The Securities and Exchange Commission (SEC) has overhauled the guidelines governing the registration of qualified buyers for private stock placements, moving to standardize how banks and brokerages vet high-net-worth investors.

The corporate regulator issued Memorandum Circular No. 5, Series of 2026, which amends the implementing rules of the Securities Regulation Code.

The move aims to streamline the oversight of registrars—authorized entities such as investment houses and banks responsible for certifying that institutional and individual investors meet the strict financial thresholds required to participate in exempt securities offerings.

A central feature of the updated framework is the creation of an Inter-Registrar Registry. This internal SEC database will be accessible to all authorized registrars, allowing them to validate the credentials and certificates of qualified buyers (QBs) in real time.

Under the new “qualified buyer reliance” provision, a registrar may rely on a certificate of registration issued by another authorized entity when executing transactions, a shift intended to reduce redundant paperwork and expedite capital market activity.

SEC Chairperson Francis Lim said the amended guidelines ensure a uniform implementation of the commission’s rules, making compliance more efficient for both intermediaries and investors. He noted that the changes align with the agency's dual goal of strengthening investor protection while maintaining effective regulatory oversight.

To operate as a registrar, an entity must hold an appropriate secondary license from the SEC. The pool of eligible firms includes banks acting as broker-dealers or government securities dealers, as well as investment houses, brokers, and dealers. The SEC has also extended eligibility to investment company advisers, issuers selling their own securities, and registered crowdfunding portals.

Applicants must submit their internal procedures for SEC approval, detailing their organizational structure, the legal criteria used to evaluate QB applicants, and the control mechanisms designed to monitor ongoing compliance.

Once authorized, these registrars are tasked with assigning a permanent QB identification number to each client. This number remains fixed even if a buyer’s status is later suspended or revoked, and it cannot be recycled for other entities.

Certificates of registration issued to qualified buyers will now carry a three-year validity period, provided the investor maintains the required financial qualifications. Registrars are further mandated to submit an annual attestation to the SEC every year-end to confirm the continued eligibility of their client list.

The rules also clarify the “safe harbor” for firms using the new shared database. Registrars that rely on existing QB registrations will not incur liability for doing so, provided they comply with the SEC’s procedural requirements and act in good faith.

For firms looking to exit the business, the SEC has established a formal cessation process. A registrar must notify the commission at least 30 days before it intends to stop its functions, providing a board resolution and an attestation that all buyers in its registry have been verified for compliance up to the date of departure.

The SEC will review such filings within 10 calendar days, after which the firm must notify its clients and counterparties at least 15 days before the cessation becomes effective. (James A. Loyola)