RFBT - SECURITIES REGULATION CODE Flashcards
(59 cards)
1
Q
What is a broker?
A
“Broker” is a person engaged in the business of buying and selling securities for the account of others.
2
Q
What is a Dealer?
A
“Dealer” means any person who buys and sells securities for his/her own account in the ordinary course of business.
3
Q
What is an associated person of a broker or dealer?
A
“Associated person of a broker or dealer” is an employee thereof who, directly exercises control of supervisory authority, but does not include a salesman, or an agent or a person whose functions are solely
clerical or ministerial.
4
Q
What is a Clearing Agency?
A
“Clearing Agency” is any person who acts as intermediary in making deliveries upon payment to effect settlement in securities transactions.
5
Q
What is an Exchange?
A
“Exchange” is an organized marketplace or facility that brings together buyers and sellers and executes trades of securities and/or commodities.
6
Q
What is an Insider?
A
“Insider” means:
(a) the issuer;
(b) a director or officer (or person performing similar functions) of, or a person controlling the issuer;
(c) a person whose relationship or former relationship to the issuer gives or gave him access to material information about the issuer or the security that is not generally available to the public;
(d) a government employee, or director, or officer of an exchange, clearing agency and/or self-regulatory organization who has access to material information about an issuer or a security that is not generally
available to the public; or
(e) a person who learns such information by
a communication from any of the foregoing insiders.
7
Q
What is a pre-need plan?
A
“Pre-Need Plans” are contracts which provide for the
performance of future services or the payment of future monetary considerations at the time of actual need, for which plan holders pay in cash or installment at stated prices, with or without interest or insurance coverage and includes life, pension, education, interment, and other plans which the Commission may from time to time approve.
8
Q
What is a promoter?
A
“Promoter” is a person who, acting alone or with others, takes initiative in founding and organizing the business or enterprise of the issuer and receives consideration therefor.
9
Q
What is a prospectus?
A
“Prospectus” is the document made by or on behalf of an issuer, underwriter or dealer to sell or offer securities for sale to the public through a registration statement filed with the Commission.
10
Q
What is a registration statement?
A
“Registration statement” is the application for the registration of securities required to be filed with the Commission.
11
Q
What is a salesman?
A
“Salesman” is a natural person, employed as such or as an agent, by a dealer, issuer or broker to buy and sell securities.
12
Q
What is an uncertificated security?
A
“Uncertificated security” is a security evidenced by electronic or similar records.
13
Q
What is an underwriter?
A
“Underwriter” is a person who guarantees on a firm
commitment and/or declared best effort basis the distribution and sale of securities of any kind by another company.
14
Q
What is painting the tape?
A
Painting the tape is a form of market manipulation whereby market players attempt to influence the price of a security by buying and selling it among themselves to create the appearance of substantial trading activity.
15
Q
What is marking the close?
A
Marking The Close is a technique of purchasing a security at the very end of the trading day often within minutes of the close of trading at a significantly higher price than the security’s current traded price. The purpose is to raise the security’s closing price, thus making it appear to be of higher value than it actually is. The manipulation of a transaction in order to give a false, misleading or artificial appearance of activity in a stock improperly influences the market price and is illegal. Yet, some traders continue to engage in such practice and pay the price.
16
Q
What is hype and dump?
A
Hype-and-dump is a scheme that attempts to boost the price of a stock through recommendations based on false, misleading or greatly exaggerated statements. The perpetrators of this scheme already have an established position in the company’s stock and sell their positions after the hype has led to a higher share price.
17
Q
What are wash sales?
A
Wash sale is one that occurs when an individual sells or trades a security at a loss and, within 30 days before or after this sale, buys a “substantially identical” stock or security, or acquires a contract or option to do so. A wash sale also results if an individual sells a security, and the individual’s spouse or a company controlled by the individual buys a substantially equivalent security.
18
Q
What is squeezing the float?
A
Squeezing the float – refers to taking advantage of a shortage of securities in the market by controlling the demand side and exploiting market congestion during such shortages in a way to create artificial prices.
19
Q
What is boiler room operations?
A
Boiler room operations – the use of high pressure sale tactics to promote purchase and sale of securities
20
Q
What is the daisy chain?
A
Daisy chain – it refers to a series of purchase and sales of the same issue at successively higher prices by the same group of people with the purpose of manipulating prices are drawing unsuspecting investors into the market leaving them defrauded of their money and securities.
21
Q
RA 8799 is known as?
A
Securities Regulation Code
22
Q
What body implements RA 8799?
A
The Securities and Exchange Commission
23
Q
What is the composition of the SEC?
A
1 Chairperson and 4 Commissioners
24
Q
What are the powers and functions of the SEC?
A
(a) Have jurisdiction and supervision over all corporations, partnership or associations who are the grantees of primary franchises and/or a license or a permit issued by the Government;
(b) Formulate policies and recommendations on issues concerning the securities market, advise Congress and other government agencies on all aspect of the securities market and propose legislation and amendments thereto;
(c) Approve, reject, suspend, revoke or require amendments to registration statements, and registration and licensing applications;
(d) Regulate, investigate or supervise the activities of persons to ensure compliance;
(e) Supervise, monitor, suspend or take over the activities of exchanges, clearing agencies and other SROs;
(f) Impose sanctions for the violation of laws and rules, regulations and orders, and issued pursuant thereto;
(g) Prepare, approve, amend or repeal rules, regulations and orders, and issue opinions and provide guidance on and supervise compliance with such rules, regulation and orders;
(h) Enlist the aid and support of and/or deputized any and all enforcement agencies of the Government, civil or military as well as any private institution, corporation, firm, association or person in the implementation of its powers and function under its Code;
(i) Issue cease and desist orders to prevent fraud or injury to the investing public;
(j) Punish for the contempt of the Commission, both direct and indirect, in accordance with the pertinent provisions of and penalties prescribed by the Rules of Court;
(k) Compel the officers of any registered corporation or association to call meetings of stockholders or members thereof under its supervision;
(l) Issue subpoena duces tecum and summon witnesses to appear in any proceedings of the Commission and in appropriate cases, order the examination, search and seizure of all documents, papers, files and records, tax returns and books of accounts of any entity or person under investigation as may be necessary for the proper disposition of the cases before it, subject to the provisions of existing laws;
(m) Suspend, or revoke, after proper notice and hearing the franchise or certificate of registration of corporations, partnership or associations, upon any of the grounds provided by law; and
(n) Exercise such other powers as may be provided by law as well as those which may be implied from, or which are necessary or incidental to the carrying out of, the express powers granted the Commission to achieve the objectives and purposes of these laws.
25
What are the four principal departments of the SEC? define each.
1. Markets and Securities Regulation Department - develops registration criteria for all market participants and supervises them to ensure compliance.
2. Corporate Governance and Finance Department - registers mutual funds and monitors compliance of financing/lending and with the Revised Code of Corporate Governance
3. Company Registration and Monitoring Department - registers corporations and partnerships and associations
4. Enforcement and Investor Protection Department - ensures compliance by all market participants/issuers and takes appropriate action against them for legal infractions of the Code
26
What are the requirements for registration of securities prior to disposal to the public? What is the process?
Securities shall not be sold or offered for sale or distribution within the Philippines, without a registration statement duly filed with and approved by the Commission. Prior to such sale, information on the securities, in such form and with such substance as the Commission may prescribe, shall be made available to each prospective purchaser.
1. All securities required to be registered under Subsection 8. I shall be registered through the filing by the issuer in the main office of the Commission, of a sworn registration statement with the respect to such securities, in such form and containing such information and document as the Commission prescribe. The registration statement shall include any prospectus required
2. The information required for the registration of any kind, and all securities, shall include, among others, the effect of the securities issue on ownership, on the mix of ownership, especially foreign and local ownership.
3. The registration statement shall be signed by the issuer’s executive officer, its principal operating officer, its principal financial officer, its comptroller, its principal accounting officer, its corporate secretary, or persons performing similar functions accompanied by a duly verified resolution of the board of directors of the issuer corporation. The written consent of the expert named as having certified any part of the registration statement or any document used in connection therewith shall also be filed. Where the registration statement shares to be sold by selling shareholders, written certification by such selling shareholders as to the accuracy of any part of the registration statement contributed to by such selling shareholders shall be filed.
4. Upon filing of the registration statement, the issuer shall pay to the Commission a fee of not more than one-tenth (1/10) of one per centum (1%) of the maximum aggregate price at which such securities are proposed to be offered. The Commission shall prescribe by the rule diminishing fees in inverse proportion the value of the aggregate price of the offering.
5. Within forty-five (45) days after the date of filing of the registration statement, or by such later date to which the issuer has consented, the Commission shall declare the registration statement effective or rejected, unless the applicant is allowed to amend the registration statement as provided in Section 14 hereof. The Commission shall enter an order declaring the registration statement to be effective if it finds that the registration statement together with all the other papers and documents attached thereto, is on its face complete and that the requirements have been complied with. The Commission may impose such terms and conditions as may be necessary or appropriate for the protection of the investors.
6. Upon affectivity of the registration statement, the issuer shall state under oath in every prospectus that all registration requirements have been met and that all information are true and correct as represented by the issuer or the one making the statement. Any untrue statement of fact or omission to state a material fact required to be stated herein or necessary to make the statement therein not misleading shall constitute fraud.
7. If a registration statement is on its face incomplete or inaccurate in any material respect, the SEC shall issue an order directing the amendment of the registration statement.
27
What are the grounds for rejection of registration of securities?
(a) The issuer:
(i) Has been judicially declared insolvent;
(ii) Has violated any of the provision of this Code, the rules promulgate pursuant thereto, or any order of the Commission of which the issuer has notice in connection with the offering for which a registration statement has been filed
(iii) Has been or is engaged or is about to engage in fraudulent transactions;
(iv) Has made any false or misleading representation of material facts in any prospectus concerning the issuer or its securities;
(v) Has failed to comply with any requirements that the Commission may impose as a condition for registration of the security for which the registration statement has been filed; or
(b) The registration statement is on its face incomplete or inaccurate in any material respect or includes any untrue statements of a material fact required to be stated therein or necessary to make the statement therein not misleading; or
(c) The issuer, any officer, director or controlling person performing similar functions, or any under writer has been convicted, by a competent judicial or administrative body, upon plea of guilty, or otherwise, of an offense involving moral turpitude and /or fraud or is enjoined or restrained by the Commission or other competent or administrative body for violations of securities, commodities, and other related laws.
28
What are the grounds for suspension of registration of securities?
15. 1 If at any time, the information contained in the registration statement filed is or has become misleading, incorrect, inadequate or incomplete in any material respect, or the sale or offering for sale of the security registered thereunder may work or tend to work a fraud, the Commission may require from the issuer such further information as may in its judgement be necessary to enable the Commission to ascertain whether the registration of such security should be revoked on any ground specified in this Code. The Commission may also suspend the right to sell and offer for the sale such security pending further investigation, by entering an order specifying the grounds for such action, and by notifying the issuer, underwriter, dealer or broker known as participating in such offering.
15. 2. The refusal to furnish information required by the Commission may be a ground for the issuance of an order of suspension pursuant to Subsection 15.1. Upon the issuance of any such order and notification to the issuer, underwriter, dealer or broken know as participating in such offering, no further offer or sale of any such security shall be made until the same is lifted or set aside by the Commission. Otherwise such sale shall be void.
15. 3. Upon issuance of an order of suspension, the Commission shall conduct a hearing. If the Commission determines that the sale of any security should be revoked is shall issue an order prohibiting sale of such security.
15. 4. Until the issuance of a final order, the suspension of the right to sell, though binding upon the persons notified there of, shall be deemed confidential, and shall not be published, unless it shall appear that the order of suspension has been violated after notice. If, however, the Commission finds that the sale of the security will neither be fraudulent nor result in fraud, it shall forthwith issue an order revoking the order of suspension, and such security shall be restored to its status as a registered security as of the date of such order of suspension.
29
What is a security?
It refers to shares/participation or interests in a corporation or commercial enterprise
30
What are commodity futures contracts?
It means a contract providing for the making or taking delivery at a prescribed in the future of a specific quantity and quality of a commodity or the cash value thereof
31
What is a forward contract?
It is a contract between buyer and seller whereby the buyer is obligated to take delivery and the seller is obliged to deliver a fixed amount of an underlying commodity
32
What is a warrant certificate?
It represents the right to a warrant, which may or may not be attached
33
What is a warrant instrument?
It means the written document or deed containing the terms and conditions of the issue and exercise of a warrants
34
What is a beneficiary security?
It means the shares of stock of the issuer which form the basis of entitlement in a warrant
35
What is an underlying share?
It means the unissued shares of a corporation that may be purchased by the warrant holder upon the exercise of the right granted under the warrant.
36
What securities are required to be registered with the SEC?
(a) Shares of stocks, bonds, debentures, notes evidences of indebtedness, asset-backed securities;
(b) Investment contracts, certificates of interest or participation in a profit sharing agreement, certifies of deposit for a future subscription;
(c) Fractional undivided interests in oil, gas or other mineral rights;
(d) Derivatives like option and warrants;
(e) Certificates of assignments, certificates of participation, trust certificates, voting trust certificates or similar instruments
(f) Proprietary or nonproprietary membership certificates in corporations; and
(g) Other instruments as may in the future be determined by the Commission.
37
What securities are exempt from requirement of registration with the SEC?
(a) Any security issued or guaranteed by the Government of the Philippines, or by any political subdivision or agency thereof, or by any person controlled or supervised by, and acting as an instrumentality of said Government.
(b) Any security issued or guaranteed by the government of any country with which the Philippines maintains diplomatic relations, or by any state, province or political subdivision thereof on the basis of reciprocity: Provided, That the Commission may require compliance with the form and content for disclosures the Commission may prescribe.
(c) Certificates issued by a receiver or by a trustee in bankruptcy duly approved by the proper adjudicatory body.
(d) Any security or its derivatives the sale or transfer of which, by law, is under the supervision and regulation of the Office of the Insurance Commission, Housing and Land Use Rule Regulatory Board, or the Bureau of Internal Revenue.
(e) Any security issued by a bank except its own shares of stock.
(f) Ordinary deeds or instrument that are not normally sold to the public
38
What are the exempted transactions from requirement of registration with SEC?
The requirement of registration under Subsection 8.1 shall not apply to the sale of any security in any of the following transactions:
(a) At any judicial sale, or sale by an executor, administrator, guardian or receiver or trustee in insolvency or bankruptcy.
(b) By or for the account of a pledge holder, or mortgagee or any of a pledge lien holder selling of offering for sale or delivery in the ordinary course of business and not for the purpose of avoiding the provision of this Code, to liquidate a bonafide debt, a security pledged in good faith as security for such debt.
(c) An isolated transaction in which any security is sold, offered for sale, subscription or delivery by the owner therefore, or by his representative for the owner’s account, such sale or offer for sale or offer for sale, subscription or delivery not being made in the course of repeated and successive transaction of a like character by such owner, or on his account by such representative and such owner or representative not being the underwriter of such security.
(d) The distribution by a corporation actively engaged in the business authorized by its articles of incorporation, of securities to its stockholders or other security holders as a stock dividend or other distribution out of surplus.
(e) The sale of capital stock of a corporation to its own stockholders exclusively, where no commission or other remuneration is paid or given directly or indirectly in connection with the sale of such capital stock.
(f) The issuance of bonds or notes secured by mortgage upon real estate or tangible personal property, when the entire mortgage together with all the bonds or notes secured thereby are sold to a single purchaser at a single sale.
(g) The issue and delivery of any security in exchange for any other security of the same issuer pursuant to a right of conversion entitling the holder of the security surrendered in exchange to make such conversion: Provided, That the security so surrendered has been registered under this Code or was, when sold, exempt from the provision of this Code, and that the security issued and delivered in exchange, if sold at the conversion price, would at the time of such conversion fall within the class of securities entitled to registration under this Code. Upon such conversion the par value of the security surrendered in such exchange shall be deemed the price at which the securities issued and delivered in such exchange are sold.
(h) Broker’s transaction, executed upon customer’s orders, on any registered Exchange or other trading market.
(i) Subscriptions for shares of the capitals stocks of a corporation prior to the incorporation thereof or in pursuance of an increase in its authorized capital stocks under the Corporation Code, when no expense is incurred, or no commission, compensation or remuneration is paid or given in connection with the sale or disposition of such securities, and only when the purpose for soliciting, giving or taking of such subscription is to comply with the requirements of such law as to the percentage of the capital stock of a corporation which should be subscribed before it can be registered and duly incorporated, or its authorized, capital increase.
(j) The exchange of securities by the issuer with the existing security holders exclusively, where no commission or other remuneration is paid or given directly or indirectly for soliciting such exchange.
(k) The sale of securities by an issuer to fewer than twenty (20) persons in the Philippines during any twelve-month period.
(l) The sale of securities to any number of the following qualified buyers:
(i) Bank;
(ii) Registered investment house;
(iii) Insurance company;
(iv) Pension fund or retirement plan maintained by the Government of the Philippines or any political subdivision thereof or manage by a bank or other persons authorized by the Bangko Sentral to engage in trust functions;
(v) Investment company or;
(vi) Such other person as the Commission may rule by determine as qualified buyers, on the basis of such factors as financial sophistication, net worth, knowledge, and experience in financial and business matters, or amount of assets under management.
39
What is a tender offer?
A publicly announced intention by a person acting alone or in concert with other persons to acquire outstanding equity securities of a public company.
40
What are the instances of mandatory tender offers?
1. Any person or group of persons acting in concert who intends to acquire at least 15% of any class of any equity security of a listed corporation of any class of any equity security of a corporation with assets of at least fifty million pesos (50,000,000.00) and having two hundred(200) or more stockholders at least one hundred shares each or who intends to acquire at least thirty percent(30%) of such equity over a period of twelve months (12) shall make a tender offer to stockholders by filling with the Commission
2. Any person or group of persons acting in concert who intends to acquire 35% of the outstanding voting shares or such outstanding voting shares that are sufficient to gain control of the board in a public company in one or more transactions within a period of 12 months
3. Any person or group of persons acting in concert who intends to acquire 35% of the outstanding voting shares or such outstanding voting shares that are sufficient to gain control of the board in a public company through the Exchange trading system shall not be required to make a tender offer even if such person or group of persons acquire the remainder through a block sale if after acquisition through the exchange trading system they fail to acquire their target of 35%
4. Any person or group of persons acting in concert who intends to acquire 35% of the outstanding voting shares or such outstanding voting shares that are sufficient to gain control of the board in a public company directly from one or more stockholders shall be required to make a tender offer for all the outstanding voting shares
5. If any acquisition that would result in ownership of over 50% of the total outstanding equity, the acquirer shall be required to make a tender offer
41
What transactions are exempted from mandatory tender offers?
1. Any purchase of securities from the unissued capital stock; provided that the acquisition will not result to a fifty percent or more ownership of securities by the purchaser or that such percentage that is sufficient to gain control of the board
2. Any purchase of securities from an increase in authorized capital stock
3. Purchase in connection with foreclosure proceedings
4. Purchases in connection with privatization undertaken by the government
5. Purchases in connection with corporate rehabilitation
6. Purchases in open market at the prevailing market price
7. Merger/consolidation
42
T or F
A reacquisition or repurchase by an issuer of its own securities shall only be made if such issuer has unrestricted earnings in its books to cover the amount of shares to be purchased
True, in addition it is undertaken for the following purposes:
a. implement a stock option plan
b. meet short-term obligations
c. pay dissenting/withdrawing stockholders
d. other legitimate corporate purposes
43
What are the dissemination requirements of a tender offer?
1. An offeror or issuer shall publish the terms and conditions of the tender offering in 2 national newspapers of general circulation on the date of commencement of the tender offer and for 2 consecutive days after compliance with SRC
2. If a material change occurs in the information published, sent or given to security holders, the offeror shall disseminate promptly a disclosure of such change in a manner reasonably calculated
44
When do tender offers expire?
A tender offer shall unless withdrawn, remain open until the expiration of:
a. At least 20 business days from its commencement; provided that an offer should as much as possible be completed within sixty days from the date of intention to make such offer
b. At least 10 business days from the date the notice of a change in the percentage of the class of securities being sought or in the consideration offered is first published/sent/given to holders
45
What is the purpose of the SRC (RA 8799)?
It aims to protect the investing public primarily through a system of disclosure and provide punishment for fraudulent practices by:
a. Requiring full disclosure of information to the public regarding the securities that are being offered and the issuers including the filing and approval of the registration
b. Requirement of regularly submitting material information
c. Close monitoring of securities and other circumstances
d. Prohibitng and penalizing fraudulent transactions and practices
e. Providing the SEC powers and functions
46
What are the powers and functions of the SEC?
(a) Have jurisdiction and supervision over all corporations, partnership or associations who are the grantees of primary franchises and/or a license or a permit issued by the Government;
(b) Formulate policies and recommendations on issues concerning the securities market, advise Congress and other government agencies on all aspect of the securities market and propose legislation and amendments thereto;
(c) Approve, reject, suspend, revoke or require amendments to registration statements, and registration and licensing applications;
(d) Regulate, investigate or supervise the activities of persons to ensure compliance;
(e) Supervise, monitor, suspend or take over the activities of exchanges, clearing agencies and other SROs;
(f) Impose sanctions for the violation of laws and rules, regulations and orders, and issued pursuant thereto;
(g) Prepare, approve, amend or repeal rules, regulations and orders, and issue opinions and provide guidance on and supervise compliance with such rules, regulation and orders;
(h) Enlist the aid and support of and/or deputized any and all enforcement agencies of the Government, civil or military as well as any private institution, corporation, firm, association or person in the implementation of its powers and function under its Code;
(i) Issue cease and desist orders to prevent fraud or injury to the investing public;
(j) Punish for the contempt of the Commission, both direct and indirect, in accordance with the pertinent provisions of and penalties prescribed by the Rules of Court;
(k) Compel the officers of any registered corporation or association to call meetings of stockholders or members thereof under its supervision;
(l) Issue subpoena duces tecum and summon witnesses to appear in any proceedings of the Commission and in appropriate cases, order the examination, search and seizure of all documents, papers, files and records, tax returns and books of accounts of any entity or person under investigation as may be necessary for the proper disposition of the cases before it, subject to the provisions of existing laws;
(m) Suspend, or revoke, after proper notice and hearing the franchise or certificate of registration of corporations, partnership or associations, upon any of the grounds provided by law; and
(n) Exercise such other powers as may be provided by law as well as those which may be implied from, or which are necessary or incidental to the carrying out of, the express powers granted the Commission to achieve the objectives and purposes of these laws.
47
What is a detachable warrant?
It is a warrant that may be sold/transferred or assigned to any person separate from and independent of the corresponding beneficiary security
48
What is a non-detachable warrant?
It is a warrant that may NOT be sold/transferred or assigned to any person separate from and independent of the corresponding beneficiary security
49
What is an investment contract?
It is a contract whereby a person invests his money in a common enterprise and is led to expect profits primarily from the efforts of others.
50
What transactions are exempt from registration?
1. Broker’s transaction, executed upon customer’s orders, on any registered Exchange or other trading market.
2. An isolated transaction in which any security is sold, offered for sale, subscription or delivery by the owner therefore, or by his representative for the owner’s account, such sale or offer for sale or offer for sale, subscription or delivery not being made in the course of repeated and successive transaction of a like character by such owner, or on his account by such representative and such owner or representative not being the underwriter of such security.
3. The distribution by a corporation actively engaged in the business authorized by its articles of incorporation, of securities to its stockholders or other security holders as a stock dividend or other distribution out of surplus.
4. The issue and delivery of any security in exchange for any other security of the same issuer pursuant to a right of conversion entitling the holder of the security surrendered in exchange to make such conversion: Provided, That the security so surrendered has been registered under this Code or was, when sold, exempt from the provision of this Code, and that the security issued and delivered in exchange, if sold at the conversion price, would at the time of such conversion fall within the class of securities entitled to registration under this Code. Upon such conversion the par value of the security surrendered in such exchange shall be deemed the price at which the securities issued and delivered in such exchange are sold.
5. The sale of capital stock of a corporation to its own stockholders exclusively, where no commission or other remuneration is paid or given directly or indirectly in connection with the sale of such capital stock.
6. The sale of securities by an issuer to fewer than twenty (20) persons in the Philippines during any twelve-month period.
7. Subscriptions for shares of the capitals stocks of a corporation prior to the incorporation thereof or in pursuance of an increase in its authorized capital stocks under the Corporation Code, when no expense is incurred, or no commission, compensation or remuneration is paid or given in connection with the sale or disposition of such securities, and only when the purpose for soliciting, giving or taking of such subscription is to comply with the requirements of such law as to the percentage of the capital stock of a corporation which should be subscribed before it can be registered and duly incorporated, or its authorized, capital increase.
8. The sale of securities to any number of the following qualified buyers:
(i) Bank;
(ii) Registered investment house;
(iii) Insurance company;
(iv) Pension fund or retirement plan maintained by the Government of the Philippines or any political subdivision thereof or manage by a bank or other persons authorized by the Bangko Sentral to engage in trust functions;
(v) Investment company or;
(vi) Such other person as the Commission may rule by determine as qualified buyers, on the basis of such factors as financial sophistication, net worth, knowledge, and experience in financial and business matters, or amount of assets under management.
9. The issuance of bonds or notes secured by mortgage upon real estate or tangible personal property, when the entire mortgage together with all the bonds or notes secured thereby are sold to a single purchaser at a single sale.
10. At any judicial sale, or sale by an executor, administrator, guardian or receiver or trustee in insolvency or bankruptcy.
11. By or for the account of a pledge holder, or mortgagee or any of a pledge lien holder selling of offering for sale or delivery in the ordinary course of business and not for the purpose of avoiding the provision of this Code, to liquidate a bonafide debt, a security pledged in good faith as security for such debt.
12. The exchange of securities by the issuer with the existing security holders exclusively, where NO commission or other remuneration is paid or given directly or indirectly for soliciting such exchange.
51
What are the reportorial requirements under RA 8799?
Every issuer satisfying the requirements in Subsection 17.2 hereof shall file with the Commission:
(a) Within one hundred thirty-five (135) days, after the end of the issuer’s fiscal year, or such other time as the Commission may prescribe, an annual report which shall include, among others, a balance sheet, profit and loss statement and statement of cash flows, for such last fiscal year, certified public accountant, an a management discussion and analysis of results of operation; and
(b) Such other periodical reports for interim fiscal periods and current reports on significant developments of the issuer as the Commission may prescribe as necessary to keep current information on the operation of the business and financial condition of the issuer.
17. 2. The reportorial requirements of Subsection 17.1 shall apply to the following:
(a) An issuer which has sold a class of its securities pursuant to a registration under section 12 hereof: Provided however, That the obligation of such issuer to file reports shall be suspended for any fiscal year after the year such registration became effective if such issuer, as of the first day of any such fiscal year, has less than one hundred (100) holder of such class securities or such other number as the Commission shall prescribe and it notifies the Commission of such;
(b) An issuer with a class of securities listed for trading on an Exchange; and
(c) An issuer with assets of at least Fifty million pesos (50,000,000.00) or such other amount as the Commission shall prescribe, and having two hundred (200) or more holder each holding at least one hundred (100) share of a class of its equity securities: Provided, however, That the obligation of such issuer to file report shall be terminate ninety (90) days after notification to the Commission by the issuer that the number of its holders holding at least one hundred (100) share reduced to less than one hundred (100).
52
When are General Information Sheets (GIS) filed?
All corporations shall file their GIS within 30 calendar days from:
a. Stock corporations - date of annual stockholders meeting
b. Non-stock corporations - date of annual member's meeting
c. Foreign Corporations - anniversary date of the issuance of SEC license.
53
When do corporations file their annual financial statements?
1. Corporations using calendar year - depending on the last numerical digit of their SEC registration/license number
However, any corporations may file their AFS regardless of the last numerical digit or license number on or before the first day stated in the coding schedule
2. Corporations using the fiscal year
a. GR - 120 days from the end of the fiscal year
b. EX:
Broker dealer - 110 calendar days from end of fiscal year
Listed and Public companies - 105 days from end of fiscal year
54
What is material non-public information?
Information that will affect the price of the security or would influence a person in deciding whether to by/sell/hold security which is not available to the public
55
Who are considered insiders?
(a) the issuer;
(b) a director or officer (or any person performing similar functions) of, or a person controlling the issuer; gives or gave him access to material information about the issuer or the security that is not generally available to the public;
(c) A person whose relationship or former relationship to the issuer gives or gave him access to material non-public info
(d) A government employee, director, or officer of an exchange, clearing agency and/or self-regulatory organization who has access to material information about an issuer or a security that is not generally available to the public; or
(e) a person who learns such information by a communication from any forgoing insiders.
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T or F
A purchase or sale of a security of the issuer made by an insider or such insider's spouse or relatives by affinity or consanguinity within the 4th degree, legitimate or common-law, shall be presumed to have been effected while in possession of material non-public information if transacted after such information came into existence but prior to the dissemination of such to the public and the lapse of a reasonable time for the market to absorb such information.
False, 2nd degree
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What is a matched order?
It refers to an order for the purchase or sale of security with the knowledge that a simultaneous order of substantially the same size/time and price for the sale of such security will be entered by or for the same parties
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When are wash sales and matched orders illegal?
Wash sales and matched orders are not in themselves illegal, they are fraudulent only whenever they are resorted in order to create a false or misleading appearance of active trading.
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What are boiler room operations?
It involves an intensive selling campaign through numerous salesmen and investors are induced to purchase through hard-sell techniques based on unfounded predictions and misleading marketing letters.
