The Securities and Exchange Commission (SEC) is coming out with guidelines that will facilitate the offering of collective investment schemes (CIS) across member jurisdictions of the ASEAN Capital Markets Forum (ACMF) that are signatory to the ASEAN CIS Framework.
This is part of the move towards deepening capital market connectivity in the region.
The guidelines will operationalize the Supplemental Memorandum of Understanding signed by the SEC together with the Securities Commission Malaysia, the Monetary Authority of Singapore, and Securities and Exchange Commission of Thailand for the admission of the Philippines to the ASEAN CIS Framework.
Established in 2014, the framework allows fund managers operating in a member jurisdiction to offer CIS such as unit trust funds or mutual funds to retail investors in other member jurisdictions under a streamlined authorization process.
The guidelines being finalized by the SEC will apply to investment companies incorporated in the Philippines who intend to participate in the framework, as well as foreign CIS of member jurisdictions that will offer for sale units in the Philippines or other qualifying CIS as specified under the ASEAN CIS Framework.
Under the draft guidelines, to be authorized as a qualifying CIS, an investment company must first be duly incorporated in the Philippines and authorized under the Investment Company Act (ICA) and the the Securities Regulation Code (SRC), to issue shares to the public.
Only qualified investment companies from the Philippines will be allowed to issue shares. Those offering both shares and units are still eligible to participate in the framework, but only shares can be offered cross-border.
A foreign CIS may be offered in the Philippines under the ASEAN CIS Framework if it is constituted in a member jurisdiction and is authorized to be offered to the general public of that member jurisdiction.
It must have been assessed by its home regulator as suitable to be a qualifying CIS and has been recognized by the SEC and is permitted to be offered in the Philippines, subject to existing requirements.
The foreign CIS must be concurrently offered in the Philippines and in its home jurisdiction; must comply with the Standards of Qualifying CIS, along with its CIS operator and trustee/fund supervisor; and must comply with the disclosure requirements of the SEC, among others.
The operator of the foreign CIS will likewise be required to appoint a registered entity with a mutual fund distributor license to act as local representative and distributor/s in the Philippines for each foreign CIS that is to be offered, marketed, and distributed in the country.
The SEC released the Draft Memorandum Circular on the Rules on Authorization of an Investment Company as a Qualifying CIS and Recognition of Foreing Collective Investment Scheme Under the ASEAN CIS Framework on May 28.
All interested parties may submit their comments on the draft memorandum circular not later than June 11, 2021 to the Corporate and Governance Department via email at [email protected].