The Securities Regulation Code of the Philippines

The Securities Regulation Code of the Philippines

The Securities Regulation Code of the Philippines or Republic Act No. 8799 is a landmark legislation that aims to regulate the issuance and trading of equity securities and debt securities in the Philippines.

Enacted on July 19, 2000 and amended in 2015, this code is focused on creating a fairer and self-regulating free market. The Securities Regulation Code, which is currently divided into 78 sections and classified into 13 chapters, also ensures the protection of investors and the Philippine securities market system.

What is a security?

Securities are shares or interests that raise more capital for profit-making businesses. These securities typically come in the form of the following:

  • shares of stocks, bonds, debentures
  • investment contracts
  • options and warrants
  • certificates (assignment, participation, trust, etc.)
  • proprietary and non-proprietary membership certificates

There are several actors that engage in the issuance and trading of securities. For instance, issuers create the securities. They are composed of corporations, domestic governments, foreign governments, and investment trusts. Brokers are agents who buy and sell securities for others, while dealers buy and sell securities for themselves.

For securities to be legitimate, they must indicate that they are securities with a written or electronic certificate or contract. Without proper registration, securities are not allowed to be sold or distributed in the Philippines.

Objectives of the Securities Regulation Code of the Philippines

The primary aims of the Securities Regulation Code, stated in Section 2, are as follows:

  1. To establish a socially aware and self-regulating free market;
  2. To encourage more participation in owning an enterprise;
  3. To enhance the democratization of wealth;
  4. To promote the capital market’s development;
  5. To protect investors;
  6. To ensure full and fair disclosure of securities and;
  7. To minimize or eliminate fraudulent activities such as insider trading in the free market.

Requirements and procedures to register securities

To register a security or securities, it must first be filed and approved by the Securities and Exchange Commission (SEC). A record will then be kept in the Register Securities. The documentary requirements for the registration of securities are:

  • 3 copies of SEC Form 12-1
  • Duly signed and notarized statement of management responsibilities on the audited financial statements
  • Consolidated/Audited/Interim Financial Statements (if applicable)
  • Additional components of the Audited Financial Statements
  • Material Contracts
  • Exhibits
  • Payment Assessment Form (PAF)

For a more comprehensive list of requirements, you may view the SEC’s Registration of Securities form here.

For foreign registrants, the registration statement must be signed by its resident agent in the Philippines, along with your principal executive officer, principal operating officer, principal financial officer, controller, principal accounting officer, and corporate secretary.

Exempted securities

The following securities are exempt from an SEC registration:

  1. Securities issued by the Philippine government
  2. Securities issued by the government of a country that has diplomatic relations with the Philippines
  3. Certificates issued by a trustee in bankruptcy
  4. Securities under the Office of the Insurance Commission, Housing and Land Rule Use Regulatory Board, and the Bureau of Internal Revenue
  5. Securities issued by a bank that are not its own shares of stock

To learn more about the Securities Regulation Code of the Philippines and how it can benefit your business, get in touch with us today at +1.806.553.6552 (USA) or +63.917.8922337 (Philippines). You may also send your inquiries here.