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SEC to exempt financial, multilateral institutions from registering securities

THE Securities and Exchange Commission (SEC) has proposed to exempt from registration securities offered by financial and multilateral institutions, which it deems to be sufficiently regulated by other entities.

The current registration requirements are detailed in Sections 8 and 12 of the Securities Regulation Code (SRC).

Securities offered by government financial institutions will also be exempt from Section 12, which outlines the registration procedures.

“Any evidence of indebtedness issued by a financial institution that has been licensed by the BSP (Bangko Sentral ng Pilipinas) to engage in banking or quasi-banking shall be exempt from registration under Section 8.1 of the Code,” the SEC said.

These also include those issued to the BSP through open market or rediscounting operations, and bills from the sale of goods and services.

Securities issued by multilateral financial entities (MFEs) via any agreement involving the Philippines will also be exempt.

MFEs planning to issue securities are required to publish an offering circular in the SEC-stipulated format, which must include details on the issuer and the security, the background of the MFE, and information on the guarantee.

Exemptions will also apply to other items indicating evidence of indebtedness, as long as these meet the following requirements: issued to not more than 19 non-institutional lenders, payable to a specific person, not negotiable nor assignable and held until maturity, and not exceeding P150 million.

Meanwhile, the purchase, sale, and distribution of these securities and other post-trade activities should still comply with the provisions of the Code.

“The purchase and sale of such security shall not be exempt from the coverage of the provisions of the code on civil and other related liabilities, and other applicable provisions of the code on fraud,” the SEC said.

Issuers may also be asked to disclose information on their business operations, financial condition, and use of proceeds, among others.

Registration requirements will also not apply to securities issued and sold to a registered securities dealer, accounts managed by registered brokers, licensed investment companies, government-maintained funds, trust corporations, and unit investment trust funds established under the rules and regulations of the BSP.

Securities sold to BSP-licensed quasi bank entities, pre-need companies, authorized collective investment schemes, listed professional fund managers will also be exempted from Sections 8 and 12 of the SRC.

The SEC is accepting comment on the proposal until April 20 through its Markets and Securities Regulation Department. — Keren Concepcion G. Valmonte

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