SECURITIES REGULATIONS CODE ISSUER

REPUBLIC ACT NO. 8799 The originator, maker, obligor, or creator of security
Enactment: July 17, 2000; Effectivity: August 8, 2000 BROKER
A person engaged in the business of buying and
SECTION 1. TITLE. selling securities for the account of others.
The Securities Regulation Code DEALER
Any person who buys and sells securities for
SECTION 2. DECLARATION OF STATE POLICY his/her own account in the ordinary course of
STATE POLICY business
The State shall establish: ASSOCIATED PERSON OF A BROKER OR
• socially conscious, free market that DEALER
regulates itself An employee thereof who, directly exercises
• encourage the widest participation of control of supervisory authority, but does not
ownership in enterprises include a salesman, or an agent or a person whose
• enhance the democratization of wealth functions are solely clerical or ministerial
• promote the development of the capital CLEARING AGENCY
market Any person who acts as intermediary in making
• protect investors deliveries upon payment to effect settlement in
• ensure full and fair disclosure about securities transactions
securities EXCHANGE
• minimize, if not totally eliminate, insider An organized marketplace or facility that brings
trading and other fraudulent or together buyers and sellers and executes trades of
manipulative devices and practices securities and/or commodities
which create distortions in the free INSIDER
market • the issuer
• a director or officer (or person performing
SECTION 3. DEFINITION OF TERMS similar functions) of, or a person controlling
SECURITIES the issuer
Shares participation or interests in a corporation or • a person whose relationship or former
in a commercial enterprise or profit-making venture relationship to the issuer gives or gave him
and evidenced by a certificate, contract access to material information about the
instrument, whether written or electronic in issuer or the security that is not generally
character. It shall include: available to the public
Shares of stock, bonds, debentures, notes, • a government employee, or director, or
evidences of indebtedness, asset-backed officer of an exchange, clearing agency
securities; and/or self-regulatory organization who has
Investment contracts, certificates of access to material information about an
interest or participation in a profit sharing issuer or a security that is not generally
agreement, certificates of deposit for a available to the public
future subscription • a person who learns such information by a
Fractional undivided interests in oil, gas or communication from any of the foregoing
other mineral rights insiders
Derivatives like option and warrants PRE-NEED PLANS
Certificates of assignments, certificates of Contracts which provide for the performance of
participation, trust certificates, voting trust future services or the payment of future monetary
certificates or similar instruments considerations at the time of actual need, for which
Proprietary or nonproprietary membership planholders pay in cash or installment at stated
certificates in corporations prices, with or without interest or insurance
Other instruments as may in the future be coverage and includes life, pension, education,
determined by the Commission interment, and other plans which the Commission
may from time to time approve.
PROMOTER
A person who, acting alone or with others, takes
initiative in founding and organizing the business or
enterprise of the issuer and receives consideration TYPES OF BONDS
therefor TERM BONDS Bonds with a single date
PROSPECTUS of maturity
The document made by or on behalf of an issuer, SERIAL BONDS Bonds with a series of
underwriter or dealer to sell or offer securities for maturity dates or that
sale to the public through a registration statement mature by instalments
filed with the Commission MORTGAGE BONDS Bonds secured by
REGISTRATION STATEMENT mortgage of real
The application for the registration of securities property
issuer or broker to buy and sell securities COLLATERAL TRUST Bonds secured by
SALESMAN BONDS investments in stocks
A natural person, employed as such or as an agent, and bonds
by a dealer, issuer or broker to buy and sell DEBENTURE BONDS Bonds without
securities collateral security
UNCERTIFIED SECURITY REGISTERED BONDS Require the registration
A security evidenced by electronic or similar of the name of the
records bondholder on the
UNDERWRITER books of the corporation
A person who guarantees on a firm commitment COUPON OR BEARER The name of the
and/or declared best effort basis the distribution BONDS bondholder is not
and sale of securities of any kind by another registered; the interest
company is paid periodically to
the bearer of the bond or
CLASSES OF SECURITIES the person submitting a
EQUITY SECURITIES DEBIT SECURITIES / detachable coupon
INSTRUMENTS CONVERTIBLE BOND Bonds that can be
Include shares of Include any evidence of exchanged for shares of
stocks, investment indebtedness such as capital stock of the
contracts, certificates bonds, notes, issuing company
of interest or debentures, notes, CALLABLE BONDS Bonds that can be
participation in a profit- evidences of called in for payment
sharing agreement, indebtedness, and before the date of
certificates of interest or asset-backed maturity
participation in a profit- securities. GUARANTEED BONDS Bonds issued whereby
sharing agreement, another party promises
certificates of deposit to make payment if the
for a future borrows fails to do so
subscription, and JUNK BONDS High risk and high yield
fractional undivided bonds issued by entities
interests in oil, gas or that are heavily
other mineral rights indebted or otherwise in
weak financial position

BONDS DEBENTURE (Debenture Bond, Unsecured

• A debt investment in which an investor loans Bond, Naked Debenture or Plain Bond)
money to an entity that borrows the funds for a • A debt secured only by the debtor’s earning
defined period of time at a fixed interest rate power, not by lien on any specific asset
• A formal unconditional promise, made under • A type of debt instrument that is not secured by
seal, to pay a specified sum of money at a physical asset or collateral backed only by the
determinable future date, and to make periodic general creditworthiness and reputation of the
interest payments at a stated rate until the issuer
principal sum is paid • It is frequently used by the corporation and
• A contract of debt whereby one party called the governments in order to secure capital
BORROWER or ISSUER borrows funds from
another party called the INVESTOR
 NOTES NETWORK MARKETING V INVESTMENT
A writing representing a promise by a maker to pay CONTRACT
a specified amount of money to a payee or to the A scheme adopted by companies for getting people
bearer, on demand or by a specified date to buy their products where the buyer can become
down-line seller, who earns commissions from
not securities per se purchases made by new buyers whom he refers to
the person who sold the product to him
Must be defined using the Family Resemblance
Test DERIVATIVES
FAMILY RESEMBLANCE TEST A financial instrument whose value changes in
A note is presumed to be a security unless it bears response to the change in a specified interest rate,
a strong resemblance, determined by examining security price, commodity price, foreign exchange
four specified factors, to one of a judicially crafted rate, index of prices or rates, a credit rating or credit
list of categories instrument that are not securities index, or similar variable or underlying factor.

If the instrument is not sufficiently similar to a listed requires no initial or little net investment
item, a court must decide whether another relative to other types of contracts that have
category should be added examining the same similar responses to changes in market
factors conditions
settled at a future date
EVIDENCE OF INDEBTEDNESS OPTIONS WARRANTS
A writing which acknowledges a debt or obligation Contracts that give the Rights to subscribe or
and which is executed by the party obligated buyer the right to buy or purchase new shares
thereby sell an underlying or existing shares in a
security at a pre- company, on or before a
» has reference to any printed or written determined price (the pre-determined date
instrument, signed or otherwise executed by exercise or strike
the obligor(s), which evidences on its face a price), on or before a
legally enforceable obligation to pay money pre-determined date
(the expiry date)
ASSET-BACKED SECURITY KINDS OF OPTIONS
A financial security backed by a loan, lease or CALL OPTIONS Right to Buy
receivables against assets other than real estate PUT OPTIONS Right to Sell
and mortgaged-backed securities WARRANT CERTIFICATE
Certificate representing the right to a Warrant
alternative to investing in corporate debt which may be detachable or not, duly issued by the
for investors ISSUER to the WARRANTHOLDER
WARRANT INSTRUMENT
INVESTMENT CONTRACT The written instrument or deed containing the
A contract, transaction, or scheme whereby a terms and conditions of the issue and exercise of a
person invests his money in a common enterprise Warrant, which the terms shall include:
and is led to expect profits primarily from the efforts • the maximum underlying shares that can be
of others. purchased upon exercise
HOWEY TEST • the exercise period
For an investment contract to exist, the following • such other terms and conditions as the SEC
elements must concur: may require
o a contract, transaction, or scheme KINDS OF WARRANTS
o an investment of money DETACHABLE A warrant that may be
o investment is made in a common WARRANT sold, transferred or
enterprise assigned to any person
o expectation of profits and by the
o profits arising primarily from the efforts of WARRANTHOLDER
others separate from, and
» If satisfied, the security is subject to SEC independent of, the
regulation corresponding
 BENEFICIARY there is no tangible
SECURITIES return on investments
NON-DETACHABLE A warrant that may not but an appreciation of
WARRANT be sold, transferred or capital as well as the
assigned to any persons enjoyment of particular
by the privileges and services
WARRANTHOLDER (EXEMPT SECURITY)
separate from, and PREPAID MEDICAL This falls within the
independent of, the AND PREVENTIVE meaning of the term
BENEFICIARY HEALTHCARE “securities” although
SECURITIES SERVICES such sale is done
BENEFICIARY The shares of stock and without any securities
SECURITIES other securities of the attached to it
ISSUER which form the designed to
basis of the entitlement embrace
of a Warrant speculative
UNDERLYING SHARES The unissued shares of schemes and
a corporation which includes
may be purchased by contracts for
the WARRANTHOLDER delivery of
upon the exercise of the future
right granted under the services of
Warrant every kind,
character,
PROPRIETARY SHARE NON-PROPRIETARY and
OR CERTIFICATE SHARE OR description
CERTIFICATE TIME SHARE Essentially contracts
Evidence of interest, Evidence of interest, CONTRACTS involving money outlay
participation or privilege participation or privilege on the assumption and
in a corporation which over a specific property anticipation of “future
gives the holder of the of a corporation that enjoyment privilege”,
share or certificate the allows the holder of the thus, qualify them as
right to use the facilities share or certificate to “securities”
covered by such use such property under
certificate and to certain terms and must be
receive dividends or conditions registered
earnings from the with the SEC
corporation holder shall not be VACATION Essentially contracts
entitled to OWNERSHIP involving money outlay
the holder dividends from the on the assumption and
shall have corporation or to its anticipation of “future
proportionate assets upon its enjoyment privilege”,
ownership liquidation thus, qualify them as
rights over its “securities”
asset upon
liquidation must be
registered
FLEXIBLE PRINCIPLE with the SEC
The term “Securities” embodies a flexible principle, » it must be shown
one that is capable of adaptation to meet the that the offering of
countless and variable schemed devised by those the vacation
who seek to use the money of others on the ownership contract
promise of profits is of limited
SALE OF LEASEHOLD The term “securities” character and the
RIGHTS includes contracts and amount involved is
investments even where small such that
 registration is not • upon the call of the 3 Commissioners
necessary in the
public interest and NOTICE must be given to the Commissioners and
for the protection of their presence constitute QUORUM
the offerees
UNIT INVESTMENT An exempt security SECTION 5. POWERS AND FUNCTIONS OF THE
TRUST FUND (UITF) COMMISSION
registration to the The SRC shall act with transparency and shall have
SEC is not the powers and functions provided by this Code,
necessary Presidential Decree No. 902-A, the Corporation
Code, the Investment Houses Law, the Financing
SECTION 4. ADMINISTRATIVE AGENCY Company Act and other existing laws.
SECURITIES AND EXCHANGE COMMISSION The Commission shall:
Administered by the SEC as a collegial body Have jurisdiction and supervision over all
composed of: corporations, partnerships or associations who are
A CHAIRPERSON the grantees of primary franchises and/or a license
FOUR (4) COMMISSIONERS or permit issued by the Government
Appointed by the President for a TERM OF SEVEN Formulate policies and recommendations on
(7) YEARS each. issues concerning the securities market, advise
QUALIFICATIONS Congress and other government agencies on all
Commissioners must be: aspects of the securities market and propose
natural-born citizens legislation and amendments thereto
CHAIRPERSON: at least forty (40) years Approve, reject, suspend, revoke or require
of age amendments to registration statements, and
COMMISSIONER: at least thirty-five (35) registration and licensing applications
years of age Regulate, investigate or supervise the activities of
of good moral character persons to ensure Compliance
of unquestionable integrity Supervise, monitor, suspend or take over the
of known probity and patriotism activities of exchanges, clearing agencies and
with recognized competence in social other SROs
and economic disciplines Impose sanctions for the violation of laws and the
Majority of Commissioners including the rules, regulations and orders issued pursuant
Chairperson shall be members of the thereto
Philippine Bar Prepare, approve, amend or repeal rules,
CHAIRPERSON regulations and orders, and issue opinions and
He is the Chief Executive Officer of the provide guidance on and supervise compliance
Commission. with such rules, regulations and orders
Enlist the aid and support of and/or deputize any
He shall execute and administer the policies, and all enforcement agencies of the Government,
decisions, orders and resolutions approved by the civil or military as well as any private institution,
Commission and shall have the general executive corporation, firm, association or person in the
direction and supervision of the work and operation implementation of its powers and functions under
of the Commission and of its members, bodies, this Code
boards, offices, personnel and all its administrative Issue cease and desist orders to prevent fraud or
business injury to the investing public
SALARY Punish for contempt of the Commission, both
The salary of the Chairperson and Commissioners direct and indirect, in accordance with the
shall be fixed by the President based on an pertinent provisions of and penalties prescribed by
objective classification system, at a sum the Rules of Court
comparable to the members of Monetary Board Compel the officers of any registered corporation
and commensurate to the importance and or association to call meetings of stockholders or
responsibilities attached to the position members thereof under its supervision
MEETINGS Issue subpoena duces tecum and summon
The SRC shall hold meetings AT LEAST ONCE A witnesses to appear in any proceedings of the
WEEK or AS OFTEN AS NECESSARY Commission and in appropriate cases, order the
• upon the call of the Chairperson examination, search and seizure of all documents,
papers, files and records, tax returns, and books of The costs and expenses incurred in defending the
accounts of any entity or person under aforementioned action, suit or proceeding may be
investigation as may be necessary for the proper paid by the Commission in advance of the final
disposition of the cases before it, subject to the disposition of such action, suit or proceeding upon
provisions of existing laws receipt of an undertaking by or on behalf of the
Suspend, or revoke, after proper notice and hearing Commissioner, officer or employee to repay the
the franchise or certificate of registration of amount advanced should it ultimately be
corporations, partnerships or associations, upon determined by the Commission that he/she is not
any of the grounds provided by law entitled to be indemnified as provided in this
Exercise such other powers as may be provided by subsection.
law as well as those which may be implied from, or The Commissioners, officers and employees of the
which are necessary or incidental to the carrying Commission who willfully violate this Code or who
out of, the express powers granted the Commission are guilty of negligence, abuse or acts of
to achieve the objectives and purposes of these malfeasance or fail to exercise extraordinary
laws diligence in the performance of their duties shall be
JURISDICTION held liable for any loss or injury suffered by the
The Commission's jurisdiction over all cases Commission or other institutions as a result of such
enumerated under Section 5 of Presidential violation, negligence, abuse, malfeasance, or
failure to exercise extraordinary diligence.
Decree No. 902-A is hereby transferred to the Similar responsibility shall apply to the
Courts of general jurisdiction or the appropriate Commissioners, officers and employees of the
Regional Trial Court: Provided, That the Supreme Commission for (1) the disclosure of any
Court in the exercise of its authority may information, discussion or resolution of the
designate the Regional Trial Court branches that Commission of a confidential nature, or about the
shall exercise jurisdiction over these cases. confidential operations of the Commission, unless
the disclosure is in connection with the
The Commission shall retain jurisdiction:
performance of official functions with the
over pending cases involving intra-
Commission or with prior authorization of the
corporate disputes submitted for final
Commissioners; or (2) the use of such information
resolution which should be resolved
for personal gain or to the detriment of the
within 1 year from the enactment of
government, the Commission or third parties:
the SRC
Provided, however , That any data or information
over pending suspension required to be submitted to the President and/or
payments/rehabilitation cases filed as Congress or its appropriate committee, or to be
of June 30, 2000 until finally disposed published under the provisions of this Code shall
not be considered confidential.
SECTION 6. INDEMNIFICATION AND
RESPONSIBILITIES OF COMMISSIONERS SECTION 7. REORGANIZATION
the Commission is hereby authorized to provide for
The Commission shall indemnify each its reorganization, to streamline its structure
Commissioner and other officials of the and operations, upgrade its human resource
Commission, including personnel performing component and enable it to more efficiently and
supervision and examination functions for all costs effectively perform its functions and exercise its
and expenses reasonably incurred by such persons powers under this Code.
in connection with any civil or criminal actions, All positions of the Commission shall be governed
suits or proceedings to which they may be or made by a compensation and position classification
a party by reason of the performance of their systems and qualification standards approved
functions or duties, unless they are finally adjudged by the Commission based on a comprehensive job
in such actions or proceedings to be liable for gross analysis and audit of actual duties and
negligence or misconduct. responsibilities. The compensation plan hall be
In the event of settlement or compromise, comparable with the prevailing compensation plan
indemnification shall be provided only in in the Bangko Sentral ng Pilipinas and other
connection with such matters covered by the government financial institutions and shall be
settlement as to which the Commission is advised subject to periodic review by the Commission no
by external counsel that the persons to be more than once every two (2) years without
indemnified did not commit any gross negligence or prejudice to yearly merit reviews or increases
misconduct.
based on productivity and efficiency. The SECTION 9. EXEMPT SECURITIES
Commission shall, therefore, be exempt from laws, The requirement of registration under Subsection
rules, and regulations on compensation, position 8.1 shall not as a general rule apply to any of the
classification and qualification standards. The following classes of securities:
Commission shall, however, endeavor to make its Any security issued or guaranteed by the
system conform as closely as possible with the Government of the Philippines, or by any political
principles under the Compensation and Position subdivision or agency thereof, or by any person
Classification Act of 1989 (Republic Act No. 6758, controlled or supervised by, and acting as an
as amended). instrumentality of said Government.
Any security issued or guaranteed by the
SECTION 8. REQUIREMENT OF REGISTRATION OF government of any country with
SECURITIES which the Philippines maintains diplomatic
GENERAL RULE relations, or by any state, province orpolitical
Securities shall not be sold or offered for sale or subdivision thereof on the basis of reciprocity:
distribution within the Philippines, without Provided, That the Commission may require
registration statement duly filed with and compliance with the form and content of
approved by the Commission. disclosures the Commission may prescribe.
Prior to such sale, information on the securities, in Certificates issued by a receiver or by a trustee in
such form and with such substance as the bankruptcy duly approved by the proper
Commission may prescribe, shall be made adjudicatory body.
available to each prospective purchaser. Any security or its derivatives the sale or transfer of
• The Commission may conditionally which, by law, is under the supervision and
approve the registration statement under regulation of the Office of the Insurance
such terms as it may deem necessary Commission, Housing and Land Use Regulatory
• The Commission may specify the terms and Board, or the Bureau of Internal Revenue.
conditions under which any written Any security issued by a bank except its own
communication, including any summary shares of stock.
prospectus, shall be deemed not to The Commission may, by rule or regulation after
constitute an offer for sale under this public hearing, add to the foregoing any class of
Section. securities if it finds that the enforcement of this
• A record of the registration of securities Code with respect to such securities is not
shall be kept in a Register of Securities in necessary in the public interest and for the
which shall be recorded orders entered by protection of investors
the Commission with respect to such
securities. Such register and all documents
or information with respect to the securities
registered therein shall be open to public
inspection at reasonable hours on business
days.
• The Commission may audit the financial
statements, assets and other information
of a firm applying for registration of its
securities whenever it deems the same
necessary to insure full disclosure or to
protect the interest of the investors and the
public in general.
 SECTION 10. EXEMPT TRANSACTIONS price at which the securities issued and
The requirement of registration under Subsection 8.1 delivered in such exchange are sold.
shall not apply to the sale of any security in any of the Broker's transactions, executed upon customer's
following transactions: orders, on any registered Exchange or other trading
At any judicial sale, or sale by an executor, market.
administrator, guardian or receiver or trustee in Subscriptions for shares of the capital stock of
insolvency or bankruptcy. a corporation prior to the incorporation thereof
By or for the account of a pledge holder, or or in pursuance of an increase in its authorized
mortgagee or any other similar lien holder selling capital stock under the Corporation Code, when no
or offering for sale or delivery in the ordinary course expense is incurred, or no commission,
of business and not for the purpose of avoiding the compensation or remuneration is paid or given in
provisions of this Code, to liquidate a bona fide connection with the sale or disposition of such
debt, a security pledged in good faith as security for securities, and only when the purpose for soliciting,
such debt. giving or taking of such subscriptions is to comply
An isolated transaction in which any security is with the requirements of such law as to the
sold, offered for sale, subscription or delivery by percentage of the capital stock of a corporation
the owner thereof, or by his representative for the which should be subscribed before it can be
owner's account, such sale or offer for sale, registered and duly incorporated, or its authorized
subscription or delivery not being made in the capital increased.
course of repeated and successive transactions of The exchange of securities by the issuer with its
a like character by such owner, or on his account existing security holders exclusively, where no
by such representative and such owner or commission or other remuneration is paid or given
representative not being the underwriter of such directly or indirectly for soliciting such exchange.
security. The sale of securities by an issuer to fewer than
The distribution by a corporation, actively twenty (20) persons in the Philippines during any
engaged in the business authorized by its articles of twelve-month period.
incorporation, of securities to its stockholders or The sale of securities to any number of the following
other security Holders as a stock dividend or qualified buyers:
other distribution out of surplus. • Bank
The sale of capital stock of a corporation to its • registered investment house
own stockholders exclusively, where no • insurance company
commission or other remuneration is paid or given • pension fund or retirement plan maintained by
directly or the Government of the Philippines or any
indirectly in connection with the sale of such political subdivision thereof or managed by a
capital stock. bank or other persons authorized by the BSP to
The issuance of bonds or notes secured by engage in trust functions
mortgage upon real estate or tangible personal • investment company
property, where the entire mortgage together with • such other person as the Commission may by
all the bonds or notes secured thereby are sold to a rule determine as qualified buyers, on the basis
single purchaser at a single sale. of such factors as financial sophistication, net
The issue and delivery of any security in exchange worth, knowledge, experience in financial
for any other security of the same issuer pursuant and business matters, or amount of assets
to a right of conversion entitling the holder of under management
the security surrendered in exchange to make The Commission may exempt other transactions, if it
such conversion: Provided, That the security so finds that the requirements of registration under this
surrendered: Code is not necessary in the public interest or for
• has been registered under this Code or was, the protection of the investors such as by reason of
when sold, exempt from the provisions of the small amount involved or the limited character of
this Code, and the public offering.
• that the security issued and delivered in Any person applying for an exemption under this
Section, shall file with the Commission a notice
exchange, if sold at the conversion price,
identifying the exemption relied upon on such form
would at the time of such conversion fall
and at such time as the Commission by rule may
within the class of securities entitled to prescribe and with such notice shall pay to the
registration under this Code. Commission a fee equivalent to one-tenth (1/10) of
Upon such conversion the par value of the security one percent (1%) of the maximum aggregate price
surrendered in such exchange shall be deemed the or issued value of the securities.
 depending on the necessity thereof or their
SECTION 11. COMMODITY FUTURES CONTRACTS applicability to the class of securities sought to be
registered.
COMMODITY FUTURES CONTRACTS The information required for the registration of any
A contract providing for the making or taking kind, and all securities, shall include, among
delivery at a prescribed time in the future of a others, the effect of the securities issue on
specific quality of a commodity or the cash value ownership, on the mix of ownership, especially
thereof, which is customarily offset prior to the foreign and local ownership.
delivery date, and includes standardized contracts The registration statement shall be:
having the indicia of commodities futures, • SIGNED BY THE ISSUER'S EXECUTIVE
commodity options, and commodity leverage, or OFFICER, its principal operating officer,
margin contracts its principal financial officer, its
COMMODITY comptroller, its principal accounting
Any goods, articles, services, rights and interests, officer, its corporate secretary or persons
including any group of any of the foregoing, in which performing similar functions
commodity interest contracts are presently or in • accompanied by a DULY VERIFIED
future dealt in. RESOLUTION OF THE BOARD OF
FORWARD DIRECTORS of the issuer corporation
A contract between a buyer and a seller whereby • the WRITTEN CONSENT OF THE EXPERT
the buyer is obligated to take delivery and the seller named as having certified any part of the
is obligated to deliver a fixed amount of an registration statement or any document
underlying commodity at a pre-determined price used in connection therewith shall also be
and date filed
No person shall offer, sell or enter into • where the registration statement includes
commodity futures contracts except in shares to be sold by selling
accordance with rules, regulations and orders the shareholders, a WRITTEN
Commission may prescribe in the public interest. CERTIFICATION BY SUCH SELLING
The SEC shall promulgate rules and SHAREHOLDERS as to the accuracy of any
regulations involving CFC to protect part of the registration statement
investors to ensure the development of a contributed to by such selling shareholders
fair and transparent commodities shall also be filed
market (a) Upon filing of the registration statement, the
issuer shall pay to the Commission a fee of NOT
SECTION 12. PROCEDURE FOR REGISTRATION OF MORE THAN ONE-TENTH (1/10) OF ONE PER
SECURITIES CENTUM (1%) OF THE MAXIMUM AGGREGATE
PRICE at which such securities are proposed to be
REGISTRATION OF SECURITIES offered. The Commission shall prescribe by rule
All securities required to be registered under diminishing fees in inverse proportion the value
Subsection 8.1 shall be registered through the of the aggregate price of the offering.
filing by the issuer in the main office of the (b) Notice of the filing of the registration
Commission, of a sworn registration statement statement shall be immediately published by
with respect to such securities, in such form and the issuer, at its own expense, in two (2)
containing such information and documents as the newspapers of general circulation in the
Commission shall prescribe. The registration Philippines, ONCE A WEEK FOR TWO (2)
statement shall include any prospectus required CONSECUTIVE WEEKS, or in such other manner
or permitted to be delivered under Subsections 8.2, as the Commission by rule shall prescribe, reciting
8.3 and 8.4. that a registration statement for the sale of such
In promulgating rules governing the content of any security has been filed, and that the aforesaid
registration statement (including any prospectus registration statement, as well as the papers
made a part thereof or annexed thereto), the attached thereto are open to inspection at the
Commission may require the registration Commission during business hours, and copies
statement to contain such information or thereof, photostatic or otherwise, shall be
documents as it may, by rule, prescribe. It may furnished to interested parties at such
dispense with any such requirement, or may reasonable charge as the Commission may
require additional information or documents, prescribe.
including written information from an expert,
WITHIN FORTY-FIVE (45) DAYS after the date of in any prospectus concerning the issuer or
filing of the registration statement, or by such later its securities
date to which the issuer has consented, the • has FAILED TO COMPLY WITH ANY
Commission shall declare the registration REQUIREMENT that the SEC may impose
statement EFFECTIVE OR REJECTED, unless the as a condition for registration of the security
applicant is allowed to amend the registration for which the registration statement has
statement as provided in Section 14 hereof. been filed
(b) The registration statement is on its face
The Commission shall ENTER AN ORDER INCOMPLETE or INACCURATE in any material
DECLARING THE REGISTRATION STATEMENT TO respect or include ANY UNTRUE STATEMENT of a
BE EFFECTIVE if it finds that the registration material fact or OMITS TO STATE a material fact
statement together with all the other papers and required to be stated therein or necessary to make
documents attached thereto, is on its face the statements therein not misleading
complete and that the requirements have been (c) The Issuer, any officer, director or controlling
complied with. The Commission may impose person of the issuer, or person performing similar
such terms and conditions as may be necessary functions, or any underwriter has been
or appropriate for the protection of the investors. CONVICTED, by a competent judicial or
Upon effectivity of the registration statement, the administrative body, upon plea of guilty or
issuer shall STATE UNDER OATH IN EVERY otherwise, of an offense involving moral
PROSPECTUS that all registration requirements turpitude and/or fraud or is enjoined or
have been met and that all information are true restrained by the SEC or other competent judicial
and correct as represented by the issuer or the one or administrative body for violations of securities,
making the statement. commodities, and other relation laws
“COMPETENT JUDICIAL OR ADMINISTRATIVE
FRAUD BODY”
Any untrue statement of fact or omission to state a Shall include foreign court of competent
material fact required to be stated therein or jurisdiction
necessary to make the statement therein not The SEC may:
misleading shall constitute fraud compel the production of all the books
and papers of such issuer
SECTION 13. REJECTION AND REVOCATION OF administer oaths to
REGISTRATION OF SECURITIES examine the officers of such issuer or any
other person connected therewith as to its
The SEC may: business and affairs
REJECT a registration statement and If any Issuer shall refuse to permit an
REFUSE registration of the security examination to be made by the SEC, its refusal
thereunder shall be GROUND FOR REFUSAL OR
REVOKE the effectivity of a registration REVOCATION of the registration of its securities
statement and the registration of the If the SEC deems it necessary, it may issue an
security thereunder ORDER SUSPENDING THE OFFER AND SALE of
after DUE NOTICE AND HEARING by issuing an the securities pending ANY investigation.
order to such effect, setting forth its findings in
respect thereto, if it finds that: The order shall state the grounds for taking such
(a) The Issuer: action, but such order of suspension although
• has been judicially declared INSOLVENT binding upon the persons notified thereof, shall be
• has violated any of the provisions of this deemed CONFIDENTIAL, and shall not be
Code, the rules promulgated pursuant published.
thereto, or any order of the SEC of which the
issuer has notice in connection with the Upon the issuance of the suspension order, no
offering for which the registration further offer or sale of such security shall be made
statement has been filed until the same is lifted or set aside by the SEC.
• has been or is engaged or about to engage Otherwise, such sale shall be void.
in FRAUDULENT TRANSACTIONS
• has made any FALSE or MISLEADING Notice of issuance of such order shall be given to
REPRESENTATION OF MATERIAL FACTS the Issuer and every dealer and broker who shall
have notified the SEC of an intention to sell such The Order of Revocation shall be published
security once in a national newspaper of general
» A registration statement may be withdrawn circulation at the expense of the company,
by the issuer only with the consent of the and/or uploaded at the SEC’s website
SEC
The SEC shall publish a NOTICE OF THE ORDER of » The Order of Revocation shall exempt the
revocation in a national newspaper of general issuer from its reporting obligations under
circulation and/or post at the SEC website, along Section 17.2 of the SRC unless it still
with a statement that the offering in its current form qualifies as a PUBLIC COMPANY
has been CANCELLED.
SECTION 14. AMENDMENTS TO REGISTRATION
Upon receipt of notice, the Issuer and all persons STATEMENT
acting on its behalf shall IMMEDIATELY
TERMINATE the offering and return any and all If a registration statement is on its face
payments received from purchasers WITHIN TEN INCOMPLETE or INACCURATE in any material
(10) BUSINESS DAYS after the notice was first respect, the SEC shall issue an order directing the
published. AMENDMENT of the registration statement.
VOLUNTARY REVOCATION
An application for voluntary revocation shall Upon compliance with such order, the amended
include: registration statement shall become effective in
• Verified Petition for Revocation of accordance with the procedure mentioned in
Registration Subsection 12.6. (Within 45 days)
• Board Resolution approving the An amendment filed PRIOR to the effective date of
revocation, certified under oath by the the registration statement shall RECOMMENCE
Corp Sec, and attested to by the President THE 45 DAYS PERIOD within which the SEC shall
or anyone performing a similar function act on a registration statement.
• List of Stockholders indicating their
respective shareholdings as of the latest An amendment filed AFTER the effective date of the
date registration statement shall become effective only
• All relevant books and papers of the UPON SUCH DATE as determined by the SEC
Issuer, as may be determined by the SEC If any CHANGE occurs in the facts set forth in a
registration statement, the issuer shall file an
• Proposed Notice of Filing of Petition for
amendment thereto setting forth the change.
Voluntary Revocation of Registration of
If, at any time, the SEC finds that a registration
Securities, reciting the facts supporting
statement contains ANY FALSE STATEMENT or
said petition which shall be subject to the
OMITS TO STATE ANY FACT REQUIRED to be
approval of the SEC
stated therein or necessary to make the statements
• Copy of Official Receipt representing
therein not misleading, the SEC may conduct an
payment of the prescribed filing fees
examination, and, after due notice and hearing,
ISSUE AN ORDER SUSPENDING THE
»The SEC may impose such other EFFECTIVITY of the registration statement.
requirements or conditions it may deem
necessary
If the statement is duly amended, the
PROCEDURE OF VOLUNTARY REVOCATION
suspension order may be lifted
Presentation of documents required
In making such examination, the SEC or any
Notice of Filing of Petition for Voluntary officer/s designated by it may administer oaths
Revocation shall be immediately published and affirmations and shall have access to, and
by the issuer at its own expense, once in a may demand the production of, any books,
general newspaper of general circulation records or documents relevant to the examination.
The SEC shall prepare an order revoking the
registration, if after fifteen (15) business Failure of the issuer, underwriter or any other
days from publication, it finds that the person to cooperate, or his obstruction or refusal to
petition together with all other papers and undergo an examination, shall be a ground for the
documents attached to it, is on its face issuance of a suspension order.
complete and that no party stands to
suffer any damage from the revocation
 MATERIAL INFORMATION amount in relation to the previous range
It shall include, but not be limited to, the following: and the total amount based on the new
• any event or transaction which increases or volume or price.
creates a risk on the investment or on the If the SEC learns that the prospectus is on its face
securities covered by the registration INCOMPLETE OR INACCURATE in any material
• Increase or decrease in the volume of respect, or there is a material omission in it, it may
securities being offered at an issue price require the issuer to comply with above (SRC Rule
higher or lower than the range set and 14.2) or suspend or revoke its registration under
disclosed in the registration statement and Sec 13 or 15 of the SRC
which results to a derogation of the rights of
existing security holders, as may be If non-material information stated in the
determined by the SEC prospectus changes, the issuer shall file a report on
• Major change in the primary busines of the SEC Form 17-C on the said changes prior to making
issuer any amendments in the registration statement.
• Reorganization of the company
• Loss, deterioration or substitution of the » The proposed amendments shall be
property underlying the securities considered part of the original disclosure
unless the SEC, within 20 business days
• Ten Percent (10%) or more change in the
from receipt of such report, requires the
financial condition or results of operation of
issuer to explain such changes
the issuer unless a report to that effect has
been filed with the SEC and furnished the Every amendment of a registration
prospective purchaser statement shall be signed by the persons
specified in Sec 12.4 of the SRC or by any
• Classification, de-classification or re-
executive officer duly authorized by the
classification of securities which results to
BOD
the derogation of the rights of existing
security holders, as may be determined by The final registration statement and
the Commission prospectus shall be signed by all the
If a registration or prospectus on file with the SEC required signatories under Sec 12.4 of the
becomes INCOMPLETE OR INACCURATE in any SRC
material respect or if the issuer wants to change The issuer shall file with the SEC
any material information therein after a current • 1 complete, unmarked copy of every
report or the SEC Form 17-C has been filed, the amendment, including exhibits and other
issuer shall: papers and documents filed as part of the
• file an amendment to the registration amendment
statement with the SEC explaining in detail • 1 additional copy, marked to indicate
all proposed changes clearly and precisely, by underlining or in
• If declared effective, publish a notice of the some appropriate manner, the changes
proposed amendment in 2 national effected in the registration statement by the
newspapers of general circulation amendment
• If changes shall result to derogation of the • 4 copies of the amended registration
rights of existing security holders, the issuer statement and prospectus shall be signed
may include in the publication an offer to by the required signatories and filed with
rescind all transactions that have been the SEC
completed for sale to date, without making
any deduction and wait for 30 days for the » The date on which the amendments are
purchasers to respond before initiating the received by the SEC shall be considered
amended offering their date of filing if all the requirements
• The purchasers may, within 30 days from have been complied with
the date of such notification, renounce their
purchase of said securities SECTION 15. SUSPENSION OF REGISTRATION
• In case of increase in the volume or offering
price of the securities, the amended If, at any time, the information contained in the
registration statement filed is or has become:
registration statement or prospectus shall
be accompanied by a filing fee based on the • misleading
difference between the highest aggregate • incorrect
 • inadequate SECTION 16. PRE-NEED PLANS
• incomplete
in any material respect or the sale or offering for PRE-NEED PLANS
sale of the security registered thereunder may work Refers to contracts, agreements, deeds or plans for
or tend to work a fraud, the SEC may require from the benefit of the planholders which provide for the
the issuer such further information as may in its performance of future service/s, payment of
judgment be necessary to enable the Commission monetary considerations or delivery of other
to ascertain whether the registration of such benefits at the time of actual need or agreed
security should be revoked on any ground specified maturity date, as specified therein, in exchange for
in this Code. cash or installment amounts with or without
The SEC may also suspen the right to sell and offer interest or insurance coverage and includes life,
for sale of such security pending further pension, education, interment and other plans,
investigation: instruments, contracts or deeds as may in the
• by entering an order specifying grounds for future be determined by the Commission.
such action No person shall sell or offer for sale to the public
• by notifying the issuer, underwriter, dealer any pre-need plan except in accordance with rules
or broker known as participating in such and regulations which the Commission shall
offering. prescribe.
The refusal to furnish information required by the
Sec may be a GROUND FOR THE ISSUANCE OF Such rules shall regulate the sale of pre-need plans
AN ORDER OF SUSPENSION pursuant to by, among other things, requiring the registration of
Subsection 15.1 (above) pre-need plans, licensing persons involved in the
sale of pre-need plans, requiring disclosures to
Upon the issuance of any such order and prospective plan holders, prescribing advertising
notification to the issuer, underwriter, dealer or guidelines, providing for uniform accounting
broker known as participating in such offering, no system, reports and record keeping with respect to
further offer or sale of any such security shall be such plans, imposing capital, bonding and other
made until the same is lifted or set aside by the financial responsibility, and establishing trust
Commission, otherwise, such sale shall be void. funds for the payment of benefits under such plans
Upon issuance of an order of suspension, the A pre-need company must secure a license from
Commission shall conduct a hearing. If the the Insurance Commission to operate or engage in
Commission determines that the sale of any the business of pre-need company
security should be revoked, it shall issue an order • license shall expire 1 year from the time of
prohibiting sale of such security. its registration
renewable
Until the issuance of a final order, the suspension planholder may terminate at any time by
of the right to sell, though binding upon the persons giving written notice to the issuer
notified thereof, shall be deemed confidential, and
shall not be published, unless it shall appear that SECTION 17. PERIODIC AND OTHER REPORTS OF
the order of suspension has been violated after ISSUERS
notice. If, however, the Commission finds that the
sale of the security will neither be fraudulent nor Every issuer satisfying the requirements in Section
result in fraud, it shall forthwith issue an order 17.2 hereof shall file with the SEC:
revoking the order of suspension, and such security (a) Within one hundred thirty-five (135) days,
shall be restored to its status as a registered after the end of the issuer's fiscal year, or such
security as of the date of such order of suspension. other time as the Commission may prescribe, an
annual report which shall include, among others, a
balance sheet, profit and loss statement and
statement of cash flows, for such last fiscal
year, certified by an independent certified public
accountant, and a management discussion and
analysis of results of operations
(b) Such other periodical reports for interim fiscal
periods and current reports on significant
developments of the issuer as the Commission
may prescribe as necessary to keep current SECTION 18. REPORTS BY FIVE PER CENTUM
information on the operation of the business and HOLDERS OF EQUITY SECURITIES
financial condition of the issuer.
The reportorial requirements of Subsection 17.1 In every case in which the issuer satisfies the
shall apply to the following: requirements of Subsection 17.2 hereof, any
(a) An issuer which has sold a class of its person who acquires directly or indirectly the
securities pursuant to a registration under beneficial ownership of MORE THAN FIVE
Section 12 hereof: Provided, however , That the PERCENTUM (5%) of such class or in excess of
obligation of such issuer to file reports shall be such lesser per centum as the SEC by rule may
suspended for any fiscal year after the year such prescribe, shall, WITHIN TEN (10) DAYS after such
registration became effective if such issuer, as of acquisition or such reasonable time as fixed by the
the first day of any such fiscal year, has less than Commission, submit to the issuer of the security,
one hundred (100) holders of such class of to the Exchange where the security is traded, and
securities or such other number as the to the Commission a sworn statement containing
Commission shall prescribe and it notifies the the following information and such other
Commission of such information as the Commission may require in the
(b) An issuer with a class of securities listed for public interest or for the protection of investors:
trading on an Exchange (a) the personal background, identity, residence,
(c) An issuer with assets of at least Fifty million and citizenship of, and the nature of such
pesos (P50,000,000.00) or such other amount as beneficial ownership by, such person and all
the Commission shall prescribe, and having two other persons by whom or on whose behalf the
hundred (200) or more holders each holding at purchases are effected; in the event the beneficial
least one hundred (100) shares of a class of its owner is a juridical person, the lines of business
equity securities: Provided, however, That the of the beneficial owner shall also be reported
obligation of such issuer to file reports shall be (b) If the purpose of the purchases or prospective
TERMINATED ninety (90) days after notification to purchases is to acquire control of the business
the Commission by the issuer that the number of its of the issuer of the securities, any plans or
holders holding at least one hundred (100) shares proposals which such persons may have that will
is reduced to less than one hundred (100). effect a major change in its business or corporate
Every issuer of a security listed for trading on an structure
Exchange shall file with the Exchange a copy of any (c) The number of shares of such security which
report filed with the Commission under Subsection are beneficially owned, and the number of shares
17.1 hereof concerning which there is a right to acquire,
directly or indirectly, by:
All reports (including financial statements) (i) such person, and
required to be filed with the Commission pursuant (ii) each associate of such person, giving
to Subsection 17.1 hereof shall be in such form, the background, identity, residence, and
contain such information and be filed at such times citizenship of each such associate
as the Commission shall prescribe, and shall be in (d) Information as to any contracts,
lieu of any periodical or current reports or arrangements, or understanding with any person
financial statements otherwise required to be with respect to any securities of the issuer
filed under the Corporation Code. including but not limited to transfer, joint ventures,
loan or option arrangements, puts or calls,
Every issuer which has a class of equity securities guarantees or division of losses or profits, or
satisfying any of the requirements in Subsection proxies naming the persons with whom such
17.2 shall furnish to each holder of such equity contracts, arrangements, or understanding have
security an annual report in such form and been entered into, and giving the details thereof.
containing such information as the Commission If any change occurs in the facts set forth in the
shall prescribe. statements, an amendment shall be transmitted to
the issuer, the Exchange and the Commission
Within such period as the Commission may The Commission, may permit any person to file in
prescribe preceding the annual meeting of the lieu of the statement required by Subsection 17.1
holders of any equity security of a class entitled to hereof:
vote at such meeting, the issuer shall transmit to • a notice stating the name of such person,
such holders an annual report in conformity with the shares of any equity securities subject
Subsection 17.5. to Subsection 17.1 which are owned by him
 • the date of their acquisition and such (c) Such person has promptly notified any other
other information as the Commission may person on whose behalf it holds, on a
specify, if it appears to the Commission discretionary basis, securities exceeding five
that such securities were acquired by such percent (5%) of the class of any acquisition or
person in the ordinary course of his transaction on behalf of such other person which
business and were not acquired for the might be reportable by that person under Section
purpose of and do not have the effect of 18.1 (a) of the Code
changing or influencing the control of the
issuer nor in connection with any BENEFICIAL OWNER
transaction having such purpose or effect. It shall have the same definition, provided that:
(a) A person who, in the ordinary course of
If the equity securities under the name of the legal business, is a pledgee of securities under a
owner are beneficially owned by another person/s, written agreement shall NOT be deemed to be the
the legal owner and beneficial owner shall beneficial owner of such pledged securities until
individually or jointly, WITHIN FIVE (5) • the pledgee has taken all the steps
BUSINESS DAYS after such acquisition, submit to required to declare a default
the issuer, the Exchange where the security is • has determined that the power to vote or
traded, and to the Commission a sworn statement to dispose or to direct the disposition of
containing the information required by SEC Form such pledged securities will be exercised
18-A (b) A person engaged in the business of an
A person required to file a report on SEC Form 18-A investment house who acquires his securities
may, in lieu of such report, file with the through his participation in good faith in a firm
Commission WITHIN FORTY FIVE (45) DAYS after commitment underwriting shall NOT be deemed to
the end of the year in which such person became be the beneficial owner of such securities until the
obligated, copies of a short form report on SEC expiration of six (6) months from the date of
Form 18-AS including all exhibits, and send one such acquisition
copy of such report to the Issuer at its principal (c) When two (2) or more persons agree to act
office and to each Exchange where the security is together for the purpose of acquiring, holding,
listed for trading; provided, that the percentage of voting or disposing of the equity securities of an
the class of equity security beneficially owned as of Issuer, the group formed in the process shall be
the end of the calendar year is more than five deemed to have acquired beneficial ownership for
percent (5%), and that: purposes of Section 18 of the Code, as of the date
(a) Such person has acquired such securities in of such agreement, of all equity securities of that
the ordinary course of business and not for the Issuer that are beneficially owned by such persons
purpose of changing or influencing the control of
the Issuer, nor in connection with or as a SECTION 19. TENDER OFFERS
participant in any transaction having such purpose
or effect MANDATORY TENDER OFFER RULE
(b) Such person is: It is a publicly announced intention by a person acting
• a broker or dealer registered under the alone or in concert with other persons to acquire
Code equity securities of a “public company.” It is an
• a bank authorized to operate as such by offer by the acquiring person to stockholders of a
the BSP public company for them to tender their shares
therein on the terms specified in the offer
• an insurance company subject to the
supervision of the Insurance Commission
PURPOSE: to protect minority shareholders
• an investment house registered under the against any scheme that dilutes the share value of
Investment Houses Law their investments. It gives the minority shareholders
• an investment company registered under the chance to exit the company under reasonable
the Investment Company Act terms, giving them the opportunity to sell their shares
• a pension plan subject to the regulation at the same price as those of the majority
and supervision by the BIR and/or the shareholders
Insurance Commission MANDATORY TENDER OFFERS
• a group where all its members are persons 1. Any person or group of persons acting in concert,
specified above who intends to acquire FIFTEEN PERCENT (15%) OF
EQUITY SECURITIES IN A PUBLIC COMPANY IN
ONE OR MORE TRANSACTIONS WITHIN A PERIOD
OF TWELVE (12) MONTHS, shall file a declaration to OUTSTANDING EQUITY SECURITIES OF A PUBLIC
that effect with the Commission. COMPANY, the acquirer shall be required to make a
2. WHEN REQUIRED TO DISCLOSE THE INTENTION tender offer under this Rule for all the outstanding
AND TO MAKE TENDER OFFER FOR THE equity securities to all remaining stockholders of the
PERCENTAGE SOUGHT TO ALL HOLDERS OF SUCH said company at a price supported by a fairness
SECURITIES opinion provided by an independent financial advisor
Any person or group of persons acting in concert, who or equivalent third party. The acquirer in such a tender
intends to acquire THIRTY FIVE PERCENT (35%) OF offer shall be required to accept all securities
THE OUTSTANDING VOTING SHARES OR SUCH tendered.
OUTSTANDING VOTING SHARES THAT ARE
SUFFICIENT TO GAIN CONTROL OF THE BOARD IN EXEMPTIONS FROM THE MANDATORY TENDER
A PUBLIC COMPANY IN ONE OR MORE OFFER REQUIREMENT
TRANSACTIONS WITHIN A PERIOD OF TWELVE (12) Unless the acquisition of equity securities is intended
MONTHS, shall disclose such intention and to circumvent or defeat the objectives of the tender
contemporaneously make a tender offer for the offer rules, the mandatory tender offer requirement
percentage sought to all holders of such securities shall not apply to the following:
within the said period. Any purchase of securities from the unissued
If the tender offer is OVERSUBSCRIBED, the capital stock; Provided, the acquisition WILL
aggregate amount of securities to be acquired at the NOT RESULT TO A FIFTY PERCENT (50%) OR
close of such tender offer shall be proportionately MORE OWNERSHIP OF SECURITIES by the
distributed across selling shareholders with whom purchaser or such percentage that is
the acquirer may have been in private negotiations sufficient to gain control of the board
and other shareholders. For purposes of SRC Rule Any purchase of securities from an increase
19.2.2, the last sale that meets the threshold shall not in authorized capital stock
be consummated until the closing and completion Purchase in connection with foreclosure
of the tender offer. proceedings involving a duly constituted
3. WHEN NOT REQUIRED TO MAKE TENDER OFFER pledge or security arrangement where the
Any person or group of persons acting in concert, who acquisition is made by the debtor or creditor
intends to ACQUIRE THIRTY FIVE PERCENT (35%) Purchases in connection with a privatization
OF THE OUTSTANDING VOTING SHARES OR SUCH undertaken by the government of the
OUTSTANDING VOTING SHARES THAT ARE Philippines
SUFFICIENT TO GAIN CONTROL OF THE BOARD IN Purchases in connection with corporate
A PUBLIC COMPANY THROUGH THE EXCHANGE rehabilitation under court supervision
TRADING SYSTEM shall NOT be required to make a Purchases in the open market at the
tender offer even if such person or group of persons prevailing market Price
acting in concert acquire the remainder through a Merger or consolidation
block sale if, after acquisition through the Exchange Purchasers of securities in the foregoing transactions
trading system, they fail to acquire their target of shall, however, comply with the disclosure and
thirty five percent (35%) or such outstanding other obligations under SRC Rules 18.1 and 23.
voting shares that is sufficient to gain control of
the board. TENDER OFFER (Take-Over Bids)
4. WHEN REQUIRED TO MAKE TENDER OFFER FOR A publicly announced intention by a person acting
OUTSTANDING VOTING SHARES alone or in concert with other persons to acquire
Any person or group of persons acting in concert, who equity securities of a public company
intends to acquire THIRTY FIVE PERCENT (35%) OF PUBLIC COMPANY
THE OUTSTANDING VOTING SHARES OR SUCH A public company can either be:
OUTSTANDING VOTING SHARES THAT ARE • A corporation listed in an exchange
SUFFICIENT TO GAIN CONTROL OF THE BOARD IN
• A corporation with assets of AT LEAST FIFTY
A PUBLIC COMPANY DIRECTLY FROM ONE OR
MILLIO PESOS (50,000,000) and having two
MORE STOCKHOLDERS SHALL BE REQUIRED TO
hundred (200) or more stockholders
MAKE A TENDER OFFER FOR ALL THE
holding at least one hundred (100) shares
OUTSTANDING VOTING SHARES. The sale of shares
each
pursuant to the private transaction or block sale shall
not be completed prior to the closing and completion TENDER OFFER MATERIALS
of the tender offer. (i) the Offeror's formal offer, including all the material
5. WHEN REQUIRED TO MAKE TENDER OFFER FOR terms and conditions of the tender offer and all their
ALL OUTSTANDING EQUITY SHARES amendments;
If any acquisition that would result in OWNERSHIP (ii) the related transmittal letter (whereby equity
OF OVER FIFTY PERCENT (50%) OF THE TOTAL securities of the target company that are sought in the
tender offer may be transmitted to the Offeror or its as nearly as may be pro rata, disregarding fractions,
depository) and all their amendments; and according to the number of securities deposited by
(iii) press releases, advertisements, letters and other each depositor. The provisions of this subsection
documents published by the Offeror or sent or given shall also apply to securities deposited WITHIN TEN
by the Offeror to security holders which, directly or (10) DAYS after notice of an increase in the
indirectly, solicit, invite or request tenders of the consideration offered to security holders, as
equity securities being sought in the tender offer. described in paragraph (e) of this subsection, is first
published or sent or given to security holders.
Where any person varies the terms of a tender offer or
request or invitation for tenders before the expiration
thereof by increasing the consideration offered to
holders of such securities, such person shall PAY
THE INCREASED CONSIDERATION TO EACH
SECURITY HOLDER WHOSE SECURITIES ARE
PROCEDURE OF MAKING TENDER OFFER TAKEN UP AND PAID FOR whether or not such
1. By filing with the SEC a DECLARATION to make a securities have been taken up by such person before
tender offer the variation of the tender offer or request or
2. By furnishing the issuer or the originator of the invitation.
security a statement containing such information
required under Sec 17 of the SRC: MINI TENDER OFFER
Annual Report (balance sheet; profit and loss It is a type of third-party offer made to a company’s
statement shareholders as AN ATTEMPT TO PURCHASE THE
Periodical reports for interim fiscal periods UNDERLYING SHARES. Unlike in conventional
3. By publishing all requests or invitations for tender tenders, mini-tenders usually involve LESS THAN 5%
or materials, making a tender offer or requesting or OF THE COMPANY’S OUTSTANDING SHARES and
inviting letters of such a security typically represent a discount compared to the
stock’s current market price
Copies of any additional material soliciting or
requesting such tender offers subsequent to the BEACHHEAD ACQUISITION
initial solicitation or request shall contain such Occurs when certain persons who may want to
information as the Commission may prescribe, and acquire shares “quietly” by gradually accumulating
shall be filed with the Commission and sent to the shares in a target company
issuer not later than the time copies of such
materials are first published or sent or given to DEFENSES
security holders. The components of the target corporation may defend
Any SOLICITATION OR RECOMMENDATION to the against the take-over bid by resorting to different
holders of such a security to accept or reject a tender methods of resistance that include:
offer or request or invitation for tenders shall be made 1. LEVERAGED BUYOUT – some of the components
in accordance with such rules and regulations as the of the corporation buy all the outstanding capital
Commission may prescribe. stock held by the public
2. POISON PILL – issuance of shares that can be
redeemed if there is take-over
Securities deposited pursuant to a tender offer or 3. CROWN JEWEL – the target corporation sells its
request or invitation for tenders MAY BE most valuable asset
WITHDRAWN BY OR ON BEHALF OF THE 4. WHITE NIGHT – the target corporation looks for
DEPOSITOR: preferable third party investor/s who will make a more
• AT ANY TIME throughout the period that the favorable offer
tender offer remains open and if the
securities deposited have not been previously MARGIN TRADING
accepted for payment, and The customer purchases stocks by advising only a
• AT ANY TIME AFTER SIXTY (60) DAYS from portion of the purchase price with the broker
the date of the original tender offer or extending credit or making loan for balance due.
request or invitation, PROHIBITED PRACTICES
except as the Commission may otherwise prescribe. The following acts are prohibited in any tender offer:
Where the securities offered EXCEED THAT WHICH » To employ any devise, scheme or artifice TO
A PERSON OR GROUP OF PERSONS IS BOUND OR DEFRAUD ANY PERSON
WILLING TO TAKE UP AND PAY FOR, the securities » To MAKE ANY UNTRUE STATEMENT OF A
that are subject of the tender offer shall be taken up MATERIAL FACT OR TO OMIT TO STATE A
 MATERIAL FACT necessary in order to make persons solicited is not more than nineteen
the statements made, in the light of the (19)
circumstances under which they are made,
not misleading SECTION 21. FEES FOR TENDER OFFERS AND
» To engage in any act, practice or course of CERTAIN PROXY SOLICITATIONS
business which operates or would operate as
A FRAUD OR DECEIT upon any person At the time of filing with the Commission of any
statement required under Section 19 for any tender
SECTION 20. PROXY SOLICITATIONS offer or Section 72.2 for issuer repurchases, or
Section 20 for proxy or consent solicitation, the
Proxies must be issued and proxy solicitation must Commission may require hat the person making such
be made in accordance with rules and regulations to filing pay a fee of NOT MORE THAN ONE-TENTH
be issued by the Commission. (1/10) OF ONE PERCENTUM (1%) of:
Proxies must be: • The proposed aggregate purchase price in
• IN WRITING, the case of a transaction under Sections 20 or
• SIGNED BY THE STOCKHOLDER or his duly 72.2
authorized representative and • The proposed payment in cash, and the
• FILED BEFORE THE SCHEDULED MEETING value of any securities or property to be
with the corporate secretary. transferred in the acquisition, merger or
Unless otherwise provided in the proxy, it shall be consolidation, or the cash and value of any
VALID ONLY FOR THE MEETING FOR WHICH IT IS securities proposed to be received upon
INTENDED. No proxy shall be valid and effective for a the sale or disposition of such assets in the
PERIOD LONGER THAN FIVE (5) YEARS AT ONE case of a solicitation under Section 20. The
TIME. RENEWABLE Commission shall prescribe by rule
No broker or dealer shall give any proxy, consent or diminishing fees in inverse proportion to the
authorization, in respect of any security carried for value of the aggregate price of the offering
the account of a customer, to a person other than the
customer, WITHOUT THE EXPRESS WRITTEN SECTION 22. INTERNAL RECORD KEEPING AND
AUTHORIZATION OF SUCH CUSTOMER. ACCOUNTING CONTROLS
A broker or dealer who holds or acquires the proxy for
AT LEAST TEN PER CENTUM (10%) or such Every issuer which has a class of securities that
percentage as the Commission may prescribe of the satisfies the requirements of subsection 17.2 shall:
outstanding share of the issuer, shall submit a report Make and keep books, records, and
identifying the beneficial owner WITHIN TEN (10) accounts which, in reasonable detail
DAYS AFTER SUCH ACQUISITION, for its own accurately and fairly reflect the transactions
account or customer, to the issuer of the security, to and dispositions of assets of the issuer
the Exchange where the security is traded and to the Devise and maintain a system of internal
Commission. accounting controls sufficient to provide
reasonable assurances that:
PROXY o transactions and access to assets
Refers to the proxy, consent or authorization referred are pursuant to management
in Sec 20 of SRC authorization
SOLICIT/SOLICITATION o financial statements are prepared in
conformity with generally accepted
The term solicit/solicitation shall include:
accounting principles that are
• Any request for a proxy or authorization
adopted by the Accounting Standards
• Any request to execute or not to execute, or to Council and the rules promulgated by
revoke, a proxy or authorization the Commission with regard to the
• The furnishing of a form of proxy or other preparation of financial statements
communication to security holders under o recorded assets are compared with
circumstances reasonably calculated to existing assets at reasonable
result in the procurement, withholding or intervals and differences are
revocation of a proxy reconciled
The term shall NOT apply to:
• The performance by any person of ministerial SECTION 23. TRANSACTIONS OF DIRECTORS,
acts on behalf of a person soliciting a proxy OFFICERS AND PRINCIPAL STOCKHOLDERS
• Any solicitation made otherwise than on
behalf of the issuer where the total number of Every person who is:
 • directly or indirectly the beneficial owner of For the purpose of preventing the unfair use of
MORE THAN TEN PER CENTUM (10%) OF information which may have been obtained by
ANY CLASS OF ANY EQUITY SECURITY such beneficial owner, director, or officer by
which satisfies the requirements of reason of his relationship to the issuer, any profit
Subsection 17.2, or realized by him from any purchase and sale, or any
• a DIRECTOR OR AN OFFICER OF THE sale and purchase, of any equity security of such
ISSUER OF SUCH SECURITY issuer WITHIN ANY PERIOD OF LESS THAN SIX (6)
shall: MONTHS, unless such security was acquired in good
» WITHIN TEN (10) CALENDAR DAYS AFTER faith in connection with a debt previously
THE EFFECTIVE DATE OF THE contracted, shall INURE TO AND BE RECOVERABLE
REGISTRATION STATEMENT for that BY THE ISSUER, irrespective of any intention of
security, or WITHIN TEN (10) CALENDAR holding the security purchased or of not repurchasing
DAYS AFTER HE BECOMES SUCH the security sold FOR A PERIOD EXCEEDING SIX (6)
BENEFICIAL OWNER, DIRECTOR OR MONTHS.
OFFICER, subsequent to the effective date of
the registration statement, whichever is SUIT TO RECOVER SUCH PROFIT may be instituted
earlier, file a statement with the before the Regional Trial Court by the issuer, or by the
Commission, and with the Exchange, if the owner of any security of the issuer in the name and in
security is listed on an Exchange, on Form behalf of the issuer if the issuer shall fail or refuse to
23-A indicating the amount of securities of bring such suit WITHIN SIXTY (60) DAYS AFTER
such issuer of which he is the beneficial REQUEST OR SHALL FAIL DILIGENTLY TO
owner PROSECUTE THE SAME thereafter, but no such suit
» WITHIN TEN (10) CALENDAR DAYS AFTER shall be brought MORE THAN TWO (2) YEARS AFTER
THE CLOSE OF EACH CALENDAR MONTH THE DATE SUCH PROFIT WAS REALIZED. This
thereafter, if there has been any change in subsection shall not be construed to cover any
such ownership during the month, file a transaction where such beneficial owner was not
statement with the Commission and with the such both at the time of the purchase and sale, or the
Exchange, if the security is listed on an sale and purchase, of the security involved, or any
Exchange, on Form 23-B indicating his transaction or transactions which the Commission by
ownership at the close of the calendar rules and regulations may exempt as not
month and such changes in his ownership comprehended within the purpose of this subsection.
as have occurred during that calendar month It shall be UNLAWFUL for any such beneficial owner,
director, or officer, directly or indirectly, to sell any
Notify the Commission if his direct or indirect equity security of such issuer if the person selling the
beneficial ownership of securities FALLS BELOW TEN security or his principal:
PERCENT (10%), or if he CEASES TO BE AN OFFICER • Does not own the security sold; or
OR DIRECTOR OF THE ISSUER. After filing such • If owning the security, does not deliver it
notification, he shall no longer be required to file Form against such sale within twenty (20) days
23-B. thereafter, or does not within five (5) days
However, a newly appointed officer, who has no after such sale deposit it in the mails or
beneficial ownership over the shares of the other usual channels of transportation; but
company, shall notify the Commission of such fact no person shall be deemed to have violated
WITHIN TEN (10) CALENDAR DAYS FROM SUCH this subsection if he proves that
APPOINTMENT. notwithstanding the exercise of good faith he
was unable to make such delivery or deposit
If the security is listed on an Exchange, the report within such time, or that to do so would cause
shall be filed on that Exchange in accordance with the undue inconvenience or expense.
rules of the Exchange, but NOT MORE THAN FIVE (5) The provisions of Subsection 23.2 shall not apply to
CALENDAR DAYS AFTER SUCH PERSON BECAME any purchase and sale, or sale and purchase, and
BENEFICIAL OWNER. the provisions of Subsection 23.3 shall not apply to
any sale, of an equity security not then or
The filing with the Exchange may be deemed thereafter held by him in an investment account,
as filing with the Commission pursuant to a by a dealer in the ordinary course of his business and
Memorandum of Agreement between the incident to the establishment or maintenance by him
Exchange and the Commission; Provided of a primary or secondary market, otherwise than on
that, the Memorandum of Agreement shall an Exchange, for such security. The Commission may,
provide for the ability of the Commission to by such rules and regulations as it deems necessary
download and upload the same information or appropriate in the public interest, define and
made available to the Exchange. prescribe terms and conditions with respect to
securities held in an investment account and » It is the practice of inflating the price of a
transactions made in the ordinary course of business stock through a system of pretended
and incident to the establishment or maintenance of purchases
a primary or secondary market. MANIPULATION OF SECURITY PRICES –
Circulating Information to Affect the Price of a
SECTION 24. MANIPULATION OF SECURITY PRICES; Security
DEVICES AND PRACTICES (c) To circulate or disseminate information that the
price of any security listed in an Exchange will or is
It shall be UNLAWFUL for any person acting for likely to rise or fall because of manipulative market
himself or through a dealer or broker, directly or operations of any one or more persons conducted for
indirectly: the purpose of raising or depressing the price of the
MANIPULATION OF TRADE VOLUME security for the purpose of inducing the purchase or
(a) To create a false or misleading appearance of sale of such security
active trading in any listed security traded in an (d) To make false or misleading statement with
Exchange or any other trading market: respect to any material fact, which he knew or had
• WASH TRADE – By effecting any transaction reasonable ground to believe was so false or
in such security which involves no change misleading, for the purpose of inducing the purchase
in the beneficial ownership thereof or sale of any security listed or traded in an Exchange
» The operation of simultaneously buying MANIPULATION OF SECURITY PRICES –
and selling the exact same stock so no Price Fixing
change of ownership occurs and yet (e) To effect, either alone or others, any series of
creates the illusion that the security has transactions for the purchase and/or sale of any
been traded security traded in an Exchange for the purpose of
pegging, fixing or stabilizing the price of such security,
• ORDER MATCHING OR IMPROPERLY unless otherwise allowed by this Code or by rules of
MATCH ORDERS – By entering an order or the Commission
orders for the purchase or sale of such No person shall use or employ, in connection with the
security with the knowledge that a purchase or sale of any security any manipulative or
simultaneous order or orders of substantially deceptive device or contrivance. Neither shall any
the same size, time and price, for the sale or short sale be effected nor any STOP-LOSS ORDER be
purchase of any such security, has or will be executed in connection with the purchase or sale of
entered by or for the same or different parties any security except in accordance with such rules and
» It involves a transaction where both the regulations as the Commission may prescribe as
buy and the sell orders are entered at the necessary or appropriate in the public interest or for
same time with the same price and the protection of investors.
quantity by different but colluding The foregoing provisions notwithstanding, the
parties Commission, having due regard to the public interest
and the protection of investors, may, by rules and
• By performing similar act where there is no regulations, allow certain acts or transactions that
change in beneficial ownership may otherwise be prohibited under this Section.
PRICE MANIPULATION (Market Rigging or Jiggling)
(b) To effect, alone or with others, a series of COMMON FORMS OF PRICE MANIPULATION
transactions in securities that: 1. PAINTING THE TAPE – market players makes
(i) Raises their price to induce the purchase several trades of a certain security between
of a security, whether of the same or a themselves in an attempt to create the appearance of
different class of the same issuer or of a substantial trading activity and thus influence its
controlling, controlled, or commonly price
controlled company by others; 2. MARKING THE CLOSE – buying and selling the
(ii) Depresses their price to induce the sale securities at the close of the market in an effort to
of a security, whether of the same or a alter the closing price of the security because a higher
different class, of the same issuer or of a closing prices makes it more attractive as a first
controlling, controlled, or commonly option at the re-opening of the market the next trading
controlled company by others; or day
(iii) Creates active trading to induce such a 3. HYPE AND DUMP – engaging in buying activity at
purchase or sale through manipulative increasingly higher prices and then selling the
devices such as marking the close, painting securities in the market at higher securities
the tape, squeezing the float, hype and dump, 4. WASH SALES – engaging in transactions in which
boiler room operations and such other similar there is no change in beneficial ownership or a
devices security
5. SQUEEZING THE FLOAT – taking advantage of a writing shall be made with the Exchange and the
shortage of securities in the market by controlling the Commission, or in accordance with rules of the
demand side and exploiting the market congestion clearing agency that shall clear and settle the
during such shortages in a way as to create artificial transactions.
prices The Commission may, motu proprio or upon
6. Disseminating false or misleading market recommendation of the Exchange
information through media, including the internet, or prohibit short selling in the Exchange
any other means to move the price of a security in a indefinitely or for such period as it may
direction that is favorable to a position held or a deem proper FOR THE PROTECTION OF
transaction THE INVESTORS
7. Other types of prohibited conduct and/or prohibit short selling in any Exchange as an
manipulative practices which include, among others, emergency measure or whenever such
the creation of temporary funds for the purpose of short selling is NECESSARY OR
engaging in other manipulative practices APPROPRIATE IN THE PUBLIC INTEREST

MARGIN TRADING or SHORT SALE

Any sale of a security which the seller does not own SECTION 25. REGULATION OF OPTION TRADING
or any sale which is consummated by the delivery
of a security borrowed by, or for the account of the No member of an Exchange shall, directly or indirectly
seller with the commitment of the seller or securities endorse or guarantee the performance of any put,
borrower TO RETURN OR DELIVER SAID call, straddle, option or privilege in relation to any
SECURITIES OR THEIR EQUIVALENT TO THE security registered on a securities exchange.
LENDER on a determined or determinable future
date. The terms "PUT", "CALL", "STRADDLE", "OPTION",
A person shall be deemed to own a security if: or "PRIVILEGE" shall not include any registered
• he or his agent has title to it; warrant, right or convertible security.
• he has purchased, or has entered into an PUT – a transferrable option or offer to deliver a given
unconditional contract, binding on both number of shares of a stock at a stated price at any
parties thereto, to purchase it and has not yet given time during a stated period
received it;
• he owns a security convertible into or CALL – transferrable option to buy a specified number
exchangeable for it and has tendered such of shares at a stated price
security for conversion or exchange;
• he has an option to purchase or acquire it STRADDLE – combination of put and call
and has exercised such option; or
• he has rights or warrants to subscribe to it SECTION 26. FRAUDULENT TRANSACTIONS
and has exercised such rights or warrants
provided, however, that a person shall be SECURITIES FRAUD
deemed to own securities only to the extent It shall be unlawful for any person, directly or
he has a net long position in such securities. indirectly, in connection with the purchase or sale of
QUALIFIED SECURITY any securities to:
The term qualified security shall mean a listed • Employ any DEVICE, SCHEME, OR ARTIFICE
security that is eligible for short selling in accordance TO DEFRAUD
with the following standards: • Obtain money or property by means of ANY
• market capitalization; UNTRUE STATEMENT OF A MATERIAL FACT
• tradability; OR ANY OMISSION TO STATE A MATERIAL
• liquidity; and FACT necessary in order to make the
statements made, in the light of the
• with other applicable guidelines as may be
circumstances under which they were made,
prescribed by the Commission.
not misleading
MANDATORY CLOSE-OUT
• Engage in any act, transaction, practice or
A contract involving a short sale which has not
course of business which operates or
resulted in a delivery by the Broker Dealer within the
would operate as a FRAUD OR DECEIT upon
settlement period must be closed by the Broker
any person
Dealer either by purchasing for cash or guaranteed
MARKET SECURITIES FRAUD
delivery, securities of like kind and quantity on the
MANIPULATION
next business day after settlement date, unless such
involves engaging in involve the direct and
purchase cannot be effected within said period for
transactions which are outright embezzlement
justifiable reasons in which case, notification in
intended or calculated of an investor. The fraud TRUE and documented in writing at the time
to deceive the investing or deception is employed and date it was used
public by creating false directly against another • Person, whether as principal or agent, to buy,
sense of demand or person and damages is sell or deal in securities or solicit
market activity. necessary to make the investments in securities and other
However, investors may issuer or seller of investment contracts, unless he is a
or may not “fall” for these securities liable. registered broker, dealer or licensed
schemes. It is not salesman of a broker dealer and the
necessary for an investor securities are registered under the Code or
to be defrauded before a exempt from registration pursuant to
market player can be Sections 9 and 10 thereof.
held liable for market DEALING IN SECURITIES
manipulation. It is includes making or offering to make with any person,
sufficient that he or inducing or attempting to induce any person to
performs acts which are enter into or to offer to enter into any agreement for or
intended to defraud. with a view to acquiring, disposing of, subscribing for
A Broker Dealer, Associated Person or salesman of a securities.
Broker Dealer, a paying agent, transfer agent, trustee, SOLICITATION
or any other person acting in a similar fiduciary the act of seeking or asking for business or
capacity, who has received information as to the information and including the act of providing
ownership of securities, shall NOT: information about a security or investment product
• make use of such information for the being offered for sale with the view of making another
purpose of soliciting or making purchases, person a client or closing or bringing in a sale or
sales or exchanges of securities or, purchase of security or investment product. The
• except as provided in SRC Rule 30.2.9, solicitor need not be a signatory to any contract
provide such information to any person relative to such offer or sale of the security.
who does not need such information to fulfill INVESTMENT CONTRACT
his responsibilities under the Code a contract, transaction or scheme (collectively
It shall be Unlawful for any: "contract") whereby a person invests his money in a
• Person to represent that he HAS BEEN common enterprise and is led to expect profits
REGISTERED AS A SECURITIES primarily from the efforts of others. An investment
INTERMEDIARY with the Commission contract is presumed to exist whenever a person
unless such person is registered under the seeks to use the money or property of others on the
Code. Registration under the Corporation promise of profits.
Code shall not be deemed to be registration COMMON ENTERPRISE
under the Code deemed created when two (2) or more investors
• Broker Dealer to represent that the "pool" their resources, creating a common enterprise,
registration of the Broker Dealer under the even if the promoter receives nothing more than a
Code, or the failure of the Commission to broker's commission
deny, suspend, or revoke such
registration, indicates in any way that THE SECTION 27. INSIDER’S DUTY TO DISCLOSE WHEN
COMMISSION HAS PASSED UPON OR TRADING
APPROVED the financial standing, business,
or conduct of such Broker Dealer, or the ACTS CONSTITUTING INSIDER TRADING
merits of any security or any transaction/s INSIDER TRADING PROPER
conducted thereby It shall be unlawful for an insider to sell or buy a
• Person to represent that a security is a security of the issuer, while in possession of material
particular type of security WHEN SUCH information with respect to the issuer or the security
REPRESENTATION IS INCONSISTENT with a that is not generally available to the public, unless:
stated definition under the Code or rules or • The insider proves that the information was
regulations adopted thereunder not gained from such relationship; or
• Person to represent that a security to be • If the other party selling to or buying from the
sold, transferred, pledged, mortgaged, insider (or his agent) is identified, the insider
encumbered, used for delivery, or any other proves:
purpose to another entity or itself has been o that he disclosed the information to
legally authorized by the registered owner the other party, or
WHEN SUCH REPRESENTATION IS NOT
 o that he had reason to believe that • COMMUNICATION OF NON-PUBLIC
the other party otherwise is also in MATERIAL INFORMATION WITH RESPECT
possession of the information TO TENDER OFFER – Any tender offeror,
PRESUMPTION those acting on its behalf, the issuer of the
A purchase or sale of a security of the issuer made by securities sought or to be sought by such
an insider defined in Subsection 3.8, or such insider's tender offer, and any insider of such issuer to
spouse or relatives by affinity or consanguinity within communicate material nonpublic
the second degree, legitimate or common-law, shall information relating to the tender offer to any
be presumed to have been effected while in other person where such communication is
possession of material nonpublic information if likely to result in a violation of Subsection
transacted after such information came into 27.4 (a)(i). ↑
existence but prior to dissemination of such
For purposes of this subsection the term
information to the public and the lapse of a
reasonable time for the market to absorb such "SECURITIES OF THE ISSUER SOUGHT OR TO BE
information: Provided, however , That this SOUGHT BY SUCH TENDER OFFER" shall include
presumption shall be rebutted upon a showing by any securities convertible or exchangeable into
the purchaser or seller that he was not aware of such securities or any options or rights in any of the
the material nonpublic information at the time of foregoing securities.
the purchase or sale.
COMMUNICATION OF MATERIAL NON-PUBLIC
INFORMATION RESULTING IN INSIDER TRADING INSIDER
Means:
• It has not been generally disclosed to the
public and would likely affect the market • the issuer
price of the security after being disseminated • a director or officer (or person performing
to the public and the lapse of a reasonable similar functions) of, or a person controlling
time for the market to absorb the information the issuer
• would be considered by a reasonable person • a person whose relationship or former
important under the circumstances in relationship to the issuer gives or gave him
determining his course of action whether to access to material information about the
buy, sell or hold a security issuer or the security that is not generally
available to the public
It shall be UNLAWFUL for any insider to • a government employee, or director, or officer
communicate material nonpublic information of an exchange, clearing agency and/or self-
about the issuer or the security to any person who, regulatory organization who has access to
by virtue of the communication, becomes an material information about an issuer or a
insider as defined in Subsection 3.8, where the security that is not generally available to the
insider communicating the information knows or has public
reason to believe that such person will likely buy or • a person who learns such information by a
sell a security of the issuer while in possession of communication from any of the foregoing
such information. insiders
UNLAWFUL PURCHASE OR SALE OF SECURITIES TIPPER/TIPEE THEORY
SUBJECT TO TENDER OFFER A person who acquires material non-public
It shall be UNLAWFUL where a tender offer has information from an insider is also engaged in insider
commenced or is about to commence for: trading
• Any person (other than the tender offeror)
who IS IN POSSESSION OF MATERIAL
NONPUBLIC INFORMATION RELATING TO
SUCH TENDER OFFER, to buy or sell the
securities of the issuer that are sought or to
be sought by such tender offer if such person
knows or has reason to believe that the
information is nonpublic and has been
acquired directly or indirectly from the tender
offeror, those acting on its behalf, the issuer
of the securities sought or to be sought by
such tender offer, or any insider of such
issuer; and