SEC issues rules for cross -border investments in ASEAN

Published August 17, 2021, 2:52 PM

by James A. Loyola

The Securities and Exchange Commission announced that qualified investment companies from the Philippines may now offer their shares to Malaysia, Singapore, and Thailand, and vice versa.

This comes after the SEC’s issuance of new rules that will support the implementation of the ASEAN Collective Investment Schemes (CIS) Framework.


The Commission on August 16 issued SEC Memorandum Circular No. 9, or the Rules on Authorisation of an Investment Company as a Qualifying CIS and Recognition of a Foreign CIS under the ASEAN CIS Framework.

The rules operationalize the Supplemental Memorandum of Understanding (MoU) signed by the SEC together with the Securities Commission Malaysia, the Monetary Authority of Singapore, and Securities and Exchange Commission of Thailand on May 11, 2021, which officially welcomed the Philippines as the fourth signatory to the ASEAN CIS Framework.

The ASEAN CIS Framework is one of the initiatives undertaken by the ASEAN Capital Markets Forum (ACMF), which 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 rules 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 allowed under the ASEAN CIS Framework.

An investment company and its fund manager may be authorized as a qualifying CIS only if they are duly incorporated in the Philippines and authorized under Republic Act No. 2629, or the Investment Company Act (ICA), as well as Republic Act No. 8799, or the Securities Regulation Code (SRC), to issue shares to the public.

Qualified investment companies from the Philippines can only 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.

Moreover, 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 local representative in the Philippines in relation to each foreign CIS to be offered, marketed, and distributed in the country.

The representative could be a mutual fund distributor, fund manager, or securities broker/dealer who have corresponding licenses from the Commission.