereceiveduponthesaleordispositionofsuchassetsinthecaseofasolicitationunderSection20.TheCommissionshallprescribebyrulediminishingfeesininverseproportiontothevalueoftheaggregatepriceoftheoffering.
SEC.22.InternalRecordKeepingandAccountingControls.‐EveryissuerwhichhasaclassofsecuritiesthatsatisfiestherequirementsofSubsection17.2shall:
22.1.Makeandkeepbooks,records,andaccountswhich,inreasonabledetailaccuratelyandfairlyreflectthetransactionsanddispositionsofassetsoftheissuer;
22.2.Deviseandmaintainasystemofinternalaccountingcontrolssufficienttoprovidereasonableassurancesthat:(a)Transactionsandaccesstoassetsarepursuanttomanagementauthorization;(b)FinancialstatementsarepreparedinconformitywithgenerallyacceptedaccountingprinciplesthatareadoptedbytheAccountingStandardsCouncilandtherulespromulgatedbytheCommissionwithregardtothepreparationoffinancialstatements;and(c)Recordedassetsarecomparedwithexistingassetsatreasonableintervalsanddifferencesarereconciled.
SEC.23.TransactionsofDirectors,OfficersandPrincipalStockholders.‐23.1.Everypersonwhoisdirectlyorindirectlythebeneficialownerofmorethantenpercentum(10%)ofanyclassofanyequitysecuritywhichsatisfiestherequirementsofSubsection17.2,orwhoisadirectororanofficeroftheissuerofsuchsecurity,shallfile,atthetimeeithersuchrequirementisfirstsatisfiedorwithintendaysafterhebecomessuchabeneficialowner,director,orofficer,astatementwiththeCommissionand,ifsuchsecurityislistedfortradingonanExchange,alsowiththeExchange,oftheamountofallequitysecuritiesofsuchissuerofwhichheisthebeneficialowner,andwithinten(10)daysafterthecloseofeachcalendarmonth
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thereafter,iftherehasbeenachangeinsuchownershipduringsuchmonth,shallfilewiththeCommission,andifsuchsecurityislistedfortradingonanExchange,shallalsofilewiththeExchange,astatementindicatinghisownershipatthecloseofthecalendarmonthandsuchchangesinhisownershipashaveoccurredduringsuchcalendarmonth.
23.2.Forthepurposeofpreventingtheunfairuseofinformationwhichmayhavebeenobtainedbysuchbeneficialowner,director,orofficerbyreasonofhisrelationshiptotheissuer,anyprofitrealizedbyhimfromanypurchaseandsale,oranysaleandpurchase,ofanyequitysecurityofsuchissuerwithinanyperiodoflessthansix(6)months,unlesssuchsecuritywasacquiredingoodfaithinconnectionwithadebtpreviouslycontracted,shallinuretoandberecoverablebytheissuer,irrespectiveofanyintentionofholdingthesecuritypurchasedorofnotrepurchasingthesecuritysoldforaperiodexceedingsix(6)months.SuittorecoversuchprofitmaybeinstitutedbeforetheRegionalTrialCourtbytheissuer,orbytheownerofanysecurityoftheissuerinthenameandinbehalfoftheissueriftheissuershallfailorrefusetobringsuchsuitwithinsixty(60)daysafterrequestorshallfaildiligentlytoprosecutethesamethereafter,butnosuchsuitshallbebroughtmorethantwo(2)yearsafterthedatesuchprofitwasrealized.Thissubsectionshallnotbeconstruedtocoveranytransactionwheresuchbeneficialownerwasnotsuchbothatthetimeofthepurchaseandsale,orthesaleandpurchase,ofthesecurityinvolved,oranytransactionortransactionswhichtheCommissionbyrulesandregulationsmayexemptasnotcomprehendedwithinthepurposeofthissubsection.
23.3.Itshallbeunlawfulforanysuchbeneficialowner,director,orofficer,directlyorindirectly,tosellanyequitysecurityofsuchissuerifthepersonsellingthesecurityorhisprincipal:(a)Doesnotownthesecuritysold;or(b)Ifowningthesecurity,doesnotdeliveritagainstsuchsalewithintwenty(20)daysthereafter,ordoesnotwithinfive(5)daysaftersuchsaledeposititinthemailsorotherusualchannelsoftransportation;butnopersonshallbedeemedtohaveviolatedthissubsectionifheprovesthatnotwithstandingtheexerciseofgoodfaithhewasunabletomakesuchdeliveryordepositwithinsuchtime,orthattodosowouldcauseundueinconvenienceorexpense.
23.4.TheprovisionsofSubsection23.2shallnotapplytoanypurchaseandsale,orsaleandpurchase,andtheprovisionsofSubsection23.3shallnotapplytoanysale,ofanequitysecuritynotthenorthereafterheldbyhiminaninvestmentaccount,byadealerintheordinarycourseofhisbusinessandincidenttotheestablishmentormaintenancebyhimofaprimaryorsecondarymarket,otherwisethanonanExchange,forsuchsecurity.TheCommissionmay,bysuchrulesandregulationsas
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itdeemsnecessaryorappropriateinthepublicinterest,defineandprescribetermsandconditionswithrespecttosecuritiesheldinaninvestmentaccountandtransactionsmadeintheordinarycourseofbusinessandincidenttotheestablishmentormaintenanceofaprimaryorsecondarymarket.
CHAPTERVII
ProhibitionsonFraud,ManipulationandInsiderTrading
SEC.24.ManipulationofSecurityPrices;DevicesandPractices.‐24.1Itshallbeunlawfulforanypersonactingforhimselforthroughadealerorbroker,directlyorindirectly:
(a)TocreateafalseormisleadingappearanceofactivetradinginanylistedsecuritytradedinanExchangeoranyothertradingmarket(hereafterreferredtopurposesofthisChapteras“Exchange”):
(i)Byeffectinganytransactioninsuchsecuritywhichinvolvesnochangeinthebeneficialownershipthereof;
(ii)Byenteringanorderorordersforthepurchaseorsaleofsuchsecuritywiththeknowledgethatasimultaneousorderorordersofsubstantiallythesamesize,timeandprice,forthesaleorpurchaseofanysuchsecurity,hasorwillbeenteredbyorforthesameordifferentparties;or
(iii)Byperformingsimilaractwherethereisnochangeinbeneficialownership.
(b)Toeffect,aloneorwithothers,aseriesoftransactionsinsecuritiesthat:
(i)Raisestheirpricetoinducethepurchaseofasecurity,whetherofthesameoradifferentclassofthesameissuerorofacontrolling,controlled,orcommonlycontrolledcompanybyothers;
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(ii)Depressestheirpricetoinducethesaleofasecurity,whetherofthesameoradifferentclass,ofthesameissuerorofacontrolling,controlled,orcommonlycontrolledcompanybyothers;or
(iii)Createsactivetradingtoinducesuchapurchaseorsalethroughmanipulativedevicessuchasmarkingtheclose,paintingthetape,squeezingthefloat,hypeanddump,boilerroomoperationsandsuchothersimilardevices.
(c)TocirculateordisseminateinformationthatthepriceofanysecuritylistedinanExchangewillorislikelytoriseorfallbecauseofmanipulativemarketoperationsofanyoneormorepersonsconductedforthepurposeofraisingordepressingthepriceofthesecurityforthepurposeofinducingthepurchaseorsaleofsuchsecurity.
(d)Tomakefalseormisleadingstatementwithrespecttoanymaterialfact,whichhekneworhadreasonablegroundtobelievewassofalseormisleading,forthepurposeofinducingthepurchaseorsaleofanysecuritylistedortradedinanExchange.
(e)Toeffect,eitheraloneorothers,anyseriesoftransactionsforthepurchaseand/orsaleofanysecuritytradedinanExchangeforthepurposeofpegging,fixingorstabilizingthepriceofsuchsecurity,unlessotherwiseallowedbythisCodeorbyrulesoftheCommission.
24.2.Nopersonshalluseoremploy,inconnectionwiththepurchaseorsaleofanysecurityanymanipulativeordeceptivedeviceorcontrivance.Neithershallanyshortsalebeeffectednoranystop‐lossorderbeexecutedinconnectionwiththepurchaseorsaleofanysecurityexceptinaccordancewithsuchrulesandregulationsastheCommissionmayprescribeasnecessaryorappropriateinthepublicinterestorfortheprotectionofinvestors.
24.3.Theforegoingprovisionsnotwithstanding,theCommission,havingdueregardtothepublicinterestandtheprotectionofinvestors,may,byrulesandregulations,allowcertainactsortransactionsthatmayotherwisebeprohibitedunderthisSection.
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SEC.25.RegulationofOptionTrading.–NomemberofanExchangeshall,directlyorindirectlyendorseorguaranteetheperformanceofanyput,call,straddle,optionorprivilegeinrelationtoanysecurityregisteredonasecuritiesexchange.
Theterms“put”,“call”,“straddle”,“option”,or“privilege”shallnotincludeanyregisteredwarrant,rightorconvertiblesecurity.
SEC.26.FraudulentTransactions.‐Itshallbeunlawfulforanyperson,directlyorindirectly,inconnectionwiththepurchaseorsaleofanysecuritiesto:
26.1.Employanydevice,scheme,orartificetodefraud;
26.2.Obtainmoneyorpropertybymeansofanyuntruestatementofamaterialfactofanyomissiontostateamaterialfactnecessaryinordertomakethestatementsmade,inthelightofthecircumstancesunderwhichtheyweremade,notmisleading;or
26.3.Engageinanyact,transaction,practiceorcourseofbusinesswhichoperatesorwouldoperateasafraudordeceituponanyperson.
SEC.27.Insider’sDutytoDiscloseWhenTrading.‐27.1.Itshallbeunlawfulforaninsidertosellorbuyasecurityoftheissuer,whileinpossessionofmaterialinformationwithrespecttotheissuerorthesecuritythatisnotgenerallyavailabletothepublic,unless:(a)Theinsiderprovesthattheinformationwasnotgainedfromsuchrelationship;or(b)Iftheotherpartysellingtoorbuyingfromtheinsider(orhisagent)isidentified,theinsiderproves:(i)thathedisclosedtheinformationtotheotherparty,or(ii)thathehadreasontobelievethattheotherpartyotherwiseisalsoinpossessionoftheinformation.ApurchaseorsaleofasecurityoftheissuermadebyaninsiderdefinedinSubsection3.8,orsuchinsider’sspouseorrelativesbyaffinityorconsanguinitywithintheseconddegree,legitimateorcommon‐law,shallbepresumedtohavebeeneffectedwhileinpossessionofmaterialnon‐publicinformationiftransactedaftersuchinformationcameintoexistencebutpriortodisseminationofsuchinformationtothepublicandthelapseofareasonabletimeforthemarkettoabsorbsuchinformation:Provided,however,Thatthispresumptionshallberebutteduponashowingbythepurchaserorsellerthathewasnotawareofthematerialnon‐publicinformationatthetimeofthepurchaseorsale.
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27.2.ForpurposesofthisSection,informationis“materialnon‐public”if:(a)Ithasnotbeengenerallydisclosedtothepublicandwouldlikelyaffectthemarketpriceofthesecurityafterbeingdisseminatedtothepublicandthelapseofareasonabletimeforthemarkettoabsorbtheinformation;or(b)wouldbeconsideredbyareasonablepersonimportantunderthecircumstancesindetermininghiscourseofactionwhethertobuy,sellorholdasecurity.
27.3.Itshallbeunlawfulforanyinsidertocommunicatematerialnon‐publicinformationabouttheissuerorthesecuritytoanypersonwho,byvirtueofthecommunication,becomesaninsiderasdefinedinSubsection3.8,wheretheinsidercommunicatingtheinformationknowsorhasreasontobelievethatsuchpersonwilllikelybuyorsellasecurityoftheissuerwhileinpossessionofsuchinformation.
27.4.(a)Itshallbeunlawfulwhereatenderofferhascommencedorisabouttocommencefor:
(i)Anyperson(otherthanthetenderofferor)whoisinpossessionofmaterialnon‐publicinformationrelatingtosuchtenderoffer,tobuyorsellthesecuritiesoftheissuerthataresoughtortobesoughtbysuchtenderofferifsuchpersonknowsorhasreasontobelievethattheinformationisnon‐publicandhasbeenacquireddirectlyorindirectlyfromthetenderofferor,thoseactingonitsbehalf,theissuerofthesecuritiessoughtortobesoughtbysuchtenderoffer,oranyinsiderofsuchissuer;and
(ii)Anytenderofferor,thoseactingonitsbehalf,theissuerofthesecuritiessoughtortobesoughtbysuchtenderoffer,andanyinsiderofsuchissuertocommunicatematerialnon‐publicinformationrelatingtothetenderoffertoanyotherpersonwheresuchcommunicationislikelytoresultinaviolationofSubsection27.4(a)(i).
(b)Forpurposesofthissubsectiontheterm“securitiesoftheissuersoughtortobesoughtbysuchtenderoffer”shallincludeanysecuritiesconvertibleorexchangeableintosuchsecuritiesoranyoptionsorrightsinanyoftheforegoingsecurities.
CHAPTERVIII
RegulationofSecuritiesMarketProfessionals
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SEC.28.RegistrationofBrokers,Dealers,SalesmenandAssociatedPersons.‐28.1.NopersonshallengageinthebusinessofbuyingorsellingsecuritiesinthePhilippinesasabrokerordealer,oractasasalesman,oranassociatedpersonofanybrokerordealerunlessregisteredassuchwiththeCommission.
28.2.Noregisteredbrokerordealershallemployanysalesmanoranyassociatedperson,andnoissuershallemployanysalesman,whoisnotregisteredassuchwiththeCommission.
28.3.TheCommission,byruleororder,mayconditionallyorunconditionallyexemptfromSubsections28.1and28.2anybroker,dealer,salesman,associatedpersonofanybrokerordealer,oranyclassoftheforegoing,asitdeemsconsistentwiththepublicinterestandtheprotectionofinvestors.
28.4.TheCommissionshallpromulgaterulesandregulationsprescribingthequalificationsforregistrationofeachcategoryofapplicant,whichshall,amongotherthings,requireasaconditionforregistrationthat:
(a)Ifanaturalperson,theapplicantsatisfactorilypassawrittenexaminationastohisproficiencyandknowledgeintheareaofactivityforwhichregistrationissought;
(b)Inthecaseofabrokerordealer,theapplicantsatisfyaminimumnetcapitalasprescribedbytheCommission,andprovideabondorothersecurityastheCommissionmayprescribetosecurecompliancewiththeprovisionsofthisCode;and
(c)IflocatedoutsideofthePhilippines,theapplicantfilesawrittenconsenttoserviceofprocessupontheCommissionpursuanttoSection65hereof.
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28.5.AbrokerordealermayapplyforregistrationbyfilingwiththeCommissionawrittenapplicationinsuchformandcontainingsuchinformationanddocumentsconcerningsuchbrokerordealerastheCommissionbyruleshallprescribe.
28.6.RegistrationofasalesmanorofanassociatedpersonofaregisteredbrokerordealermaybemadeuponwrittenapplicationfiledwiththeCommissionbysuchsalesmanorassociatedperson.Theapplicationshallbeseparatelysignedandcertifiedbytheregisteredbrokerordealertowhichsuchsalesmanorassociatedpersonistobecomeaffiliated,orbytheissuerinthecaseofasalesmanemployed,appointedorauthorizedsolelybysuchissuer.TheapplicationshallbeinsuchformandcontainsuchinformationanddocumentsconcerningthesalesmanorassociatedpersonastheCommissionbyruleshallprescribe.ForpurposesofthisSection,asalesmanshallnotincludeanyemployeeofanissuerwhosecompensationisnotdetermineddirectlyorindirectlyonsalesofsecuritiesoftheissuer.
28.7.ApplicationsfiledpursuanttoSubsections28.5and28.6shallbeaccompaniedbyaregistrationfeeinsuchreasonableamountprescribedbytheCommission.
28.8.Withinthirty(30)daysafterthefilingofanyapplicationunderthisSection,theCommissionshallbyorder:(a)GrantregistrationifitdeterminesthattherequirementsofthisSectionandthequalificationsforregistrationsetforthinitsrulesandregulationshavebeensatisfied;or(b)Denysaidregistration.
28.9.Thenamesandaddressesofallpersonsapprovedforregistrationasbrokers,dealers,associatedpersonsorsalesmenandallordersoftheCommissionwithrespecttheretoshallberecordedinaRegisterofSecuritiesMarketProfessionalskeptintheofficeoftheCommissionwhichshallbeopentopublicinspection.
28.10.EverypersonregisteredpursuanttothisSectionshallfilewiththeCommission,insuchformastheCommissionshallprescribe,informationnecessarytokeeptheapplicationforregistrationcurrentandaccurate,includinginthecaseofabrokerordealerchangesinsalesmen,associatedpersonsandownersthereof.
28.11.EverypersonregisteredpursuanttothisSectionshallpaytotheCommissionanannualfeeatsuchtimeandinsuchreasonableamountastheCommissionshallprescribe.UponnoticebytheCommissionthatsuchannualfeehasnotbeenpaidas
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required,theregistrationofsuchpersonshallbesuspendeduntilpaymenthasbeenmade.
28.12.Theregistrationofasalesmanorassociatedpersonshallbeautomaticallyterminateduponthecessationofhisaffiliationwithsaidregisteredbrokerordealer,orwithanissuerinthecaseofasalesmanemployed,appointedorauthorizedbysuchissuer.Promptlyfollowinganysuchcessationofaffiliation,theregisteredbrokerordealer,orissuer,asthecasemaybe,shallfilewiththeCommissionanoticeofseparationofsuchsalesmanorassociatedperson.
SEC.29.Revocation,RefusalorSuspensionofRegistrationofBrokers,Dealers,SalesmenandAssociatedPersons.–29.1.RegistrationunderSection28ofthisCodemayberefused,oranyregistrationgrantedthereundermayberevoked,suspended,orlimitationsplacedthereon,bytheCommissionif,afterduenoticeandhearing,theCommissiondeterminestheapplicantorregistrant:
(a)HaswillfullyviolatedanyprovisionofthisCode,anyrule,regulationorordermadehereunder,oranyotherlawadministeredbytheCommission,orinthecaseofaregisteredbroker,dealerorassociatedpersonhasfailedtosupervise,withaviewtopreventingsuchviolation,anotherpersonwhocommitssuchviolation;
(b)HaswillfullymadeorcausedtobemadeamateriallyfalseormisleadingstatementinanyapplicationforregistrationorreportfiledwiththeCommissionoraself‐regulatoryorganization,orhaswillfullyomittedtostateanymaterialfactthatisrequiredtobestatedtherein;
(c)HasfailedtosatisfythequalificationsorrequirementsforregistrationprescribedunderSection28andtherulesandregulationsoftheCommissionpromulgatedthereunder;
(d)Hasbeenconvicted,byacompetentjudicialoradministrativebodyofanoffenseinvolvingmoralturpitude,fraud,embezzlement,counterfeiting,theft,estafa,misappropriation,forgery,bribery,falseoath,orperjury,orofaviolationofsecurities,commodities,banking,realestateorinsurancelaws;
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(e)Isenjoinedorrestrainedbyacompetentjudicialoradministrativebodyfromengaginginsecurities,commodities,banking,realestateorinsuranceactivitiesorfromwillfullyviolatinglawsgoverningsuchactivities;
(f)Issubjecttoanorderofacompetentjudicialoradministrativebodyrefusing,revokingorsuspendinganyregistration,licenseorotherpermitunderthisCode,therulesandregulationspromulgatedthereunder,anyotherlawadministeredbytheCommission;
(g)Issubjecttoanorderofaself‐regulatoryorganizationsuspendingorexpellinghimfrommembershiporparticipationthereinorfromassociationwithamemberorparticipantthereof;
(h)Hasbeenfoundbyacompetentjudicialoradministrativebodytohavewillfullyviolatedanyprovisionsofsecurities,commodities,banking,realestateorinsurancelaws,orhaswillfullyaided,abetted,counseled,commanded,inducedorprocuredsuchviolation;or
(i)Hasbeenjudiciallydeclaredinsolvent.
Forpurposesofthissubsection,theterm“competentjudicialoradministrativebody”shallincludeaforeigncourtofcompetentjurisdictionandaforeignfinancialregulator.
29.2.(a)Incasesofchargesagainstasalesmanorassociatedperson,noticethereofshallalsobegiventhebroker,dealerorissueremployingsuchsalesmanorassociatedperson.
(b)Pendingthehearing,theCommissionshallhavethepowertoorderthesuspensionofsuchbroker’s,dealer’s,associatedperson’sorsalesman’sregistration:Provided,Thatsuchordershallstatethecauseforsuchsuspension.Untiltheentryofafinalorder,thesuspensionofsuchregistration,thoughbindinguponthepersonsnotifiedthereof,shallbedeemedconfidential,andshallnotbepublished,unlessitshallappearthattheorderofsuspensionhasbeenviolatedafternotice.
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29.3.TheorderoftheCommissionrefusing,revoking,suspendingorplacinglimitationsonaregistrationashereinaboveprovided,togetherwithitsfindings,shallbeenteredintheRegisterofSecuritiesMarketProfessionals.Thesuspensionorrevocationoftheregistrationofadealerorbrokershallalsoautomaticallysuspendtheregistrationofallsalesmenandassociatedpersonsaffiliatedwithsuchbrokerordealer.
29.4.Itshallbesufficientcauseforrefusal,revocationorsuspensionofabroker'sordealer’sregistration,ifanyassociatedpersonthereoforanyjuridicalentitycontrolledbysuchassociatedpersonhascommittedanyactoromissionorissubjecttoanydisabilityenumeratedinparagraphs(a)through(i)ofSubsection29.1hereof.
SEC.30.TransactionsandResponsibilityofBrokersandDealers.‐30.1.Nobrokerordealershalldealinorotherwisebuyorsell,foritsownaccountorfortheaccountofcustomers,securitieslistedonanExchangeissuedbyanycorporationwhereanystockholder,director,associatedpersonorsalesman,orauthorizedclerkofsaidbrokerordealerandalltherelativesoftheforegoingwithinthefourthcivildegreeofconsanguinityoraffinity,isatthetimeholdingofficeinsaidissuercorporationasadirector,president,vice‐president,manager,treasurer,comptroller,secretaryoranyofficeoftrustandresponsibility,orisacontrollingpersonoftheissuer.
30.2.NobrokerordealershalleffectanytransactioninsecuritiesorinduceorattempttoinducethepurchaseorsaleofanysecurityexceptincompliancewithsuchrulesandregulationsastheCommissionshallprescribetoensurefairandhonestdealingsinsecuritiesandprovidefinancialsafeguardsandotherstandardsfortheoperationofbrokersanddealers,includingtheestablishmentofminimumnetcapitalrequirements,theacceptanceofcustodyanduseofsecuritiesofcustomers,andthecarryinganduseofdepositsandcreditbalancesofcustomers.
SEC.31.DevelopmentofSecuritiesMarketProfessionals.‐TheCommission,injointundertakingwithselfregulatoryorganizations,organizationsandassociationsoffinanceprofessionalsaswellasprivateeducationalandresearchinstitutionsshallundertakeorfacilitate/organizecontinuingtraining,conferences/seminars,updatingprograms,researchanddevelopmentaswellastechnologytransferatthelatestandadvancedtrendsinissuanceandtradingofsecurities,derivatives,commoditytradesandotherfinancialinstruments,aswellassecuritiesmarketsofothercountries.
CHAPTERIX
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ExchangesandOtherSecuritiesTradingMarkets
SEC.32.ProhibitiononUseofUnregisteredExchange;RegulationofOver‐the‐CounterMarkets.–32.1.Nobroker,dealer,salesman,associatedpersonofabrokerordealer,orExchange,directlyorindirectly,shallmakeuseofanyfacilityofanExchangeinthePhilippinestoeffectanytransactioninasecurity,ortoreportsuchtransaction,unlesssuchExchangeisregisteredassuchunderSection33ofthisCode.
32.2.(a)Nobroker,dealer,salesmanorassociatedpersonofabrokerordealer,singlyorinconcertwithanyotherperson,shallmake,createoroperate,orenableanothertomake,createoroperate,anytradingmarket,otherwisethanonaregisteredExchange,forthebuyingandsellingofanysecurity,exceptinaccordancewithrulesandregulationstheCommissionmayprescribe.
(b)TheCommissionmaypromulgaterulesandregulationsgoverningtransactionsbybrokers,dealers,salesmenorassociatedpersonsofabrokerordealer,overanyfacilitiesofsuchtradingmarketandmayrequiresuchmarkettobeadministeredbyaself‐regulatoryorganizationdeterminedbytheCommissionascapableofinsuringtheprotectionofinvestorscomparabletothatprovidedinthecaseofaregisteredExchange.Suchself‐regulatoryorganizationmustprovideacentralizedmarketplacefortradingandmustsatisfyrequirementscomparabletothoseprescribedforregistrationofExchangesinSection33ofthisCode.
SEC.33.RegistrationofExchanges.‐33.1.AnyExchangemayberegisteredassuchwiththeCommissionunderthetermsandconditionshereinafterprovidedinthisSectionandSection40hereof,byfilinganapplicationforregistrationinsuchformandcontainingsuchinformationandsupportingdocumentsastheCommissionbyruleshallprescribe,includingthefollowing:
(a)AnundertakingtocomplyandenforcecompliancebyitsmemberswiththeprovisionsofthisCode,itsimplementingrulesorregulationsandtherulesoftheExchange;
(b)TheorganizationalchartsoftheExchange,rulesofprocedure,andalistofitsofficersandmembers;
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(c)CopiesoftherulesoftheExchange;and
(d)AnundertakingthatintheeventamemberfirmbecomesinsolventorwhentheExchangeshallhavefoundthatthefinancialconditionofitsmemberfirmhassodeterioratedthatitcannotreadilymeetthedemandsofitscustomersforthedeliveryofsecuritiesand/orpaymentofsalesproceeds,theExchangeshall,uponorderoftheCommission,takeovertheoperationoftheinsolventmemberfirmandimmediatelyproceedtosettlethememberfirm’sliabilitiestoitscustomers.
33.2.RegistrationofanExchangeshallbegranteduponcompliancewiththefollowingprovisions:
(a)Thattheapplicantisorganizedasastockcorporation:Provided,ThatanyregisteredExchangeexistingpriortotheeffectivityofthisCodeshallwithinone(1)yearreorganizeasastockcorporationpursuanttoademutualizationplanapprovedbytheCommission;
(b)Thattheapplicantisengagedsolelyinthebusinessofoperatinganexchange:Provided,however,ThattheCommissionmayadoptrules,regulationsorissueanorder,uponapplication,exemptinganExchangeorganizedasastockcorporationandownedandcontrolledbyanotherjuridicalpersonfromthisrestriction;
c)WheretheExchangeisorganizedasastockcorporation,thatnopersonmaybeneficiallyownorcontrol,directlyorindirectly,morethanfivepercent(5%)ofthevotingrightsoftheExchangeandnoindustryorbusinessgroupmaybeneficiallyownorcontrol,directlyorindirectly,morethantwentypercent(20%)ofthevotingrightsoftheExchange:Provided,however,ThattheCommissionmayadoptrules,regulationsorissueanorder,uponapplication,exemptinganapplicantfromthisprohibitionwhereitfindsthatsuchownershiporcontrolwillnotnegativelyimpactontheexchange’sabilitytoeffectivelyoperateinthepublicinterest;
(d)Theexpulsion,suspension,ordiscipliningofamemberandpersonsassociatedwithamemberforconductorproceedinginconsistentwithjustandequitableprinciplesoffairtrade,andforviolationsofprovisionsofthisCode,oranyotherAct
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administeredbytheCommission,therules,regulationsandordersthereunder,ortherulesoftheExchange;
(e)Afairprocedureforthediscipliningofmembersandpersonsassociatedwithmembers,thedenialofmembershiptoanypersonseekingtobeamember,thebarringofanypersonfromassociationwithamember,andtheprohibitionorlimitationofanypersonfromaccesstoservicesofferedbytheExchange;
(f)ThatthebrokersintheboardoftheExchangeshallcompriseofnotmorethanforty‐ninepercent(49%)ofsuchboardandshallproportionatelyrepresenttheExchangemembershipintermsofvolume/valueoftradeandpaidupcapital,andthatanynaturalpersonassociatedwithajuridicalentitythatisamembershallhimselfbedeemedtobeamemberforthispurpose:Provided,ThatanyregisteredExchangeexistingpriortotheeffectivityofthisCodeshallimmediatelycomplywiththisrequirement;
(g)FortheboardoftheExchangetoincludeinitscomposition(i)thepresidentoftheExchange,and(ii)nolessthanfiftyonepercent(51%)oftheremainingmembersoftheboardtobecomprisedofthree(3)independentdirectorsandpersonswhorepresenttheinterestsofissuers,investors,andothermarketparticipants,whoarenotassociatedwithanybrokerordealerormemberoftheExchangeforaperiodoftwo(2)yearspriortohis/herappointment.Noofficeroremployeeofamember,itssubsidiariesoraffiliatesorrelatedinterestsshallbecomeanindependentdirector:Provided,however,ThattheCommissionmaybyrule,regulation,ororderuponapplication,permittheexchangeorganizedasastockcorporationtouseadifferentgovernancestructure:Provided,further,ThattheCommissionissatisfiedthattheExchangeisactinginthepublicinterestandisabletoeffectivelyoperateasaself‐regulatoryorganizationunderthisCode:Provided,finally,ThatanyregisteredexchangeexistingpriortotheeffectivityofthisCodeshallimmediatelycomplywiththisrequirement.
(h)ThepresidentandothermanagementoftheExchangetoconsistonlyofpersonswhoarenotmembersandarenotassociatedinanycapacity,directlyorindirectlywithanybrokerordealerormemberorlistedcompanyoftheExchange:Provided,ThattheExchangemayonlyappoint,andapersonmayonlyserve,asanofficeroftheexchangeifsuchpersonhasnotbeenamemberoraffiliatedwithanybroker,dealer,ormemberoftheExchangeforaperiodofatleasttwo(2)yearspriortosuchappointment;
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(i)ThetransparencyoftransactionsontheExchange;
(j)Theequitableallocationofreasonabledues,fees,andotherchargesamongmembersandissuersandotherpersonsusinganyfacilityorsystemwhichtheExchangeoperatesorcontrols;
(k)Preventionoffraudulentandmanipulativeactsandpractices,promotionofjustandequitableprinciplesoftrade,and,ingeneral,protectionofinvestorsandthepublicinterest;and
(l)Thetransparent,promptandaccurateclearanceandsettlementoftransactionseffectedontheExchange.
33.3.IftheCommissionfindsthattheapplicantExchangeiscapableofcomplyingandenforcingcompliancebyitsmembers,andpersonsassociatedwithsuchmembers,withtheprovisionsofthisCode,itsrulesandregulations,andtherulesoftheExchange,andthattherulesoftheExchangearefair,justandadequate,theCommissionshallcausesuchExchangetoberegistered.If,afternoticedueandhearing,theCommissionfindsotherwise,theapplicationshallbedenied.
33.4.Withinninety(90)daysafterthefilingoftheapplicationtheCommissionmayissueanordereithergrantingordenyingregistrationasanExchange,unlesstheExchangeapplyingforregistrationshallwithdrawitsapplicationorshallconsenttotheCommission’sdeferringactiononitsapplicationforastatedlongerperiodafterthedateoffiling.ThefilingwiththeCommissionofanapplicationforregistrationbyanExchangeshallbedeemedtohavetakenplaceuponthereceiptthereof.AmendmentstoanapplicationmaybemadeuponsuchtermsastheCommissionmayprescribe.
33.5.UpontheregistrationofanExchange,itshallpayafeeinsuchamountandwithinsuchperiodastheCommissionmayfix.
33.6.UponappropriateapplicationinaccordancewiththerulesandregulationsoftheCommissionanduponsuchtermsastheCommissionmaydeemnecessaryfortheprotectionofinvestors,anExchangemaywithdrawitsregistrationorsuspenditsoperationsorresumethesame.
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SEC.34.SegregationandLimitationofFunctionsofMembers,BrokersandDealers.‐34.1.Itshallbeunlawfulforanymember‐brokerofanExchangetoeffectanytransactiononsuchExchangeforitsownaccount,theaccountofanassociatedperson,oranaccountwithrespecttowhichitoranassociatedpersonthereofexercisesinvestmentdiscretion:Provided,however,Thatthissectionshallnotmakeunlawful‐
(a)Anytransactionbyamember‐brokeractinginthecapacityofamarketmaker;
(b)Anytransactionreasonablynecessarytocarryonanodd‐lottransactions;
(c)Anytransactiontooffsetatransactionmadeinerror;and
(d)AnyothertransactionofasimilarnatureasmaybedefinedbytheCommission.
34.2.Inallinstanceswherethemember‐brokereffectsatransactiononanExchangeforitsownaccountortheaccountofanassociatedpersonoranaccountwithrespecttowhichitexercisesinvestmentdiscretion,itshalldisclosetosuchcustomeratorbeforethecompletionofthetransactionitisactingforitsownaccount:Provided,further,Thatthisfactshallbereflectedintheorderticketandtheconfirmationslip.
34.3.Anymember‐brokerwhoviolatestheprovisionsofthisSectionshallbesubjecttotheadministrativesanctionsprovidedinSection54ofthisCode.
SEC.35.AdditionalFeesofExchanges.‐InadditiontotheregistrationfeeprescribedinSection33ofthisCode,everyExchangeshallpaytotheCommission,onasemestralbasisonorbeforethetenthdayoftheendofeverysemesterofthecalendaryear,afeeinsuchanamountastheCommissionshallprescribe,butnotmorethanone‐hundredthofonepercentum(1%)oftheaggregateamountofthesalesofsecuritiestransactedonsuchExchangeduringtheprecedingcalendaryear,fortheprivilegeofdoingbusiness,duringtheprecedingcalendaryearoranypartthereof.
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SEC.36.PowerswithRespecttoExchangesandOtherTradingMarket.‐36.1.TheCommissionisauthorized,ifinitsopinionsuchactionisnecessaryorappropriatefortheprotectionofinvestorsandthepublicinterestsorequires,summarilytosuspendtradinginanylistedsecurityonanyExchangeorothertradingmarketforaperiodnotexceedingthirty(30)daysor,withtheapprovalofthePresidentofthePhilippines,summarilytosuspendalltradingonanysecuritiesExchangeorothertradingmarketforaperiodofmorethanthirty(30)butnotexceedingninety(90)days:Provided,however,ThattheCommission,promptlyfollowingtheissuanceoftheorderofsuspension,shallnotifytheaffectedissuerofthereasonsforsuchsuspensionandprovidesuchissuerwithanopportunityforhearingtodeterminewhetherthesuspensionshouldbelifted.
36.2.WherevertwoormoreExchangesorothertradingmarketsexist,theCommissionmayrequireandenforceuniformityoftradingregulationsinand/orbetweenoramongsaidExchangesorothertradingmarkets.
36.3.InadditiontotheexistingPhilippineStockExchange,theCommissionshallhavetheauthoritytodeterminethenumber,sizeandlocationofstockExchanges,othertradingmarketsandcommodityExchangesandothersimilarorganizationsinthelightofnationalorregionalrequirementsforsuchactivitieswiththeviewtopromote,enhance,protect,conserveorrationalizeinvestment.
36.4.TheCommission,havingdueregardtothepublicinterest,theprotectionofinvestors,thesafeguardingofsecuritiesandfunds,andmaintenanceoffaircompetitionamongbrokers,dealers,clearingagencies,andtransferagents,shallpromulgaterulesandregulationsforthepromptandaccurateclearanceandsettlementofsecuritiestransactions.
36.5.(a)TheCommissionmayestablishorfacilitatetheestablishmentoftrustfundswhichshallbecontributedbyExchanges,brokers,dealers,underwriters,transferagents,salesmenandotherpersonstransactinginsecurities,astheCommissionmayrequire,forthepurposeofcompensatinginvestorsfortheextraordinarylossesordamagetheymaysufferduetobusinessfailureorfraudormismanagementofthepersonswithwhomtheytransact,undersuchrulesandregulationsastheCommissionmayfromtimetotimeprescribeorapproveinthepublicinterest.
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(b)TheCommissionmay,havingdueregardtothepublicinterestortheprotectionofinvestors,regulate,supervise,examine,suspendorotherwisediscontinuesuchandothersimilarfundsundersuchrulesandregulationswhichtheCommissionmaypromulgate,andwhichmayincludetakingcustodyandmanagementofthefunditselfaswellasinvestmentsinanddisbursementsfromthefundsundersuchformsofcontrolandsupervisionbytheCommissionasitmayfromtimetotimerequire.TheauthoritygrantedtotheCommissionunderthissubsectionshallalsoapplytoallfundsestablishedfortheprotectionofinvestors,whetherestablishedbytheCommissionorotherwise.
SEC.37.RegistrationofInnovativeandOtherTradingMarkets.‐TheCommission,havingdueregardfornationaleconomicdevelopment,shallencouragecompetitivenessinthemarketbypromulgatingwithinsix(6)monthsupontheenactmentofthisCode,rulesfortheregistrationandlicensingofinnovativeandothertradingmarketsorExchangescovering,butnotlimitedto,theissuanceandtradingofinnovativesecurities,securitiesofsmall,medium,growthandventureenterprises,andtechnology‐basedventurespursuanttoSection33ofthisCode.
SEC.38.IndependentDirectors.‐AnycorporationwithaclassofequitysecuritieslistedfortradingonanExchangeorwithassetsinexcessofFiftymillionpesos(P50,000,000.00)andhavingtwohundred(200)ormoreholders,atleastoftwohundred(200)ofwhichareholdingatleastonehundred(100)sharesofaclassofitsequitysecuritiesorwhichhassoldaclassofequitysecuritiestothepublicpursuanttoaneffectiveregistrationstatementincompliancewithSection12hereofshallhaveatleasttwo(2)independentdirectorsorsuchindependentdirectorsshallconstituteatleasttwentypercent(20%)ofthemembersofsuchboard,whicheveristhelesser.Forthispurpose,an“independentdirector”shallmeanapersonotherthananofficeroremployeeofthecorporation,itsparentorsubsidiaries,oranyotherindividualhavingarelationshipwiththecorporation,whichwouldinterferewiththeexerciseofindependentjudgmentincarryingouttheresponsibilitiesofadirector.
CHAPTERX
Registration,Responsibilitiesand
OversightofSelf‐RegulatoryOrganizations
SEC.39.AssociationsofSecuritiesBrokers,andDealers,andOtherSecuritiesRelatedOrganizations.‐39.1.TheCommissionshallhavethepowertoregisterasa
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self‐regulatoryorganization,orotherwisegrantlicenses,andtoregulate,supervise,examine,suspendorotherwisediscontinue,asaconditionfortheoperationoforganizationswhoseoperationsarerelatedtoorconnectedwiththesecuritiesmarketsuchasbutnotlimitedtoassociationsofbrokersanddealers,transferagents,custodians,fiscalandpayingagents,computerservices,newsdisseminatingservices,proxysolicitors,statisticalagencies,securitiesratingagencies,andsecuritiesinformationprocessorswhichareengagedinthebusinessof:(a)Collecting,processing,orpreparingfordistributionorpublication,orassisting,participatingin,orcoordinatingthedistributionorpublicationof,informationwithrespecttotransactionsinorquotationsforanysecurity;or(b)Distributingorpublishing,whetherbymeansofatickertape,acommunicationsnetwork,aterminaldisplaydevice,orotherwise,onacurrentandcontinuingbasis,informationwithrespecttosuchtransactionsorquotations.TheCommissionmayprescriberulesandregulationswhicharenecessaryorappropriateinthepublicinterestorfortheprotectionofinvestorstogovernself‐regulatoryorganizationsandotherorganizationslicensedorregulatedpursuanttotheauthoritygrantedinSubsection39.1includingtherequirementofcooperationwithinandamong,andelectronicintegrationoftherecordsof,allparticipantsinthesecuritiesmarkettoensuretransparencyandfacilitateexchangeofinformation.
39.2.AnassociationofbrokersanddealersmayberegisteredasasecuritiesassociationpursuanttoSubsection39.3byfilingwiththeCommissionanapplicationforregistrationinsuchformastheCommission,byrule,mayprescribecontainingtherulesoftheassociationandsuchotherinformationanddocumentsastheCommission,byrule,mayprescribeasnecessaryorappropriateinthepublicinterestorfortheprotectionofinvestors.
39.3.AnassociationofbrokersanddealersshallnotberegisteredasasecuritiesassociationunlesstheCommissiondeterminesthat:
(a)TheassociationissoorganizedandhasthecapacitytobeabletocarryoutthepurposesofthisCodeandtocomplywith,andtoenforcecompliancebyitsmembersandpersonsassociatedwithitsmembers,withtheprovisionsofthisCode,therulesandregulationsthereunder,andtherulesoftheassociation.
(b)Therulesoftheassociation,notwithstandinganythingintheCorporationCodetothecontrary,providethat:
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(i)Anyregisteredbrokerordealermaybecomeamemberoftheassociation;
(ii)ThereexistafairrepresentationofitsmemberstoserveontheBoardofDirectorsoftheassociationandintheadministrationofitsaffairs,andthatanynaturalpersonassociatedwithajuridicalentitythatisamembershallhimselfbedeemedtobeamemberforthispurpose;
(iii)TheBoardofDirectorsoftheassociationincludesinitscomposition:(a)Thepresidentoftheassociationand(b)Personswhorepresenttheinterestsofissuersandpublicinvestorsandarenotassociatedwithanybrokerordealerormemberoftheassociation;thatthepresidentandothermanagementoftheassociationnotbeamemberorassociatedwithanybroker,dealerormemberoftheassociation;
(iv)Fortheequitableallocationofreasonabledues,fees,andotherchargesamongmembersandissuersandotherpersonsusinganyfacilityorsystemwhichtheassociationoperatesorcontrols;
(v)Forthepreventionoffraudulentandmanipulativeactsandpractices,thepromotionofjustandequitableprinciplesoftrade,and,ingeneral,theprotectionofinvestorsandthepublicinterest;
(vi)ThatitsmembersandpersonsassociatedwithitsmembersshallbeappropriatelydisciplinedforviolationofanyprovisionofthisCode,therulesorregulationsthereunder,ortherulesoftheassociation;
(vii)Thatafairprocedureforthediscipliningofmembersandpersonsassociatedwithmembers,thedenialofmembershiptoanypersonseekingmembershiptherein,thebarringofanypersonfrombecomingassociatedwithamemberthereof,andtheprohibitionorlimitationbytheassociationofanypersonwithrespecttoaccesstoservicesofferedbytheassociationoramemberthereof.
39.4.(a)Aregisteredsecuritiesassociationshalldenymembershiptoanypersonwhoisnotaregisteredbrokerordealer.
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(b)Aregisteredsecuritiesassociationmaydenymembershipto,orconditionthemembershipof,aregisteredbrokerordealerifsuchbrokerordealer:
(i)Doesnotmeetthestandardsoffinancialresponsibility,operationalcapability,training,experience,orcompetencethatareprescribedbytherulesoftheassociation;or
(ii)Hasengaged,andthereisareasonablelikelihooditwillagainengage,inactsorpracticesinconsistentwithjustandequitableprinciplesoffairtrade.
(c)Aregisteredsecuritiesassociationmaydenymembershiptoaregisteredbrokerordealernotengagedinatypeofbusinessinwhichtherulesoftheassociationrequirememberstobeengaged:Provided,however,Thatnoregisteredsecuritiesassociationmaydenymembershiptoaregisteredbrokerordealerbyreasonoftheamountofbusinessdonebythebrokerordealer.
Aregisteredsecuritiesassociationmayexamineandverifythequalificationsofanapplicanttobecomeamemberinaccordancewithproceduresestablishedbytherulesoftheassociation.
(d)Aregisteredsecuritiesassociationmaybarasalesmanorpersonassociatedwithabrokerordealerfrombeingemployedbyamemberorsetconditionsfortheemploymentofasalesmanorassociatedifsuchperson:
(i)Doesnotmeetthestandardsoftraining,experience,orcompetencethatareprescribedbytherulesoftheassociation;or
(ii)Hasengaged,andthereisareasonablelikelihoodhewillagainengage,inactsorpracticesinconsistentwithjustandequitableprinciplesoffairtrade.
Aregisteredsecuritiesassociationmayexamineandverifythequalificationsofanapplicanttobecomeasalesmanorassociatedpersonemployedbyamemberinaccordancewithproceduresestablishedbytherulesoftheassociation.Aregisteredassociationalsomayrequireasalesmanorassociatedpersonemployedbya
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membertoberegisteredwiththeassociationinaccordancewithproceduresprescribedintherulesoftheassociation.
39.5.Inanyproceedingbyaregisteredsecuritiesassociationtodeterminewhetherapersonshallbedeniedmembership,orbarredfromassociationwithamember,theassociationshallprovidenoticetothepersonunderreviewofthespecificgroundsbeingconsideredfordenial,affordhimanopportunitytodefendagainsttheallegations,andkeeparecordoftheproceedings.Adeterminationbytheassociationtodenymembershipshallbesupportedbyastatementsettingforththespecificgroundsonwhichthedenialisbased.
SEC.40.PowerswithRespecttoSelf‐RegulatoryOrganizations.‐40.1.UponthefilingofanapplicationforregistrationasanExchangeunderSection33,aregisteredsecuritiesassociationunderSection39,aregisteredclearingagencyunderSection42,orotherself‐regulatoryorganizationunderthisSection,theCommissionshallhaveninety(90)dayswithinwhichtoeithergrantregistrationorinstituteaproceedingtodeterminewhetherregistrationshouldbedenied.Intheeventproceedingsareinstituted,theCommissionshallhavetwohundredseventy(270)dayswithinwhichtoconcludesuchproceedingsatwhichtimeitshall,byorder,grantordenysuchregistration.
40.2.Everyself‐regulatoryorganizationshallcomplywiththeprovisionsofthisCode,therulesandregulationsthereunder,anditsownrules,andenforcecompliancetherewith,notwithstandinganyprovisionoftheCorporationCodetothecontrary,byitsmembers,personsassociatedwithitsmembersoritsparticipants.
40.3.(a)Eachself‐regulatoryorganizationshallsubmittotheCommissionforpriorapprovalanyproposedruleoramendmentthereto,togetherwithaconcisestatementofthereasonandeffectoftheproposedamendment.
(b)Withinsixty(60)daysaftersubmissionofaproposedamendment,theCommissionshall,byorder,approvetheproposedamendment.Otherwise,thesamemaybemadeeffectivebytheself‐regulatoryorganization.
(c)Intheeventofanemergencyrequiringactionfortheprotectionofinvestors,themaintenanceoffairandorderlymarkets,orthesafeguardingofsecuritiesand
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funds,aself‐regulatoryorganizationmayputaproposedamendmentintoeffectsummarily:Provided,however,ThatacopyofthesameshallbeimmediatelysubmittedtotheCommission.
40.4.TheCommissionisfurtherauthorized,ifaftermakingappropriaterequestinwritingtoaself‐regulatoryorganizationthatsuchorganizationeffectonitsownbehalfspecifiedchangesinitsrulesandpracticesand,afterduenoticeandhearingitdeterminesthatsuchchangeshavenotbeeneffected,andthatsuchchangesarenecessary,byruleorregulationorbyorder,mayalter,abrogateorsupplementtherulesofsuchself‐regulatoryorganizationinsofarasnecessaryorappropriatetoeffectsuchchangesinrespectofsuchmattersas:
(a)Safeguardsinrespectofthefinancialresponsibilityofmembersandadequateprovisionagainsttheevasionoffinancialresponsibilitythroughtheuseofcorporateformsorspecialpartnerships;
(b)Thesupervisionoftradingpractices;
(c)Thelistingorstrikingfromlistingofanysecurity;
(d)Hoursoftrading;
(e)Themanner,method,andplaceofsolicitingbusiness;
(f)Fictitiousaccounts;
(g)Thetimeandmethodofmakingsettlements,payments,anddeliveries,andofclosingaccounts;
(h)Thetransparencyofsecuritiestransactionsandprices;
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(i)Thefixingofreasonableratesoffees,interest,listingandothercharges,butnotratesofcommission;
(j)Minimumunitsoftrading;
(k)Odd‐lotpurchasesandsales;
(l)Minimumdepositsonmarginaccounts;and
(m)Thesupervision,auditinganddiscipliningofmembersorparticipants.
40.5.TheCommission,afterduenoticeandhearing,isauthorized,inthepublicinterestandtoprotectinvestors:
(a)Tosuspendforaperiodnotexceedingtwelve(12)monthsortorevoketheregistrationofaself‐regulatoryorganization,ortocensureorimposelimitationsontheactivities,functions,andoperationsofsuchself‐regulatoryorganization,iftheCommissionfindsthatsuchaself‐regulatoryorganizationhaswillfullyviolatedorisunabletocomplywithanyprovisionofthisCodeoroftherulesandregulationsthereunder,oritsownrules,orhasfailedtoenforcecompliancetherewithbyamemberof,personassociatedwithamember,oraparticipantinsuchself‐regulatoryorganization;
(b)Toexpelfromaself‐regulatoryorganizationanymemberthereoforanyparticipantthereinwhoissubjecttoanorderoftheCommissionunderSection29ofthisCodeorisfoundtohavewillfullyviolatedanyprovisionofthisCodeorsuspendforaperiodnotexceedingtwelve(12)monthsforviolationofanyprovisionofthisCodeoranyotherlawsadministeredbytheCommission,ortherulesandregulationsthereunder,oreffected,directlyorindirectly,anytransactionforanypersonwho,suchmemberorparticipanthadreasontobelieve,wasviolatinginrespectofsuchtransactionanyofsuchprovisions;and
(c)Toremovefromofficeorcensureanyofficerordirectorofaself‐regulatoryorganizationifitfindsthatsuchofficerordirectorhasviolatedanyprovisionofthis
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Code,anyotherlawadministeredbytheCommission,therulesorregulationsthereunder,ortherulesofsuchself‐regulatoryorganization,abusedhisauthority,orwithoutreasonablejustificationorexcusehasfailedtoenforcecompliancewithanyofsuchprovisions.
40.6.(a)Aself‐regulatoryorganizationisauthorizedtodisciplineamemberoforparticipantinsuchself‐regulatoryorganization,oranypersonassociatedwithamember,includingthesuspensionorexpulsionofsuchmemberorparticipant,andthesuspensionorbarfrombeingassociatedwithamember,ifsuchpersonhasengagedinactsorpracticesinconsistentwithjustandequitableprinciplesoffairtradeorinwillfulviolationofanyprovisionoftheCode,anyotherlawadministeredbytheCommission,therulesorregulationsthereunder,ortherulesoftheself‐regulatoryorganization.Inanydisciplinaryproceedingbyaself‐regulatoryorganization(otherthanasummaryproceedingpursuanttoparagraph(b)ofthissubsection)theself‐regulatoryorganizationshallbringspecificcharges,providenoticetothepersoncharged,affordthepersonchargedwithanopportunitytodefendagainstthecharges,andkeeparecordoftheproceedings.Adeterminationtoimposeadisciplinarysanctionshallbesupportedbyawrittenstatementoftheoffense,asummaryoftheevidencepresentedandastatementofthesanctionimposed.
(b)Aself‐regulatoryorganizationmaysummarily:(i)Suspendamember,participantorpersonassociatedwithamemberwhohasbeenorisexpelledorsuspendedfromanyotherself‐regulatoryorganization;or(ii)Suspendamemberwhotheself‐regulatoryorganizationfindstobeinsuchfinancialoroperatingdifficultythatthememberorparticipantcannotbepermittedtocontinuetodobusinessasamemberwithsafetytoinvestors,creditors,othermembers,participantsortheself‐regulatoryorganization:Provided,Thattheself‐regulatoryorganizationimmediatelynotifiestheCommissionoftheactiontaken.Anypersonaggrievedbyasummaryactionpursuanttothisparagraphshallbepromptlyaffordedanopportunityforahearingbytheassociationinaccordancewiththeprovisionsofparagraph(a)ofthissubsection.TheCommission,byorder,maystayasummaryactiononitsownmotionoruponapplicationbyanypersonaggrievedthereby,iftheCommissiondeterminessummarilyorafterduenoticeandhearing(whichhearingmayconsistsolelyofthesubmissionofaffidavitsorpresentationoforalarguments)thatastayisconsistentwiththepublicinterestandtheprotectionofinvestors.
40.7.Aself‐regulatoryorganizationshallpromptlynotifytheCommissionofanydisciplinarysanctiononanymemberthereoforparticipanttherein,anydenialofmembershiporparticipationinsuchorganization,ortheimpositionofany
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disciplinarysanctiononapersonassociatedwithamemberorabarofsuchpersonfrombecomingsoassociated.Withinthirty(30)daysaftersuchnotice,anyaggrievedpersonmayappealtotheCommissionfrom,ortheCommissiononitsownmotionwithinsuchperiod,mayinstitutereviewof,thedecisionoftheself‐regulatoryorganization,attheconclusionofwhich,afterduenoticeandhearing(whichmayconsistsolelyofreviewoftherecordbeforetheself‐regulatoryorganization),theCommissionshallaffirm,modifyorsetasidethesanction.InsuchproceedingtheCommissionshalldeterminewhethertheaggrievedpersonhasengagedoromittedtoengageintheactsandpracticesasfoundbytheself‐regulatoryorganization,whethersuchactsandpracticesconstitutewillfulviolationsofthisCode,anyotherlawadministeredbytheCommission,therulesorregulationsthereunder,ortherulesoftheself‐regulatoryorganizationasspecifiedbysuchorganization,whethersuchprovisionswereappliedinamannerconsistentwiththepurposesofthisCode,andwhether,withdueregardforthepublicinterestandtheprotectionofinvestorsthesanctionisexcessiveoroppressive.
40.8.ThepowersoftheCommissionunderthissectionshallapplytoorganizedexchangesandregisteredclearingagencies.
CHAPTERXI
AcquisitionandTransferofSecuritiesand
SettlementofTransactionsinSecurities
SEC.41.ProhibitiononUseofUnregisteredClearingAgency.‐Itshallbeunlawfulforanybroker,dealer,salesman,associatedpersonofabrokerordealer,orclearingagency,directlyorindirectly,tomakeuseofanyfacilityofaclearingagencyinthePhilippinestomakedeliveriesinconnectionwithtransactionsinsecuritiesortoreducethenumberofsettlementsofsecuritiestransactionsortoallocatesecuritiessettlementresponsibilitiesortoprovideforthecentralhandlingofsecuritiessothattransfers,loansandpledgesandsimilartransactionscanbemadebybookkeepingentryorotherwisetofacilitatethesettlementofsecuritiestransactionswithoutphysicaldeliveryofsecuritiescertificates,unlesssuchclearingagencyisregisteredassuchunderSection42ofthisCodeorisexemptedfromsuchregistrationuponapplicationbytheclearingagencybecause,intheopinionoftheCommission,byreasonofthelimitedvolumeoftransactionswhicharesettledusingtheclearingagency,itisnotpracticableandnotnecessaryorappropriateinthepublicinterestorfortheprotectionofinvestorstorequiresuchregistration.
SEC.42.RegistrationofClearingAgencies.–42.1.AnyclearingagencymayberegisteredassuchwiththeCommissionunderthetermsandconditionshereinafterprovidedinthisSection,byfilinganapplicationforregistrationinsuchformand
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containingsuchinformationandsupportingdocumentsastheCommissionbyruleshallprescribe,includingthefollowing:
(a)AnundertakingtocomplyandenforcecompliancebyitsparticipantswiththeprovisionsofthisCode,andanyamendmentthereto,andtheimplementingrulesorregulationsmadeortobemadethereunder,andtheclearingagency’srules;
(b)TheorganizationalchartsoftheExchange,itsrulesofprocedure,andalistofitsofficersandparticipants;
(c)Copiesoftheclearingagency’srules.
42.2.Noregistrationofaclearingagencyshallbegrantedunlesstherulesoftheclearingagencyincludeprovisionfor:
(a)Theexpulsion,suspension,ordiscipliningofaparticipantforviolationsofthisCode,oranyotherActadministeredbytheCommission,therules,regulations,andordersthereunder,ortheclearingagency’srules;
(b)Afairprocedureforthediscipliningofparticipants,thedenialofparticipationrightstoanypersonseekingtobeaparticipant,andtheprohibitionorlimitationofanypersonfromaccesstoservicesofferedbytheclearingagency;
(c)Theequitableallocationofreasonabledues,fees,andotherchargesamongparticipants;
(d)Preventionoffraudulentandmanipulativeactsandpractices,promotionofjustandequitableprinciplesoftrade,and,ingeneral,protectionofinvestorsandthepublicinterest;and
(e)Thetransparent,promptandaccurateclearanceandsettlementoftransactionsinsecuritieshandledbytheclearingagency.
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(f)Theestablishmentandoversightofafundtoguaranteethepromptandaccurateclearanceandsettlementoftransactionsexecutedonanexchange,includingarequirementthatmemberseachcontributeanamountbasedontheirvolumeandarelevantpercentageofthedailyexposureofthefour(4)largesttradingbrokerswhichadequatelyreflectstradingrisksundertakenorpursuanttoanotherformulasetforthinCommissionrulesorregulationsororder,uponapplication:Provided,however,Thataclearingagencyengagedinthebusinessofasecuritiesdepositoryshallbeexemptfromthisrequirement.
42.3.InthecaseofanapplicationfiledpursuanttothisSection,theCommissionshallgrantregistrationifitfindsthattherequirementsofthisCodeandtherulesandregulationsthereunderwithrespecttotheapplicanthavebeensatisfied,andshalldenyregistrationifitdoesnotmakesuchfinding.
42.4.UponappropriateapplicationinaccordancewiththerulesandregulationsoftheCommissionanduponsuchtermsastheCommissionmaydeemnecessaryfortheprotectionofinvestors,aclearingagencymaywithdrawitsregistrationorsuspenditsoperationorresumethesame.
42.5.Section32ofthisCodeshallapplytoeveryregisteredclearingagency.
SEC.43.UncertificatedSecurities.‐NotwithstandingSection63oftheCorporationCodeofthePhilippines:
43.1.AcorporationwhosesecuritiesareregisteredpursuanttothisCodeorlistedonasecuritiesExchangemay:
(a)IfsoresolvedbyitsBoardofDirectorsandagreedbyashareholder,investororsecuritiesintermediary,issuesharesto,orrecordthetransferofsomeorallofitssharesintothenameofsaidshareholders,investorsor,securitiesintermediaryintheformofuncertificatedsecurities.Theuseofuncertificatedsecuritiesinthesecircumstancesshallbewithoutprejudicetotherightsofthesecuritiesintermediarysubsequentlytorequirethecorporationtoissueacertificateinrespectofanysharesrecordedinitsname;and
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(b)Ifsoprovidedinitsarticlesofincorporationandby‐laws,issueallofthesharesofaparticularclassintheformofuncertificatedsecuritiesandsubjecttoaconditionthatinvestorsmaynotrequirethecorporationtoissueacertificateinrespectofanysharesrecordedintheirname.
43.2.TheCommissionbyrulemayallowothercorporationstoprovideintheirarticlesofincorporationandby‐lawsfortheuseofuncertificatedsecurities.
43.3.Transfersofsecurities,includinganuncertificatedsecurities,maybevalidlymadeandconsummatedbyappropriatebook‐entriesinthesecuritiesaccountsmaintainedbysecuritiesintermediaries,orinthestockandtransferbookheldbythecorporationorthestocktransferagentandsuchbookkeepingentriesshallbebindingonthepartiestothetransfer.Atransferunderthissubsectionhastheeffectofthedeliveryofasecurityinbearerformordulyindorsedinblankrepresentingthequantityoramountofsecurityorrighttransferred,includingtheunrestrictednegotiabilityofthatsecuritybyreasonofsuchdelivery.However,transferofuncertificatedsharesshallonlybevalid,sofarasthecorporationisconcerned,whenatransferisrecordedinthebooksofthecorporationsoastoshowthenamesofthepartiestothetransferandthenumberofsharestransferred.
However,nothinginthisCodeshallprecludecompliancebybankingandotherinstitutionsunderthesupervisionoftheBangkoSentralngPilipinasandtheirstockholderswiththeapplicableceilingsonshareholdingsprescribedunderpertinentbankinglawsandregulations.
SEC.44.EvidentiaryValueofClearingAgencyRecord.‐Theofficialrecordsandbookentriesofaclearingagencyshallconstitutethebestevidenceofsuchtransactionsbetweenclearingagencyanditsparticipantsandmembers,withoutprejudicetotherightofparticipants’ormembers’clientstoprovetheirrights,titleandentitlementwithrespecttothebook‐entrysecurityholdingsoftheparticipantsormembersheldonbehalfoftheclients.However,thecorporationshallnotbeboundbytheforegoingtransactionsunlessthecorporatesecretaryisdulynotifiedinsuchmannerastheCommissionmayprovide.
SEC.45.PledgingaSecurityorInterestTherein.‐Inadditiontoothermethodsrecognizedbylaw,apledgeof,orreleaseofapledgeof,asecurity,includinganuncertificatedsecurity,isproperlyconstitutedandtheinstrumentprovingtherightpledgedshallbeconsidereddeliveredtothecreditorunderArticles2093and2095
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oftheCivilCodeifasecuritiesintermediaryindicatesbybook‐entrythatsuchsecurityhasbeencreditedtoaspeciallydesignatedpledgeaccountinfavorofthepledgee.Apledgeunderthissubsectionhastheeffectofthedeliveryofasecurityinbearerformordulyindorsedinblankrepresentingthequantityoramountofsuchsecurityorrightpledged.Inthecaseofaregisteredclearingagency,theproceduresbywhich,andtheexacttimeatwhich,suchbook‐entriesarecreatedshallbegovernedbytheregisteredclearingagency’srules.However,thecorporationshallnotbeboundbytheforegoingtransactionsunlessthecorporatesecretaryisdulynotifiedinsuchmannerastheCommissionmayprovide.
SEC.46.Issuer’sResponsibilityforWrongfulTransfertoRegisteredClearingAgency.‐Theregistrationofatransferofasecurityintothenameofandbyaregisteredclearingagencyoritsnomineeshallbefinalandconclusiveunlesstheclearingagencyhadnoticeofanadverseclaimbeforetheregistrationwasmade.Theaboveprovisionshallbewithoutprejudicetoanyrightswhichtheclaimantmayhaveagainsttheissuerforwrongfulregistrationinsuchcircumstances.
SEC.47.PoweroftheCommissionWithRespecttoSecuritiesOwnership.‐TheCommissionisauthorized,havingdueregardtothepublicinterestandtheprotectionofinvestors,topromulgaterulesandregulationswhich:
47.1.Validatethetransferofsecuritiesbybook‐entriesratherthanthedeliveryofphysicalcertificates;
47.2.Establishwhenapersonacquiresasecurityoraninterestthereinandwhendeliveryofasecuritytoapurchaseroccurs;
47.3.Establishwhichrecordsconstitutethebestevidenceofaperson’sinterestsinasecurityandtheeffectofanyerrorsinelectronicrecordsofownership;
47.4.Codifytherightsofinvestorswhochoosetoholdtheirsecuritiesindirectlythrougharegisteredclearingagencyand/orothersecuritiesintermediaries;
47.5.Codifythedutiesofsecuritiesintermediaries(includingclearingagencies)whoholdsecuritiesonbehalfofinvestors;and
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47.6.Givefirstprioritytoanyclaimsofaregisteredclearingagencyagainstaparticipantarisingfromafailurebytheparticipanttomeetitsobligationsundertheclearingagency’srulesinrespectoftheclearingandsettlementoftransactionsinsecurities,inadissolutionoftheparticipant,andanysuchrulesandregulationsshallbindtheissuersofthesecurities,investorsinthesecurities,anythirdpartieswithinterestsinthesecurities,andthecreditorsofaparticipantofaregisteredclearingagency.
CHAPTERXII
MarginandCredit
SEC.48.MarginRequirements.‐48.1.Forthepurposeofpreventingtheexcessiveuseofcreditforthepurchaseorcarryingofsecurities,theCommission,inaccordancewiththecreditandmonetarypoliciesthatmaybepromulgatedfromtimetotimebytheMonetaryBoardoftheBangkoSentralngPilipinas,shallprescriberulesandregulationswithrespecttotheamountofcreditthatmaybeextendedonanysecurity.Fortheextensionofcredit,suchrulesandregulationsshallbebaseduponthefollowingstandard:
Anamountnotgreaterthanwhicheveristhehigherof‐
(a)Sixty‐fivepercentum(65%)ofthecurrentmarketpriceofthesecurity;or
(b)Onehundredpercentum(100%)ofthelowestmarketpriceofthesecurityduringtheprecedingthirty‐six(36)calendarmonths,butnotmorethanseventy‐fivepercentum(75%)ofthecurrentmarketprice.
However,theMonetaryBoardmayincreaseordecreasetheabovepercentages,inordertoachievetheobjectivesoftheGovernmentwithdueregardforpromotionoftheeconomyandpreventionoftheuseofexcessivecredit.
Suchrulesandregulationsmaymakeappropriateprovisionwithrespecttothecarryingofundermarginedaccountsforlimitedperiodsandunderspecified
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conditions;thewithdrawaloffundsorsecurities;thetransferofaccountsfromonelendertoanother;specialordifferentmarginrequirementsfordelayeddeliveries,shortsales,arbitragetransactions,andsecuritiestowhichletter(b)ofthesecondparagraphofthissubsectiondoesnotapply;thebasesandthemethodstobeusedincalculatingloans,andmarginsandmarketprices;andsimilaradministrativeadjustmentsanddetails.
48.2.NomemberofanExchangeorbrokerordealershall,directlyorindirectly,extendormaintaincreditorarrangefortheextensionormaintenanceofcredittoorforanycustomer:
(a)OnanysecurityunlesssuchcreditisextendedandmaintainedinaccordancewiththerulesandregulationswhichtheCommissionshallprescribeunderthisSectionincludingrulessettingcreditinrelationtonetcapitalofsuchmember,brokerordealer;
(b)Withoutcollateraloronanycollateralotherthansecurities,except(i)tomaintainacreditinitiallyextendedinconformitywiththerulesandregulationsoftheCommission;and(ii)incaseswheretheextensionormaintenanceofcreditisnotforthepurposeofpurchasingorcarryingsecuritiesorofevadingorcircumventingtheprovisionsofparagraph(a)ofthissubsection.
48.3.AnypersonnotsubjecttoSubsection48.2hereofshallextendormaintaincreditorarrangefortheextensionormaintenanceofcreditforthepurposeofpurchasingorcarryinganysecurity,onlyinaccordancewithsuchrulesandregulationsastheCommissionshallprescribetopreventtheexcessiveuseofcreditforthepurchasingorcarryingofortradinginsecuritiesincircumventionoftheotherprovisionsofthisSection.Suchrulesandregulationsmayimposeuponallloansmadeforthepurposeofpurchasingorcarryingsecuritieslimitationssimilartothoseimposeduponmembers,brokers,ordealersbySubsection48.2andtherulesandregulationsthereunder.Thissubsectionandtherulesandregulationsthereundershallnotapply:(a)Toacreditextensionmadebyapersonnotintheordinarycourseofbusiness;(b)ToaloantoadealertoaidinthefinancingofthedistributionofsecuritiestocustomersnotthroughthemediumofanExchange;or(c)TosuchothercreditextensionastheCommissionshallexemptfromtheoperationofthissubsectionandtherulesandregulationsthereunderuponspecifiedtermsandconditionsorforstatedperiod.
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SEC.49.RestrictionsonBorrowingsbyMembers,Brokers,andDealers.‐Itshallbeunlawfulforanyregisteredbrokerordealer,ormemberofanExchange,directlyorindirectly:
49.1.Topermitintheordinarycourseofbusinessasabrokerordealerhisaggregateindebtednessincludingcustomers’creditbalances,toexceedsuchpercentageofthenetcapital(exclusiveoffixedassetsandvalueofExchangemembership)employedinthebusiness,butnotexceedinginanycasetwothousandpercentum(2,000%),astheCommissionmaybyrulesandregulationsprescribeasnecessaryorappropriateinthepublicinterestorfortheprotectionofinvestors.
49.2.Topledge,mortgage,orotherwiseencumberorarrangeforthepledge,mortgageorencumbranceofanysecuritycarriedfortheaccountofanycustomerundercircumstances:(a)Thatwillpermitthecomminglingofhissecurities,withouthiswrittenconsent,withthesecuritiesofanycustomer;(b)Thatwillpermitsuchsecuritiestobecommingledwiththesecuritiesofanypersonotherthanabonafidecustomer;or(c)Thatwillpermitsuchsecuritiestobepledged,mortgagedorencumbered,orsubjectedtoanylienorclaimofthepledgee,forasuminexcessoftheaggregateindebtednessofsuchcustomersinrespectofsuchsecurities.However,theCommission,havingdueregardtotheprotectionofinvestors,may,byrulesandregulations,allowcertaintransactionsthatmayotherwisebeprohibitedunderthissubsection.
49.3.TolendorarrangeforthelendingofanysecuritycarriedfortheaccountofanycustomerwithoutthewrittenconsentofsuchcustomerorincontraventionofsuchrulesandregulationsastheCommissionshallprescribe.
SEC.50.EnforcementofMarginRequirementsandRestrictionsonBorrowing.‐TopreventindirectviolationsofthemarginrequirementsunderSection48,thebrokerordealershallrequirethecustomerinnon‐margintransactionstopaythepriceofthesecuritypurchasedforhisaccountwithinsuchperiodastheCommissionmayprescribe,whichshallinnocaseexceedtheprescribedsettlementdate.Otherwise,thebrokershallsellthesecuritypurchasedstartingonthenexttradingdaybutnotbeyondten(10)tradingdaysfollowingthelastdayforthecustomertopaysuchpurchaseprice,unlesssuchsalecannotbeeffectedwithinsaidperiodforjustifiablereasons.Thesaleshallbewithoutprejudicetotherightofthebrokerordealertorecoveranydeficiencyfromthecustomer.TopreventindirectviolationoftherestrictionsonborrowingsunderSection49,thebrokershall,unlessotherwisedirectedbythecustomer,paythenetsalespriceofthesecuritiessoldforacustomerwithinthesameperiodasaboveprescribedbytheCommission:Provided,
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Thatthecustomershallberequiredtodelivertheinstrumentsevidencingthesecuritiesasaconditionforsuchpaymentupondemandbythebroker.
CHAPTERXIII
GeneralProvisions
SEC.51.LiabilitiesofControllingPersons,AiderandAbettorandOtherSecondaryLiability.–51.1.Everypersonwho,byorthroughstockownership,agency,orotherwise,orinconnectionwithanagreementorunderstandingwithoneormoreotherpersons,controlsanypersonliableunderthisCodeortherulesorregulationsoftheCommissionthereunder,shallalsobeliablejointlyandseverallywithandtothesameextentassuchcontrolledpersonstoanypersontowhomsuchcontrolledpersonisliable,unlessthecontrollingpersonprovesthat,despitetheexerciseofduediligenceonhispart,hehasnoknowledgeoftheexistenceofthefactsbyreasonofwhichtheliabilityofthecontrolledpersonisallegedtoexist.
51.2.Itshallbeunlawfulforanyperson,directlyorindirectly,todoanyactorthingwhichitwouldbeunlawfulforsuchpersontodoundertheprovisionsofthisCodeoranyruleorregulationthereunder.
51.3.Itshallbeunlawfulforanydirectororofficerof,oranyownerofanysecuritiesissuedby,anyissuerrequiredtofileanydocument,reportorotherinformationunderthisCodeoranyruleorregulationoftheCommissionthereunder,withoutjustcause,tohinder,delayorobstructthemakingorfilingofanysuchdocument,report,orinformation.
51.4.Itshallbeunlawfulforanypersontoaid,abet,counsel,command,induceorprocureanyviolationofthisCode,oranyrule,regulationororderoftheCommissionthereunder.
51.5.EverypersonwhosubstantiallyassiststheactoromissionofanypersonprimarilyliableunderSections57,58,59and60ofthisCode,withknowledgeorinrecklessdisregardthatsuchactoromissioniswrongful,shallbejointlyandseverallyliableasanaiderandabettorfordamagesresultingfromtheconductofthepersonprimarilyliable:Provided,however,Thatanaiderandabettorshallbe
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liableonlytotheextentofhisrelativecontributionincausingsuchdamagesincomparisontothatofthepersonprimarilyliable,ortheextenttowhichtheaiderandabettorwasunjustlyenrichedthereby,whicheverisgreater.
SEC.52.AccountsandRecords,Reports,ExaminationofExchanges,Members,andOthers.‐52.1.EveryregisteredExchange,brokerordealer,transferagent,clearingagency,securitiesassociation,andotherself‐regulatoryorganization,andeveryotherpersonrequiredtoregisterunderthisCode,shallmake,keepandpreserveforsuchperiods,records,furnishsuchcopiesthereof,andmakesuchreports,astheCommissionbyitsrulesandregulationsmayprescribe.Suchaccounts,correspondence,memoranda,papers,books,andotherrecordsshallbesubjectatanytimetosuchreasonableperiodic,specialorotherexaminationsbyrepresentativesoftheCommissionastheCommissionmaydeemnecessaryorappropriateinthepublicinterestorfortheprotectionofinvestors.
52.2.Anybroker,dealerorotherpersonextendingcredit,whoissubjecttotherulesandregulationsprescribedbytheCommissionpursuanttothisCode,shallmakesuchreportstotheCommissionasmaybenecessaryorappropriatetoenableittoperformthefunctionsconferreduponitbythisCode.
52.3.ForpurposesofthisSection,theterm“records”referstoaccounts,correspondence,memoranda,tapes,discs,papers,booksandotherdocumentsortranscribedinformationofanytype,whetherwrittenorelectronicincharacter.
SEC.53.Investigations,InjunctionsandProsecutionofOffenses.‐53.1.TheCommissionmay,initsdiscretion,makesuchinvestigationsasitdeemsnecessarytodeterminewhetheranypersonhasviolatedorisabouttoviolateanyprovisionofthisCode,anyrule,regulationororderthereunder,oranyruleofanExchange,registeredsecuritiesassociation,clearingagency,otherself‐regulatoryorganization,andmayrequireorpermitanypersontofilewithitastatementinwriting,underoathorotherwise,astheCommissionshalldetermine,astoallfactsandcircumstancesconcerningthemattertobeinvestigated.TheCommissionmaypublishinformationconcerninganysuchviolations,andtoinvestigateanyfact,condition,practiceormatterwhichitmaydeemnecessaryorpropertoaidintheenforcementoftheprovisionsofthisCode,intheprescribingofrulesandregulationsthereunder,orinsecuringinformationtoserveasabasisforrecommendingfurtherlegislationconcerningthematterstowhichthisCoderelates:Provided,however,Thatanypersonrequestedorsubpoenaedtoproducedocumentsortestifyinanyinvestigationshallsimultaneouslybenotifiedinwritingofthepurposeofsuchinvestigation:Provided,further,Thatallcriminalcomplaints
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forviolationsofthisCode,andtheimplementingrulesandregulationsenforcedoradministeredbytheCommissionshallbereferredtotheDepartmentofJusticeforpreliminaryinvestigationandprosecutionbeforethepropercourt:Provided,furthermore,Thatininstanceswherethelawallowsindependentcivilorcriminalproceedingsofviolationsarisingfromthesameact,theCommissionshalltakeappropriateactiontoimplementthesame:Provided,finally,Thattheinvestigation,prosecution,andtrialofsuchcasesshallbegivenpriority.
53.2.Forthepurposeofanysuchinvestigation,oranyotherproceedingunderthisCode,theCommissionoranyofficerdesignatedbyitisempoweredtoadministeroathsandaffirmations,subpoenawitnesses,compelattendance,takeevidence,requiretheproductionofanybook,paper,correspondence,memorandum,orotherrecordwhichtheCommissiondeemsrelevantormaterialtotheinquiry,andtoperformsuchotheractsnecessaryintheconductofsuchinvestigationorproceedings.
53.3.WheneveritshallappeartotheCommissionthatanypersonhasengagedorisabouttoengageinanyactorpracticeconstitutingaviolationofanyprovisionofthisCode,anyrule,regulationororderthereunder,oranyruleofanExchange,registeredsecuritiesassociation,clearingagencyorotherself‐regulatoryorganization,itmayissueanordertosuchpersontodesistfromcommittingsuchactorpractice:Provided,however,ThattheCommissionshallnotchargeanypersonwithviolationoftherulesofanExchangeorotherselfregulatoryorganizationunlessitappearstotheCommissionthatsuchExchangeorotherself‐regulatoryorganizationisunableorunwillingtotakeactionagainstsuchperson.Afterfindingthatsuchpersonhasengagedinanysuchactorpracticeandthatthereisareasonablelikelihoodofcontinuing,furtherorfutureviolationsbysuchperson,theCommissionmayissueex‐parteaceaseanddesistorderforamaximumperiodoften(10)days,enjoiningtheviolationandcompellingcompliancewithsuchprovision.TheCommissionmaytransmitsuchevidenceasmaybeavailableconcerninganyviolationofanyprovisionofthisCode,oranyrule,regulationororderthereunder,totheDepartmentofJustice,whichmayinstitutetheappropriatecriminalproceedingsunderthisCode.
53.4.Anypersonwho,withinhispowerbutwithoutcause,failsorrefusestocomplywithanylawfulorder,decisionorsubpoenaissuedbytheCommissionunderSubsection53.2orSubsection53.3orSection64ofthisCode,shallafterduenoticeandhearing,beguiltyofcontemptoftheCommission.SuchpersonshallbefinedinsuchreasonableamountastheCommissionmaydetermine,orwhensuchfailureorrefusalisaclearandopendefianceoftheCommission’sorder,decisionor
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subpoena,shallbedetainedunderanarrestorderissuedbytheCommission,untilsuchorder,decisionorsubpoenaiscompliedwith.
SEC.54.AdministrativeSanctions.‐54.1.If,afterduenoticeandhearing,theCommissionfindsthat:(a)ThereisaviolationofthisCode,itsrules,oritsorders;(b)Anyregisteredbrokerordealer,associatedpersonthereofhasfailedreasonablytosupervise,withaviewtopreventingviolations,anotherpersonsubjecttosupervisionwhocommitsanysuchviolation;(c)Anyregistrantorotherpersonhas,inaregistrationstatementorinotherreports,applications,accounts,recordsordocumentsrequiredbylaworrulestobefiledwiththeCommission,madeanyuntruestatementofamaterialfact,oromittedtostateanymaterialfactrequiredtobestatedthereinornecessarytomakethestatementsthereinnotmisleading;or,inthecaseofanunderwriter,hasfailedtoconductaninquirywithreasonablediligencetoinsurethataregistrationstatementisaccurateandcompleteinallmaterialrespects;or(d)Anypersonhasrefusedtopermitanylawfulexaminationsintoitsaffairs,itshall,initsdiscretion,andsubjectonlytothelimitationshereinafterprescribed,imposeanyorallofthefollowingsanctionsasmaybeappropriateinlightofthefactsandcircumstances:
(i)Suspension,orrevocationofanyregistrationfortheofferingofsecurities;
(ii)AfineofnolessthanTenthousandpesos(P10,000.00)normorethanOnemillionpesos(P1,000,000.00)plusnotmorethanTwothousandpesos(P2,000.00)foreachdayofcontinuingviolation;
(iii)InthecaseofaviolationofSections19.2,20,24,26and27,disqualificationfrombeinganofficer,memberoftheBoardofDirectors,orpersonperformingsimilarfunctions,ofanissuerrequiredtofilereportsunderSection17ofthisCodeoranyotheract,ruleorregulationadministeredbytheCommission;
(iv)InthecaseofaviolationofSection34,afineofnomorethanthree(3)timestheprofitgainedorlossavoidedasaresultofthepurchase,saleorcommunicationproscribedbysuchSection;and
(v)OtherpenaltieswithinthepoweroftheCommissiontoimpose.
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54.2.Theimpositionoftheforegoingadministrativesanctionsshallbewithoutprejudicetothefilingofcriminalchargesagainsttheindividualsresponsiblefortheviolation.
54.3.TheCommissionshallhavethepowertoissuewritsofexecutiontoenforcetheprovisionsofthisSectionandtoenforcepaymentofthefeesandotherduescollectibleunderthisCode.
SEC.55.SettlementOffers.–55.1.Atanytime,duringaninvestigationorproceedingunderthisCode,partiesbeinginvestigatedand/orchargedmayproposeinwritinganofferofsettlementwiththeCommission.
55.2.Uponreceiptofsuchofferofsettlement,theCommissionmayconsidertheofferbasedontiming,thenatureoftheinvestigationorproceeding,andthepublicinterest.
55.3.TheCommissionmayonlyagreetoasettlementofferbasedonitsfindingsthatsuchsettlementisinthepublicinterest.Anyagreementtosettleshallhavenolegaleffectuntilpubliclydisclosed.Suchdecisionmaybemadewithoutadeterminationofguiltonthepartofthepersonmakingtheoffer.
55.4.TheCommissionshalladoptrulesandproceduresgoverningthefiling,review,withdrawal,formofrejectionandacceptanceofsuchoffers.
SEC.56.CivilLiabilitiesonAccountofFalseRegistrationStatement.‐56.1.Anypersonacquiringasecurity,theregistrationstatementofwhichoranypartthereofcontainsonitseffectivityanuntruestatementofamaterialfactoromitstostateamaterialfactrequiredtobestatedthereinornecessarytomakesuchstatementsnotmisleading,andwhosuffersdamage,maysueandrecoverdamagesfromthefollowingenumeratedpersons,unlessitisprovedthatatthetimeofsuchacquisitionheknewofsuchuntruestatementoromission:
(a)Theissuerandeverypersonwhosignedtheregistrationstatement;
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(b)Everypersonwhowasadirectorof,oranyotherpersonperformingsimilarfunctions,orapartnerin,theissueratthetimeofthefilingoftheregistrationstatementoranypart,supplementoramendmentthereofwithrespecttowhichhisliabilityisasserted;
(c)Everypersonwhoisnamedintheregistrationstatementasbeingorabouttobecomeadirectorof,orapersonperformingsimilarfunctions,orapartnerin,theissuerandwhosewrittenconsenttheretoisfiledwiththeregistrationstatement;
(d)Everyauditororauditingfirmnamedashavingcertifiedanyfinancialstatementsusedinconnectionwiththeregistrationstatementorprospectus.
(e)Everypersonwho,withhiswrittenconsent,whichshallbefiledwiththeregistrationstatement,hasbeennamedashavingpreparedorcertifiedanypartoftheregistrationstatement,orashavingpreparedorcertifiedanyreportorvaluationwhichisusedinconnectionwiththeregistrationstatement,withrespecttothestatement,report,orvaluation,whichpurportstohavebeenpreparedorcertifiedbyhim.
(f)Everysellingshareholderwhocontributedtoandcertifiedastotheaccuracyofaportionoftheregistrationstatement,withrespecttothatportionoftheregistrationstatementwhichpurportstohavebeencontributedbyhim.
(g)Everyunderwriterwithrespecttosuchsecurity.
56.2.Ifthepersonwhoacquiredthesecuritydidsoaftertheissuerhasmadegenerallyavailabletoitssecurityholdersanincomestatementcoveringaperiodofatleasttwelvemonthsbeginningfromtheeffectivedateoftheregistrationstatement,thentherightofrecoveryunderthissubsectionshallbeconditionedonproofthatsuchpersonacquiredthesecurityrelyinguponsuchuntruestatementintheregistrationstatementorrelyingupontheregistrationstatementandnotknowingofsuchincomestatement,butsuchreliancemaybeestablishedwithoutproofofthereadingoftheregistrationstatementbysuchperson.
SEC.57.CivilLiabilitiesArisinginConnectionWithProspectus,CommunicationsandReports.‐57.1.Anypersonwho:
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(a)OfferstosellorsellsasecurityinviolationofChapterIII;or
(b)Offerstosellorsellsasecurity,whetherornotexemptedbytheprovisionsofthisCode,bytheuseofanymeansorinstrumentsoftransportationorcommunication,bymeansofaprospectusorotherwrittenororalcommunication,whichincludesanuntruestatementofamaterialfactoromitstostateamaterialfactnecessaryinordertomakethestatements,inthelightofthecircumstancesunderwhichtheyweremade,notmisleading(thepurchasernotknowingofsuchuntruthoromission),andwhoshallfailintheburdenofproofthathedidnotknow,andintheexerciseofreasonablecarecouldnothaveknown,ofsuchuntruthoromission,shallbeliabletothepersonpurchasingsuchsecurityfromhim,whomaysuetorecovertheconsiderationpaidforsuchsecuritywithinterestthereon,lesstheamountofanyincomereceivedthereon,uponthetenderofsuchsecurity,orfordamagesifhenolongerownsthesecurity.
57.2.Anypersonwhoshallmakeorcausetobemadeanystatementinanyreport,ordocumentfiledpursuanttothisCodeoranyruleorregulationthereunder,whichstatementwasatthetimeandinthelightofthecircumstancesunderwhichitwasmadefalseormisleadingwithrespecttoanymaterialfact,shallbeliabletoanypersonwho,notknowingthatsuchstatementwasfalseormisleading,andrelyinguponsuchstatementsshallhavepurchasedorsoldasecurityatapricewhichwasaffectedbysuchstatement,fordamagescausedbysuchreliance,unlessthepersonsuedshallprovethatheactedingoodfaithandhadnoknowledgethatsuchstatementwasfalseormisleading.
SEC.58.CivilLiabilityForFraudinConnectionWithSecuritiesTransactions.‐AnypersonwhoengagesinanyactortransactioninviolationofSections19.2,20or26,oranyruleorregulationoftheCommissionthereunder,shallbeliabletoanyotherpersonwhopurchasesorsellsanysecurity,grantsorrefusestograntanyproxy,consentorauthorization,oracceptsordeclinesaninvitationfortenderofasecurity,asthecasemaybe,forthedamagessustainedbysuchotherpersonasaresultofsuchactortransaction.
SEC.59.CivilLiabilityForManipulationofSecurityPrices.‐AnypersonwhowillfullyparticipatesinanyactortransactioninviolationofSection24shallbeliabletoanypersonwhoshallpurchaseorsellanysecurityatapricewhichwasaffectedbysuchactortransaction,andthepersonsoinjuredmaysuetorecoverthedamagessustainedasaresultofsuchactortransaction.
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SEC.60.CivilLiabilityWithRespecttoCommodityFuturesContractsandPre‐needPlans.‐60.1.AnypersonwhoengagesinanyactortransactioninwillfulviolationofanyruleorregulationpromulgatedbytheCommissionunderSection11or16,whichtheCommissiondenominatesatthetimeofissuanceasintendedtoprohibitfraudintheofferandsaleofpre‐needplansortoprohibitfraud,manipulation,fictitioustransactions,unduespeculation,orotherunfairorabusivepracticeswithrespecttocommodityfuturecontracts,shallbeliabletoanyotherpersonsustainingdamageasaresultofsuchactortransaction.
60.2.Astoeachsuchruleorregulationsodenominated,theCommissionbyruleshallprescribetheelementsofproofrequiredforrecoveryandanylimitationsontheamountofdamagesthatmaybeimposed.
SEC.61.CivilLiabilityonAccountofInsiderTrading.‐61.1.AnyinsiderwhoviolatesSubsection27.1andanypersoninthecaseofatenderofferwhoviolatesSubsection27.4(a)(i),oranyruleorregulationthereunder,bypurchasingorsellingasecuritywhileinpossessionofmaterialinformationnotgenerallyavailabletothepublic,shallbeliableinasuitbroughtbyanyinvestorwho,contemporaneouslywiththepurchaseorsaleofsecuritiesthatisthesubjectoftheviolation,purchasedorsoldsecuritiesofthesameclassunlesssuchinsider,orsuchpersoninthecaseofatenderoffer,provesthatsuchinvestorknewtheinformationorwouldhavepurchasedorsoldatthesamepriceregardlessofdisclosureoftheinformationtohim.
61.2.AninsiderwhoviolatesSubsection27.3oranypersoninthecaseofatenderofferwhoviolatesSubsection27.4(a),oranyruleorregulationthereunder,bycommunicatingmaterialnon‐publicinformation,shallbejointlyandseverallyliableunderSubsection61.1with,andtothesameextentas,theinsider,orpersoninthecaseofatenderoffer,towhomthecommunicationwasdirectedandwhoisliableunderSubsection61.1byreasonofhispurchaseorsaleofasecurity.
SEC.62.LimitationofActions.‐62.1.NoactionshallbemaintainedtoenforceanyliabilitycreatedunderSection56or57ofthisCodeunlessbroughtwithintwo(2)yearsafterthediscoveryoftheuntruestatementortheomission,or,iftheactionistoenforcealiabilitycreatedunderSubsection57.1(a),unlessbroughtwithintwo(2)yearsaftertheviolationuponwhichitisbased.InnoeventshallanysuchactionbebroughttoenforcealiabilitycreatedunderSection56orSubsection57.1(a)
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morethanfive(5)yearsafterthesecuritywasbonafideofferedtothepublic,orunderSubsection57.1(b)morethanfive(5)yearsafterthesale.
62.2.NoactionshallbemaintainedtoenforceanyliabilitycreatedunderanyotherprovisionofthisCodeunlessbroughtwithintwo(2)yearsafterthediscoveryofthefactsconstitutingthecauseofactionandwithinfive(5)yearsaftersuchcauseofactionaccrued.
SEC.63.AmountofDamagestobeAwarded.‐63.1.AllsuitstorecoverdamagespursuanttoSections56,57,58,59,60and61shallbebroughtbeforetheRegionalTrialCourt,whichshallhaveexclusivejurisdictiontohearanddecidesuchsuits.TheCourtisherebyauthorizedtoawarddamagesinanamountnotexceedingtripletheamountofthetransactionplusactualdamages.
Exemplarydamagesmayalsobeawardedincasesofbadfaith,fraud,malevolenceorwantonnessintheviolationofthisCodeortherulesandregulationspromulgatedthereunder.
TheCourtisalsoauthorizedtoawardattorney’sfeesnotexceedingthirtypercentum(30%)oftheaward.
63.2.ThepersonsspecifiedinSections56,57,58,59,60and61hereofshallbejointlyandseverallyliableforthepaymentofdamages.However,anypersonwhobecomesliableforthepaymentofsuchdamagesmayrecovercontributionfromanyotherpersonwho,ifsuedseparately,wouldhavebeenliabletomakethesamepayment,unlesstheformerwasguiltyoffraudulentrepresentationandthelatterwasnot.
63.3.Notwithstandinganyprovisionoflawtothecontrary,allpersons,includingtheissuer,heldliableundertheprovisionsofSections56,57,58,59,60and61shallcontributeequallytothetotalliabilityadjudgedherein.Innocaseshalltheprincipalstockholders,directorsandotherofficersoftheissuerorpersonsoccupyingsimilarpositionstherein,recovertheircontributiontotheliabilityfromtheissuer.However,therightoftheissuertorecoverfromtheguiltypartiestheamountithascontributedunderthisSectionshallnotbeprejudiced.
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SEC.64.CeaseandDesistOrder.–64.1.TheCommission,afterproperinvestigationorverification,motuproprio,oruponverifiedcomplaintbyanyaggrievedparty,mayissueaceaseanddesistorderwithoutthenecessityofapriorhearingifinitsjudgmenttheactorpractice,unlessrestrained,willoperateasafraudoninvestorsorisotherwiselikelytocausegraveorirreparableinjuryorprejudicetotheinvestingpublic.
64.2.UntiltheCommissionissuesaceaseanddesistorder,thefactthataninvestigationhasbeeninitiatedorthatacomplainthasbeenfiled,includingthecontentsofthecomplaint,shallbeconfidential.Uponissuanceofaceaseanddesistorder,theCommissionshallmakepublicsuchorderandacopythereofshallbeimmediatelyfurnishedtoeachpersonsubjecttotheorder.
64.3.Anypersonagainstwhomaceaseanddesistorderwasissuedmay,withinfive(5)daysfromreceiptoftheorder,fileaformalrequestforaliftingthereof.SaidrequestshallbesetforhearingbytheCommissionnotlaterthanfifteen(15)daysfromitsfilingandtheresolutionthereofshallbemadenotlaterthanten(10)daysfromtheterminationofthehearing.IftheCommissionfailstoresolvetherequestwithinthetimehereinprescribed,theceaseanddesistordershallautomaticallybelifted.
SEC.65.SubstitutedServiceUpontheCommission.‐ServiceofsummonsorotherprocessshallbemadeupontheCommissioninactionsorlegalproceedingsagainstanissueroranypersonliableunderthisCodewhoisnotdomiciledinthePhilippines.UponreceiptbytheCommissionofsuchsummons,theCommissionshallwithinten(10)daysthereafter,transmitbyregisteredmailacopyofsuchsummonsandthecomplaintorotherlegalprocesstosuchissuerorpersonathislastknownaddressorprincipaloffice.ThesendingthereofbytheCommission,theexpensesforwhichshallbeadvancedbythepartyatwhoseinstanceitismade,shallcompletesuchservice.
SEC.66.RevelationofInformationFiledwiththeCommission.–66.1.AllinformationfiledwiththeCommissionincompliancewiththerequirementsofthisCodeshallbemadeavailabletoanymemberofthegeneralpublic,uponrequest,inthepremisesandduringregularofficehoursoftheCommission,exceptassetforthinthisSection.
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66.2.NothinginthisCodeshallbeconstruedtorequire,ortoauthorizetheCommissiontorequire,therevealingoftradesecretsorprocessesinanyapplication,report,ordocumentfiledwiththeCommission.
66.3.Anypersonfilinganysuchapplication,reportordocumentmaymakewrittenobjectiontothepublicdisclosureofinformationcontainedtherein,statingthegroundsforsuchobjection,andtheCommissionmayhearobjectionsasitdeemsnecessary.TheCommissionmay,insuchcases,makeavailabletothepublictheinformationcontainedinanysuchapplication,report,ordocumentonlywhenadisclosureofsuchinformationisrequiredinthepublicinterestorfortheprotectionofinvestors;andcopiesofinformationsomadeavailablemaybefurnishedtoanypersonhavingalegitimateinterestthereinatsuchreasonablechargeandundersuchreasonablelimitationsastheCommissionmayprescribe.
66.4.Itshallbeunlawfulforanymember,officer,oremployeeoftheCommissiontodisclosetoanypersonotherthanamember,officeroremployeeoftheCommissionortouseforpersonalbenefit,anyinformationcontainedinanyapplication,report,ordocumentfiledwiththeCommissionwhichisnotmadeavailabletothepublicpursuanttoSubsection66.3.
66.5.NotwithstandinganythinginSubsection66.4tothecontrary,onrequestfromaforeignenforcementauthorityofanycountrywhoselawsgrantreciprocalassistanceashereinprovided,theCommissionmayprovideassistanceinaccordancewiththissubsection,includingthedisclosureofanyinformationfiledwithortransmittedtotheCommission,iftherequestingauthoritystatesthatitisconductinganinvestigationwhichitdeemsnecessarytodeterminewhetheranypersonhasviolated,isviolating,orisabouttoviolateanylawsrelatingtosecuritiesorcommoditiesmattersthattherequestingauthorityadministersorenforces.SuchassistancemaybeprovidedwithoutregardtowhetherthefactsstatedintherequestwouldalsoconstituteaviolationoflawofthePhilippines.
SEC.67.EffectofActionofCommissionandUnlawfulRepresentationswithRespectThereto.‐67.1.NoactionorfailuretoactbytheCommissionintheadministrationofthisCodeshallbeconstruedtomeanthattheCommissionhasinanywaypasseduponthemeritsoforgivenapprovaltoanysecurityoranytransactionortransactionstherein,norshallsuchactionorfailuretoactwithregardtoanystatementorreportfiledwithorexaminedbytheCommissionpursuanttothisCodeortherulesandregulationsthereundertobedeemedafindingbytheCommissionthatsuchstatementsorreportistrueandaccurateonitsfaceorthatitisnotfalseormisleading.Itshallbeunlawfultomake,orcausetobemade,toanyprospective
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purchaserorsellerofasecurityanyrepresentationthatanysuchactionorfailuretoactbytheCommissionistobesoconstruedorhassucheffect.
67.2.NothingcontainedinSubsection67.1shall,however,beconstruedasanexemptionfromliabilityofanemployeeorofficeroftheCommissionforanynonfeasance,misfeasanceormalfeasanceinthedischargeofhisofficialduties.
SEC.68.SpecialAccountingRules.–TheCommissionshallhavetheauthoritytomake,amend,andrescindsuchaccountingrulesandregulationsasmaybenecessarytocarryouttheprovisionsofthisCode,includingrulesandregulationsgoverningregistrationstatementsandprospectusesforvariousclassesofsecuritiesandissuers,anddefiningaccounting,technicalandtradetermsusedinthisCode.Amongotherthings,theCommissionmayprescribetheformorformsinwhichrequiredinformationshallbesetforth,theitemsordetailstobeshowninthebalancesheetandincomestatement,andthemethodstobefollowedinthepreparationofaccounts,appraisalorvaluationofassetsandliabilities,determinationofdepreciationanddepletion,differentiationofrecurringandnon‐recurringincome,differentiationofinvestmentandoperatingincome,andinthepreparation,wheretheCommissiondeemsitnecessaryordesirable,ofconsolidatedbalancesheetsorincomeaccountsofanypersondirectlyorindirectlycontrollingorcontrolledbytheissuer,oranypersonunderdirectorindirectcommoncontrolwith,theissuer.
SEC.69.EffectonExistingLaw.‐TherightsandremediesprovidedbythisCodeshallbeinadditiontoanyandallotherrightsandremediesthatmaynowexist.However,exceptasprovidedinSections56and63hereof,nopersonpermittedtomaintainasuitfordamagesundertheprovisionsofthisCodeshallrecover,throughsatisfactionofjudgmentinoneormoreactions,atotalamountinexcessofhisactualdamagesonaccountoftheactcomplainedof:Provided,Thatexemplarydamagesmaybeawardedincasesofbadfaith,fraud,malevolenceorwantonnessintheviolationofthisCodeortherulesandregulationspromulgatedthereunder.
SEC.70.JudicialReviewofCommissionOrders.‐AnypersonaggrievedbyanorderoftheCommissionmayappealtheordertotheCourtofAppealsbypetitionforreviewinaccordancewiththepertinentprovisionsoftheRulesofCourt.
SEC.71.ValidityofContracts.‐71.1.Anycondition,stipulation,provisionbindinganypersontowaivecompliancewithanyprovisionofthisCodeorofanyruleor
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regulationthereunder,orofanyruleofanExchangerequiredthereby,aswellasthewaiveritself,shallbevoid.
71.2.EverycontractmadeinviolationofanyprovisionofthisCodeorofanyruleorregulationthereunder,andeverycontract,includinganycontractforlistingasecurityonanExchangeheretoforeorhereaftermade,theperformanceofwhichinvolvestheviolationof,orthecontinuanceofanyrelationshiporpracticeinviolationof,anyprovisionofthisCode,oranyruleorregulationthereunder,shallbevoid:
(a)Asregardstherightsofanypersonwho,inviolationofanysuchprovision,ruleorregulation,shallhavemadeorengagedintheperformanceofanysuchcontract;and
(b)Asregardstherightsofanypersonwho,notbeingapartytosuchcontract,shallhaveacquiredanyrightthereunderwithactualknowledgeofthefactsbyreasonofwhichthemakingorperformanceofsuchcontractwasinviolationofanysuchprovision,ruleorregulation.
71.3.NothinginthisCodeshallbeconstrued:
(a)ToaffectthevalidityofanyloanorextensionofcreditmadeorofanyliencreatedpriororsubsequenttotheeffectivityofthisCode,unlessatthetimeofthemakingofsuchloanorextensionofcreditorthecreatingofsuchlien,thepersonmakingsuchloanorextensionofcreditoracquiringsuchlienshallhaveactualknowledgeofthefactsbyreasonofwhichthemakingofsuchloanorextensionofcreditortheacquisitionofsuchlienisaviolationoftheprovisionsofthisCodeoranyrulesorregulationsthereunder;or
(b)Toaffordadefensetothecollectionofanydebt,obligationortheenforcementofanylienbyanypersonwhoshallhaveacquiredsuchdebt,obligationorlieningoodfaith,forvalueandwithoutactualknowledgeoftheviolationofanyprovisionofthisCodeoranyruleorregulationthereunderaffectingthelegalityofsuchdebt,obligationorlien.
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SEC.72.RulesandRegulations;Effectivity.‐72.1.ThisCodeshallbeself‐executory.ToeffecttheprovisionsandpurposesofthisCode,theCommissionmayissue,amend,andrescindsuchrulesandregulationsandordersnecessaryorappropriate,includingrulesandregulationsdefiningaccounting,technical,andtradetermsusedinthisCode,andprescribingtheformorformsinwhichinformationrequiredinregistrationstatements,applications,andreportstotheCommissionshallbesetforth.Forpurposesofitsrulesorregulations,theCommissionmayclassifypersons,securities,andothermatterswithinitsjurisdiction,prescribedifferentrequirementsfordifferentclassesofpersons,securities,ormatters,andbyruleororder,conditionallyorunconditionallyexemptanyperson,security,ortransaction,orclassorclassesofpersons,securitiesortransactions,fromanyorallprovisionsofthisCode.
FailureonthepartoftheCommissiontoissuerulesandregulationsshallnotinanymanneraffecttheself‐executorynatureofthisCode.
72.2.TheCommissionshallpromulgaterulesandregulationsprovidingforreporting,disclosureandthepreventionoffraudulent,deceptiveormanipulativepracticesinconnectionwiththepurchasebyanissuer,bytenderofferorotherwise,ofandequitysecurityofaclassissuedbyitthatsatisfiestherequirementsofSubsection17.2.Suchrulesandregulationsmayrequiresuchissuertoprovideholdersofequitysecuritiesofsuchdateswithsuchinformationrelatingtothereasonsforsuchpurchase,thesourceoffunds,thenumberofsharestobepurchased,thepricetobepaidforsuchsecurities,themethodofpurchaseandsuchadditionalinformationastheCommissiondeemsnecessaryorappropriateinthepublicinterestorfortheprotectionofinvestors,orwhichtheCommissiondeemstobematerialtoadeterminationbyholderswhethersuchsecurityshouldbesold.
72.3.ForthepurposeofSubsection72.2,apurchasebyorfortheissueroranypersoncontrolling,controlledby,orundercommoncontrolwiththeissuer,orapurchasesubjecttothecontroloftheissueroranysuchperson,shallbedeemedtobeapurchasedbytheissuer.TheCommissionshallhavethepowertomakerulesandregulationsimplementingthissubsection,includingexemptiverulesandregulationscoveringsituationsinwhichtheCommissiondeemsitunnecessaryorinappropriatethatapurchaseofthetypedescribedinthissubsectionshallbedeemedtobeapurchasebytheissuerforthepurposeofsomeoralloftheprovisionsofSubsection72.2.
72.4.TherulesandregulationspromulgatedbytheCommissionshallbepublishedintwo(2)newspapersofgeneralcirculationinthePhilippines,andunless
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otherwiseprescribedbytheCommission,thesameshallbeeffectivefifteen(15)daysafterthedateofthelastpublication.
SEC.73.Penalties.‐AnypersonwhoviolatesanyoftheprovisionsofthisCode,ortherulesandregulationspromulgatedbytheCommissionunderauthoritythereof,oranypersonwho,inaregistrationstatementfiledunderthisCode,makesanyuntruestatementofamaterialfactoromitstostateanymaterialfactrequiredtobestatedthereinornecessarytomakethestatementsthereinnotmisleading,shall,uponconviction,sufferafineofnotlessthanFiftythousandpesos(P50,000.00)normorethanFivemillionpesos(P5,000,000.00)orimprisonmentofnotlessthanseven(7)yearsnormorethantwenty‐one(21)years,orbothinthediscretionofthecourt.Iftheoffenderisacorporation,partnershiporassociationorotherjuridicalentity,thepenaltymayinthediscretionofthecourtbeimposeduponsuchjuridicalentityandupontheofficerorofficersofthecorporation,partnership,associationorentityresponsiblefortheviolation,andifsuchofficerisanalien,heshallinadditiontothepenaltiesprescribed,bedeportedwithoutfurtherproceedingsafterserviceofsentence.
SEC.74.TransitoryProvisions.‐TheCommission,asorganizedunderexistinglaws,shallcontinuetoexistandexerciseitspowers,functionsanddutiesundersuchlawsandthisCode:Provided,Thatuntilotherwisemandatedbyasubsequentlaw,theCommissionshallcontinuetoregulateandsupervisecommodityfuturescontractsasprovidedinSection11andpre‐needplansandthepre‐needindustryasprovidedinSection16ofthisCode.
AllfurtherrequirementshereinshallbecompliedwithuponapprovalofthisCode:Provided,however,ThatcompliancemaybedeferredforsuchreasonabletimeastheCommissionmaydeterminebutnottoexceedone(1)yearfromapprovalofthisCode:Provided,further,ThatsecuritieswhicharebeingofferedatthetimeofeffectivityofthisCodepursuanttoaneffectiveregistrationandpermit,maycontinuetobeofferedandsoldinaccordancewiththeprovisionsoftheRevisedSecuritiesActineffectimmediatelypriortoapprovalofthisCode.
Allunexpendedfundsforthecalendaryear,properties,equipmentandrecordsoftheSecuritiesandExchangeCommissionareherebyretainedbytheCommissionasreorganizedunderthisCodeandtheamountofTwohundredmillion(P200,000,000.00)orsuchamountnecessarytocarryoutthereorganizationprovidedinthisCodeisherebyappropriated.
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AllemployeesoftheCommissionwhovoluntarilyretireorareseparatedfromtheservicewiththeCommissionandwhoseretirementorseparationhasbeenapprovedbytheCommission,shallbepaidretirementorseparationbenefitsandotherentitlementsgrantedunderexistinglaws.
SEC.75.PartialUseOfIncome.‐TocarryoutthepurposesofthisCode,theCommissionisherebyauthorized,inadditiontoitsannualbudget,toretainandutilizeanamountequaltoonehundredmillionpesos(P100,000,000.00)fromitsincome.
Theuseofsuchadditionalamountshallbesubjecttotheauditingrequirements,standardsandproceduresunderexistinglaws.
SEC.76.RepealingClause.‐TheRevisedSecuritiesAct(BatasPambansaBlg.178),asamended,initsentirety,andSections2,4and8ofPresidentialDecree902‐Aasamended,areherebyrepealed.Allotherlaws,orders,rulesandregulations,orpartsthereof,inconsistentwithanyprovisionofthisCodeareherebyrepealedormodifiedaccordingly.
SEC.77.SeparabilityClause.‐IfanyportionorprovisionofthisCodeisdeclaredunconstitutionalorinvalid,theotherportionsorprovisionshereof,whicharenotaffectedtherebyshallcontinueinfullforceandeffect.
SEC.78.Effectivity.‐ThisCodeshalltakeeffectfifteen(15)daysafteritspublicationintheOfficialGazetteorintwo(2)newspapersofgeneralcirculation.
Approved:July19,2000
JOSEPHE.ESTRADA
PresidentofthePhilippines