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Philippines: New securities regulations

On November 9 2015, the 2015 Implementing Rules and Regulations of the Securities Regulation Code (the 2015 SRC Rules) took effect

Melyjane G Bertillo-Ancheta

On November 9 2015, the 2015 Implementing Rules and Regulations of the Securities Regulation Code (the 2015 SRC Rules) took effect. These supersede the amended implementing rules of 2004. According to the Securities and Exchange Commission of the Philippines (SEC), the 2015 SRC Rules adopt global best practices to ensure that the players are able to meet the challenges posed by increasing market sophistication and regional integration.

The 2015 SRC Rules introduce new provisions in mandatory tender offers; registration requirements in respect of securities for offer in the Philippines; and exemptions from such registration requirements, among other areas.

Under the new rules, any person or group of persons acting in concert, who intends to acquire 15% of equity securities in a public company in one or more transactions within a 12-month period must file a declaration to that effect with the SEC. The threshold that triggers a mandatory tender offer remains at 35%.

Moreover, the 2015 SRC Rules now expressly recognise securities issued or guaranteed by multilateral financial entities established through a treaty or any other binding agreement to which the Philippines is a party or subsequently becomes a member as exempt securities. This means they are exempt from the requirement to have the securities registered before they are offered to the public. The exemption is subject to filing an offering circular containing certain minimum information with the SEC.

The new rules also introduce a restriction on the private placement exemption. Debt instruments issued by companies without quasi-banking licenses in excess of P150 million will require the SEC's prior approval (notwithstanding that such debt instruments will be issued to not more than 19 holders).

The term of shelf-registration of securities is now three years. Thus, securities may now be registered for an offering to be made on a continuous or delayed basis in the future, for a period not exceeding three years from the effective date of the registration statement under which they will be offered or sold.

Relatedly, the SEC has also approved the extension of the age requirement for financial statements used for public offers from 135 days to 180 days. This financial reporting bulletin reform has been adopted to align the rules with the standards of the Association of Southeast Asian Nations.

Melyjane G Bertillo-Ancheta

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