The Securities and Exchange Commission (SEC) has approved the amendments to the Implementing Rules and Regulations (IRR) of the Securities Regulation Code (SRC), including the expanded list of entities deemed as qualified buyers.
Section 8 of the SRC provides that securities shall not be sold or offered for sale or distribution in the Philippines without a registration statement duly filed with and approved by the Commission.
The law provides for certain exceptions to the registration requirements laid down under Sections 8 and 12 for securities issued or guaranteed by, among others, the Philippine government, the government of any country with diplomatic relations with the Philippines, banks except their own shares of stock, multilateral financial entities established through a treaty or any other binding agreement involving the Philippines.
In addition, Sections 8 and 12 of the SRC shall not apply to securities issued and sold to qualified buyers identified under Section 10.1(1) of the Code and further enumerated under SRC Rule 10.1.3.
Under the recently approved amendments, the SEC will now consider as qualified buyers registered securities dealers, accounts managed by a registered broker under a discretionary arrangement, and registered investment companies, such as mutual fund companies.
The list of qualified buyers shall also include provident funds or pension funds maintained by a government agency or by a government or private corporation and managed by an entity authorized accordingly by the Bangko Sentral ng Pilipinas (BSP) or SEC, as well as a trust corporation that is authorized by the central bank to perform the acts of a trustee.
Also included in the list are funds established and covered by a trust or investment management agreement (IMA) under a discretionary or non-discretionary arrangement, in accordance with rules and regulations of the BSP.
Those under a non-discretionary arrangement are subject to additional requirements, such as the beneficial owner or principal of such funds having qualifications on financial capacity and sophistication as specified in the 2015 SRC Rules 10.1.11.1 for natural persons and 10.1.11.2 for juridical persons, among others.
Further, a fund established and covered by a trust or IMA whose beneficial owner or principal is deemed as a qualified buyer, and an entity with quasi bank license issued by the central bank have been added to the list of qualified buyers.
Additionally, the following entities will be deemed qualified buyers: pre-need companies authorized by the Insurance Commission; authorized collective investment schemes; a listed entity that engages the service of a professional fund manager; and a foreign entity that, if established or incorporated in the Philippines, would be covered by the aforementioned descriptions.
The Commission may also determine as qualified buyers, by rule or order, such other persons 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.
The previous list of qualified buyers only included banks, registered investment houses, insurance companies, and pension funds or retirement plans maintained by the government, among others.
The recently approved amendments also reflect in SRC Rule 9 provisions pertaining to the list of securities exempt from the registration requirements, as provided under Section 9 of the SRC.