REPUBLIC ACT NO.

8799
THE SECURITIES REGULATION CODE
Section 1. Title. - This shall be known as
"The Securities Regulation Code"
Section 2. Declaration of State Policy. – The State shall establish a socially conscious, free market
that regulates itself, encourage the widest participation of ownership in enterprises, enhance
the democratization of wealth, promote the development of the capital market, protect
investors, ensure full and fair disclosure about securities, minimize if not totally eliminate insider
trading and other fraudulent or manipulative devices and practices which create distortions in
the free market. To achieve these ends, this Securities Regulation Code is hereby enacted.
Section 3. Definition of Terms. - 3.1.
"Securities" are shares, participation or interests in a corporation or in a commercial enterprise or profit-making
venture and evidenced by a certificate, contract, instruments, whether written or electronic in character. It
includes:
(a) Shares of stocks, bonds, debentures, notes evidences of indebtedness, asset-backed securities;
(b) Investment contracts, certificates of interest or participation in a profit sharing agreement, certifies of deposit
for a future subscription;
(c) Fractional undivided interests in oil, gas or other mineral rights;
(d) Derivatives like option and warrants;
(e) Certificates of assignments, certificates of participation, trust certificates, voting trust certificates or similar
instruments
(f) Proprietary or nonproprietary membership certificates in corporations; and
(g) Other instruments as may in the future be determined by the Commission.
3.2. "Issuer" is the originator, maker, obligor, or creator of the security.
3.3. "Broker" is a person engaged in the business of buying and selling securities for the account
of others.
3.4. "Dealer" means many person who buys sells securities for his/her own account in the
ordinary course of business.
3.5. "Associated person of a broker or dealer" is an employee therefor whom, directly exercises
control of supervisory authority, but does not include a salesman, or an agent or a person whose
functions are solely clerical or ministerial.
3.6. "Clearing Agency" is any person who acts as intermediary in making deliveries upon
payment effect settlement in securities transactions.
3.7. "Exchange" is an organized market place or facility that brings together buyers and sellers
and executes trade of securities and/or commodities.
3.8. "Insider" means
◦ (a) the issuer;
◦ (b) a director or officer (or any person performing similar functions) of, or a person controlling the
issuer; gives or gave him access to material information about the issuer or the security that is not
generally available to the public;
◦ (d) A government employee, director, or officer of an exchange, clearing agency and/or self-regulatory
organization who has access to material information about an issuer or a security that is not generally
available to the public; or
◦ (e) a person who learns such information by a communication from any forgoing insiders.
3.9. "Pre-need plans" are contracts which provide for the performance of future services of or
the payment of future monetary considerations at the time actual need, for which plan holders
pay in cash or installment at stated prices, with or without interest or insurance coverage and
includes life, pension, education, interment, and other plans which the Commission may from
time to time approve.
3.10. "Promoter" is a person who, acting alone or with others, takes initiative in founding and
organizing the business or enterprise of the issuer and receives consideration therefor.
3.11. "Prospectus" is the document made by or an behalf of an issuer, underwriter or dealer to
sell or offer securities for sale to the public through registration statement filed with the
Commission.
3.12. "Registration statement" is the application for the registration of securities required to be
filed with the Commission.
3.13. "Salesman" is a natural person, employed as such as an agent, by a dealer, issuer or broker
to buy and sell securities.
3.14. "Uncertificated security" is a security evidenced by electronic or similar records.
3.15. "Underwriter" is a person who guarantees on a firm commitment and/or declared best
effort basis the distribution and sale of securities of any kind by another company.
CHAPTER II SECURITIES AND EXCHANGE
COMMISSION
Section 4. Administrative Agency. – 4.1. This Code shall be administered by the Security and
Exchange Commission (hereinafter referred to as the "Commission") as a Collegial body,
composed of a chairperson and (4) Commissioners, appointed by the President for a term of (7)
seven years each and who shall serves as such until their successor shall have been appointed
and qualified. A Commissioner appointed to fill a vacancy occurring prior to the expiration of the
term for which his/her predecessor was appointed, shall serve only for the unexpired portion of
their terms under Presidential Decree No. 902-A. Unless the context indicates otherwise, the
term "Commissioner" includes the Chairperson.
4.2. The Commissioners must be natural-born citizens of the Philippines, at least forty (40) years
of age for the Chairperson and at least thirty-five (35) years of age for the Commissioners, of
good moral character, or unquestionable integrity, of known probity and patriotism, and with
recognized competence in social and economic disciplines: Provided, That the majority of
Commissioners, including the Chairperson, shall be members of the Philippine Bar.
4.3. The chairperson is chief executive officer of the Commission. The Chairperson shall execute
and administer the policies, decisions, orders and resolutions approved by the Commission and
shall have the general executive direction and supervision of the work and operation of the
Commission and it’s members, bodies, boards, offices, personnel and all its administrative
business.
4.4. The salary of the Chairperson and the Commissioners shall be fixed by the President of the
Philippines based on the objective classification system, at a sum comparable to the members of
the Monetary Board and commensurate importance and responsibilities attached to the
position.
Section 5. Powers and Functions of the Commission.–
5.1. The commission shall act with transparency and shall have the powers and functions provided by this code, Presidential Decree No.
902-A, the Corporation Code, the Investment Houses law, the Financing Company Act and other existing laws. Pursuant thereto the
Commission shall have, among others, the following powers and functions:
(a) Have jurisdiction and supervision over all corporations, partnership or associations who are the grantees of primary franchises and/or a
license or a permit issued by the Government;
(b) Formulate policies and recommendations on issues concerning the securities market, advise Congress and other government agencies
on all aspect of the securities market and propose legislation and amendments thereto;
(c) Approve, reject, suspend, revoke or require amendments to registration statements, and registration and licensing applications;
(d) Regulate, investigate or supervise the activities of persons to ensure compliance;
(e) Supervise, monitor, suspend or take over the activities of exchanges, clearing agencies and other SROs;
(f) Impose sanctions for the violation of laws and rules, regulations and orders, and issued pursuant thereto;
(g) Prepare, approve, amend or repeal rules, regulations and orders, and issue opinions and provide guidance on and supervise compliance
with such rules, regulation and orders;
(h) Enlist the aid and support of and/or deputized any and all enforcement agencies of the Government, civil or military as well as any
private institution, corporation, firm, association or person in the implementation of its powers and function under its Code;
(i) Issue cease and desist orders to prevent fraud or injury to the investing public;
(j) Punish for the contempt of the Commission, both direct and indirect, in accordance with the pertinent provisions of and penalties
prescribed by the Rules of Court;
CHAPTER III REGISTRATION OF
SECURITIES
Section 8. Requirement of Registration of Securities.–
8.1. Securities shall not be sold or offered for sale or distribution within the Philippines, without
a registration statement duly filed with and approved by the Commission. Prior to such sale,
information on the securities, in such form and with such substance as the Commission may
prescribe, shall be made available to each prospective purchaser.
8.2. The Commission may conditionally approve the registration statement under such terms as
it may deem necessary.
Section 9. Exempt Securities. – 9.1. The requirement of
registration under Subsection 8.1 shall not as a general rule
apply to any of the following classes of securities:
(a) Any security issued or guaranteed by the Government of the Philippines, or by any political
subdivision or agency thereof, or by any person controlled or supervised by, and acting as an
instrumentality of said Government.
(b) Any security issued or guaranteed by the government of any country with which the
Philippines maintains diplomatic relations, or by any state, province or political subdivision
thereof on the basis of reciprocity: Provided, That the Commission may require compliance with
the form and content for disclosures the Commission may prescribe.
(c) Certificates issued by a receiver or by a trustee in bankruptcy duly approved by the proper
adjudicatory body.
(d) Any security or its derivatives the sale or transfer of which, by law, is under the supervision
and regulation of the Office of the Insurance Commission, Housing and Land Use Rule
Regulatory Board, or the Bureau of Internal Revenue.
(e) Any security issued by a bank except its own shares of stock.
Section 10. Exempt Transactions. –
10.1. The requirement of registration under Subsection 8.1 shall not apply to the sale of any security
in any of the following transactions:
(a) At any judicial sale, or sale by an executor, administrator, guardian or receiver or trustee in
insolvency or bankruptcy.
(b) By or for the account of a pledge holder, or mortgagee or any of a pledge lien holder selling of
offering for sale or delivery in the ordinary course of business and not for the purpose of avoiding the
provision of this Code, to liquidate a bonafide debt, a security pledged in good faith as security for
such debt.
(c) An isolated transaction in which any security is sold, offered for sale, subscription or delivery by
the owner therefore, or by his representative for the owner’s account, such sale or offer for sale or
offer for sale, subscription or delivery not being made in the course of repeated and successive
transaction of a like character by such owner, or on his account by such representative and such
owner or representative not being the underwriter of such security.
(d) The distribution by a corporation actively engaged in the business authorized by its articles of
incorporation, of securities to its stockholders or other security holders as a stock dividend or other
distribution out of surplus.
(e) The sale of capital stock of a corporation to its own stockholders exclusively, where no commission
or other remuneration is paid or given directly or indirectly in connection with the sale of such capital
stock.
(f) The issuance of bonds or notes secured by mortgage upon real estate or tangible personal
property, when the entire mortgage together with all the bonds or notes secured thereby are
sold to a single purchaser at a single sale.
(g) The issue and delivery of any security in exchange for any other security of the same issuer
pursuant to a right of conversion entitling the holder of the security surrendered in exchange to
make such conversion: Provided, That the security so surrendered has been registered under
this Code or was, when sold, exempt from the provision of this Code, and that the security
issued and delivered in exchange, if sold at the conversion price, would at the time of such
conversion fall within the class of securities entitled to registration under this Code. Upon such
conversion the par value of the security surrendered in such exchange shall be deemed the price
at which the securities issued and delivered in such exchange are sold.

(h) Broker’s transaction, executed upon customer’s orders, on any registered Exchange or other
trading market.
Section 12. Procedure of Registration Securities. - 12.1. All securities required to be registered
under Subsection 8. I shall be registered through the filing by the issuer in the main office of the
Commission, of a sworn registration statement with the respect to such securities, in such form
and containing such information and document as the Commission prescribe. The registration
statement shall include any prospectus required or permitted to be delivered under Subsections
8.2, 8.3, and 8.4.
12.2. In promulgating rules governing the content of any registration statement (including any
prospectus made a part thereof or annex thereto), the Commission may require the registration
statement to contain such information or documents as it may, by rule, prescribe. It may
dispense with any such requirements, or may require additional information or documents,
including written information from an expert, depending on the necessity thereof or their
applicability to the class of securities sought to be registered.
12.4. The registration statement shall be signed by the issuer’s executive officer, its principal
operating officer, its principal financial officer, its comptroller, its principal accounting officer, its
corporate secretary, or persons performing similar functions accompanied by a duly verified
resolution of the board of directors of the issuer corporation. The written consent of the expert
named as having certified any part of the registration statement or any document used in
connection therewith shall also be filed. Where the registration statement shares to be sold by
selling shareholders, a written certification by such selling shareholders as to the accuracy of any
part of the registration statement contributed to by such selling shareholders shall be filed.
Section 13. Rejection and Revocation of Registration of Securities. –
13.1. The Commission may reject a registration statement and refuse registration of the security there-under, or revoke
the affectivity of a registration statement and the registration of the security there-under after the due notice and
hearing by issuing an order to such effect, setting forth its finding in respect thereto, if it finds that:
(a) The issuer:
(i) Has been judicially declared insolvent;
(ii) Has violated any of the provision of this Code, the rules promulgate pursuant thereto, or any order of the Commission
of which the issuer has notice in connection with the offering for which a registration statement has been filed
(iii) Has been or is engaged or is about to engage in fraudulent transactions;
(iv) Has made any false or misleading representation of material facts in any prospectus concerning the issuer or its
securities;
(v) Has failed to comply with any requirements that the Commission may impose as a condition for registration of the
security for which the registration statement has been filed; or (b) The registration statement is on its face incomplete or
inaccurate in any material respect or includes any untrue statements of a material fact required to be stated therein or
necessary to make the statement therein not misleading; or
(c) The issuer, any officer, director or controlling person performing similar functions, or any
under writer has been convicted, by a competent judicial or administrative body, upon plea of
guilty, or otherwise, of an offense involving moral turpitude and /or fraud or is enjoined or
restrained by the Commission or other competent or administrative body for violations of
securities, commodities, and other related laws.
13.2. The Commission may compel the production of all the books and papers of such issuer,
and may administer oaths to, and examine the officers of such the issuer or any other person
connected therewith as to its business and affairs.
13.3. If any issuer shall refuse to permit an examination to be made by the Commission, its
refusal shall be ground
13.4. If the Commission deems its necessary, it may issue an order suspending the offer and sale
of the securities pending any investigation. The order shall state the grounds for taking such
action, but such order of suspension although binding upon the persons notified thereof, shall
be deemed confidential, and shall not be published. Upon the issuance of the suspension order,
no further offer or sale of such security shall be made until the same is lifted or set aside by the
Commission. Otherwise, such sale shall be void. for the refusal or revocation of the registration
of its securities
13.5. Notice of issuance of such order shall be given to the issuer and every dealer and broker
who shall have notified the Commission of an intention to sell such security.

13.6. A registration statement may be withdrawn by the issuer only with the consent of the
Commission.
Section 14. Amendment to the Registration Statement. – 14.1. If a registration statement is on
its face incomplete or inaccurate in any material respect, the Commission shall issue an order
directing the amendment of the registration statement. Upon compliance with such order, the
amended registration statement shall become effective in accordance with the procedure
mentioned in Subsection 12.6 hereof.
14.3. If any change occurs in the facts set forth in a registration statement, the issuer shall file an
amendment thereto setting forth the change.
14.4. If, at any time, the Commission finds that the registration statement contains any false
statement or omits to state any fact required to be stated therein or necessary to make the
statements therein not misleading, the Commission may conduct an examination, and, after due
notice and hearing, issue an order suspending the affectivity registration statement. If the
statement is duly amended, the suspension order may be lifted.
Section 15. Suspension of Registration. –
15.1. If at any time, the information contained in the registration statement filed is or has become
misleading, incorrect, inadequate or incomplete in any material respect, or the sale or offering for
sale of the security registered thereunder may work or tend to work a fraud, the Commission may
require from the issuer such further information as may in its judgement be necessary to enable the
Commission to ascertain whether the registration of such security should be revoked on any ground
specified in this Code. The Commission may also suspend the right to sell and offer for the sale such
security pending further investigation, by entering an order specifying the grounds for such action,
and by notifying the issuer, underwriter, dealer or broker known as participating in such offering.
15.2. The refusal to furnish information required by the Commission may be a ground for the
issuance of an order of suspension pursuant to Subsection 15.1. Upon the issuance of any such order
and notification to the issuer, underwriter, dealer or broken know as participating in such offering, no
further offer or sale of any such security shall be made until the same is lifted or set aside by the
Commission. Otherwise such sale shall be void.
CHAPTER IV REGULATION OF PRE-NEED
PLANS
Section 16. Pre-Need Plans. – No person shall sell or offer for sale to the public any pre-need
plan except in accordance with rules and regulations which the Commission shall prescribe. Such
rules shall regulate the sale of pre-need plans by, among other things, requiring the registration
of pre-need plans, licensing persons involved in the sale of pre- need plans, requiring disclosures
to prospective plan holders, prescribing advertising guidelines, providing for uniform accounting
system, reports and recording keeping with respect to such plans, imposing capital, bonding and
other financial responsibility, and establishing trust funds for the payment of benefits under
such plans.
CHAPTER V REPORTORIAL
REQUIREMENTS
Section 17. Periodic and Other Reports of Issuer.
17.1. Every issuer satisfying the requirements in Subsection 17.2 hereof shall file with the
Commission:
(a) Within one hundred thirty-five (135) days, after the end of the issuer’s fiscal year, or such
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 public accountant, an a management discussion and analysis of results of
operation; and
(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
information on the operation of the business and financial condition of the issuer.
Section 18. Reports by five per centum (5%) Holders of Equity Securities. – 18.1. In every case in
which an issuer satisfies the requirements of Subsection 17.2 hereof any person who acquires
directly or indirectly the beneficial ownership of more than five of per centum (5%) of such class
or in excess of such lesser per centum as the Commission by rule may prescribe, shall, within ten
(10) days after such acquisition or such reasonable time as fixed by the Commission, submit to
the issuer of the securities, to the Exchange where the security is traded, and to the Commission
a sworn statement containing the following information and such order information as the
Commission may require in the public interest or for the protection of investors.
CHAPTER VI PROTECTION OF
SHAREHOLDERS INTERESTS
Section 19. Tender Offers. – Any person or group of persons acting in concert who intends to
acquire at least 15% of any class of any equity security of a listed corporation of any class of any
equity security of a corporation with assets of at least fifty million pesos (50,000,000.00) and
having two hundred(200) or more stockholders at least one hundred shares each or who intends
to acquire at least thirty percent(30%) of such equity over a period of twelve months(12) shall
make a tender offer to stockholders by filling with the Commission a declaration to that effect;
and furnish the issuer, a statement containing such of the information required in Section 17 of
this Code as the Commission may prescribe. Such person or group of persons shall publish all
request or invitations or tender offer or requesting such tender offers subsequent to the initial
solicitation or request shall contain such information as the Commission may prescribe, and
shall be filed with the Commission and sent to the issuer not alter than the time copies of such
materials are first published or sent or given to security holders.
Section 20. Proxy solicitations. –
20.1. Proxies must be issued and proxy solicitation must be made in accordance with rules and
regulations to be issued by the Commission;
20.2. Proxies must be in writing, signed by the stockholder or his duly authorized representative
and file before the scheduled meeting with the corporate secretary.
20.3. Unless otherwise provided in the proxy, it shall be valid only for the meeting for which it is
intended. No proxy shall be valid only for the meting for which it is intended. No proxy shall be
valid and effective for a period longer than five (5) years at one time.
20.4. No broker or dealer shall give any proxy, consent or any authorization, in respect of any
security carried for the account of the customer, to a person other than the customer, without
written authorization of such customer.
Section 21. Fees of Tender Offers and Certain Proxy Solicitations. – At the time of filling with the
Commission of any statement required under Section 19 for any tender offer or Section 72.2 for
issuer purchases, or Section 20 for proxy or consent solicitation, The Commission may require
that the person making such filing pay a fee of not more than one-tenth (1/10)(1%) of;
CHAPTER VII PROHIBITIONS AND FRAUD,
MANIPULATION AND INSIDER TRADING
Section 24. Manipulation of Security Prices; Devices and Practices. –
24.1 It shall be unlawful for any person acting for himself or through a dealer or broker, directly
or indirectly:
(a) To create a false or misleading appearance of active trading in any listed security traded in an
Exchange of any other trading market (hereafter referred to purposes of this Chapter as
"Exchange"):
(i) By effecting any transaction in such security which involves no change in the beneficial
ownership thereof;
(ii) By entering an order or orders for the purchase or sale of such security with the knowledge
that a simultaneous order or orders of substantially the same size, time and price, for the sale or
purchase of any such security, has or will be entered by or for the same or different parties; or
(iii) By performing similar act where there is no change in beneficial ownership.
Section 27. Insider’s Duty to Disclose When Trading. – 27.1. It shall be unlawful for an insider to
sell or buy a security of the issuer, while in possession of material information with respect to
the issuer or the security that is not generally available to the public, unless: (a) The insider
proves that the information was not gained from such relationship; or (b) If the other party
selling to or buying from the insider (or his agent) is identified, the insider proves: (I) that he
disclosed the information to the other party, or (ii) that he had reason to believe that the other
party otherwise is also in possession of the information. A purchase or sale of a security of the
issuer made by an insider defined in Subsection 3.8, or such insider’s spouse or relatives by
affinity or consanguinity within the second degree, legitimate or common-law, shall be
presumed to have been effected while in possession of material nonpublic information if
transacted after such information came into existence but prior to dissemination of such
information to the public and the lapse of a reasonable time for market to absorb such
information: Provided, however, That this presumption shall be rebutted upon a showing by the
purchaser or seller that he was aware of the material nonpublic information at the time of the
purchase or sale
CHAPTER VIII REGULATION OF
SECURITIES MARKET PROFESSIONALS
Section 28. Registration of Brokers, Dealers, Salesmen and Associated Persons. – 28.1. No person
shall engage in the business of buying or selling securities in the Philippine as a broker or dealer,
or act as a salesman, or an associated person of any broker or dealer unless registered as such
with the Commission.
Section 30. Transactions and Responsibility of Brokers and Dealers. – 30.1 No brokers or dealer
shall deal in or otherwise buy or sell, for its own account or for its own account or for the
account of customers, securities listed on an Exchange issued by any corporation where any
stockholders, director, associated person or salesman, or authorized clerk of said broker or
dealer and all the relatives of the foregoing within the fourth civil degree of consanguinity or
affinity, is at the same time holding office in said issuer corporation as a director, president, vice-
president, manager, treasurer, comptroller, secretary or any office trust and responsibility, or is a
controlling of the issuer
CHAPTER IX EXCHANGES AND OTHER
SECURITIES TRADING MARKETS
Section 32. Prohibition on Use of Unregistered Exchange; Regulation of Over-the-Counter
Markets. –32.1. No broker, dealer, salesman, associated person of a broker or dealer, or
Exchange, directly or indirectly shall make use of any facility of an Exchange in the Philippines to
effect any transaction in a security, or to report such transaction, unless such Exchange is
registered as such under Section 33 of this Code.
CHAPTER XI ACQUISITION AND TRANSFER OF SECURITIES AND
SETTLEMENT OF TRANSACTION IN SECURITIES
Section 41. Prohibition on Use of Unregistered Clearing Agency. – It shall be unlawful for any
broker, dealer, salesman, associated person of a broker or dealer, or clearing agency, directly or
indirectly, to make use of any facility of a clearing agency in Philippines to make deliveries in
connection with transaction in securities or to reduce the number of settlements of securities
transactions or to allocate securities settlement responsibilities or to provide for the central
handling of securities so that transfers, loans and pledges and similar transaction can be made
by bookkeeping entry or otherwise to facilitate the settlement of securities transactions without
physical delivery of securities certificates, unless such clearing agency is registered as such under
Section 42 of this Code or is exempted from such registration upon application by the clearing
agency because, in the opinion of the Commission, by reason of the limited volume of
transactions which are settled using the clearing agency, it is not practicable and not necessary
or appropriate in the public interest or for the protection of investors to require such
registration.
CHAPTER XII MARGIN AND CREDIT
Section 48. Margin Requirements. – 48.1. For the purpose of preventing the excessive use of
credit for the purchase or carrying of securities, the Commission, in accordance with the credit
and monetary policies that may be promulgated from time to time by the Monetary Board of
the Bangko Sentral ng Pilipinas, shall prescribed rules and regulations with respect to the
amount of credit that may be extended on any security. For the extension of credit, such rules
and regulations shall be based upon the following standard:
An amount not greater than the whichever is the higher of –
(a) Sixty-five per centum (65%) of the current market price of the security, or
(b) One hundred per centum (100%) of the lowest market price of the security during the
preceding thirty-six (36) calendar months, but not more than seventy-five per centum (75%) of
the current market price.
Section 49. Restrictions on Borrowings by Members, Brokers, and Dealers. – It shall be unlawful for any
registered broker or dealer, or member of an Exchange, directly or indirectly;
49.1. To permit in the ordinary course of business as a broker or dealer his aggregate indebtedness
including customers’ credit balances, to exceed such percentage of the net capital (exclusive of fixed assets
and value of Exchange membership) employed in the business, but not exceeding in any case to thousand
percentum (2,000%), as the Commission may be rules and regulations prescribe as necessary or
appropriate in the public interest or for the protection of investors.
49.2. To pledge, mortgage, or otherwise encumber or arrange for the pledge, mortgage, or encumbrance of
any security carried for the account of any customer under circumstances:
(a) That will permit the commingling of his securities, without his written consent, with the securities of
any customer;
(b) That will permit such securities to be commingled with the securities of any person other than a bona
fide customer; or
(c) that will permit such securities to be pledged, mortgaged or encumbered, or subjected to any lien or
claim of the pledgee, for a sum in excess of the aggregate indebtedness of such customers in respect of
such securities. However, the Commission, having due regard to the protection of investors, may, by rules
and regulations, allow certain transactions that may otherwise be prohibited under this subsection. 49.3.
To lend or arrange for the lending of any security carried for the account of any customer without the
written consent of such customer or in contravention of such rules and regulations as the Commission shall
prescribe.
Section 51. Liabilities of Controlling Persons, Aider and Abettor and Other Secondary Liability.
51.1. Every person who, by or through stock ownership, agency, or otherwise, or in connection
with an agreement or understanding with one or more other persons, controls any person liable
under this Code or the rules or regulations of the Commission thereunder, shall also be liable
jointly and severally with and to the same extent as such controlled persons to any person to
whom such controlled person is liable, unless the controlling person proves that, despite the
exercise of due diligence on his part, he has no knowledge of the existence of the facts by reason
of which the liability of the controlled person is alleged to exist.
Section 53. Investigations, Injunctions and Prosecution of Offenses. 53.1. The Commission may,
in its discretion, make such investigations as it deems necessary to determine whether any
person has violated or is about to violate any provision of this Code, any rule, regulation or order
thereunder, or any rule of an Exchange, registered securities association, clearing agency, other
self-regulatory organization, and may require or permit any person to file with it a statement in
writing, under oath or otherwise, as the Commission shall determine, as to all facts and
circumstances concerning the matter to be investigated. T
Section 54. Administrative Sanctions. – 54.1. If, after due notice and hearing, the Commission finds that:
(a) There is a violation of this Code, its rule, or its orders;
(b) Any registered broker or dealer, associated person thereof has failed reasonably to supervise, with a view to
preventing violations, another person subject to supervision who commits any such violation; (c) Any registrant or
other person has, in a registration statement or in other reports, applications, accounts, records or documents
required by law or rules to be filed with the Commission, made any untrue statement of a material fact, or
omitted to state any material fact required to be stated their or necessary to make the statements therein not
misleading; or, in the case of an underwriter, has failed to conduct an inquiry with reasonable diligence to insure
that a registration statement is accurate and complete in all material respects; or (d) Any person has refused to
permit any lawful examinations into its affairs, it shall, in its discretion, and subject only to the limitations
hereinafter prescribed, impose any or all of the following sanctions as may be appropriate in light of the facts and
circumstances: (i) Suspension, or revocation of any registration for the offering of securities; (ii) A fine of no less
than Ten thousand pesos (P10,000.00) nor more than One million pesos (P1,000,000.00) plus not more than Two
thousand pesos (P2,000.00) for each day of continuing violation; (iii) In the case of a violation of Sections 19.2, 20,
24, 26 and 27, disqualification from being an officer, member of the Board of Directors, or person performing
similar functions, of an issuer required to file reports under Section 17 of this Code or any other act, rule or
regulation administered by the Commission;
(iv) In the case of a violation of Section 34, a fine of no more than three (3) times the profit gained or loss avoided
as result of the purchase, sale or communication proscribed by such Section, and (v) Other penalties within the
power of the Commission to impose.
Section 56. Civil Liabilities on Account of False Registration Statement.
56.1. Any person acquiring a security, the registration statement of which or any part thereof contains
on its effectivity an untrue statement of a material fact or omits to state a material fact required to be
stated therein or necessary to make such statements not misleading, and who suffers damage, may
sue and recover damages from the following enumerated persons, unless it is proved that at the time
of such acquisition he knew of such untrue statement or omission:
(a) The issuer and every person who signed the registration statement:
(b) Every person who was a director of, or any other person performing similar functions, or a partner
in, the issuer at the time of the filing of the registration statement or any part, supplement or
amendment thereof with respect to which his liability is asserted;
(c) Every person who is named in the registration statement as being or about to become a director
of, or a person performing similar functions, or a partner in, the issuer and whose written consent
thereto is filed with the registration statement;
(d) Every auditor or auditing firm named as having certified any financial statements used in
connection with the registration statement or prospectus.
Section 57. Civil Liabilities Arising in Connection With Prospectus, Communications and Reports.
57.1. Any person who:
(a) Offers to sell or sells a security in violation of Chapter III, or
(b) Offers to sell or sells a security, whether or not exempted by the provisions of this Code, by
the use of any means or instruments of transportation or communication, by means of a
prospectus or other written or oral communication, which includes an untrue statement of a
material fact or omits to state a material fact necessary in order to make the statements, in the
light of the circumstances under which they were made, not misleading (the purchaser not
knowing of such untruth or omission), and who shall fail in the burden of proof that he did not
know, and in the exercise of reasonable care could not have known, of such untruth or omission,
shall be liable to the person purchasing such security from him, who may sue to recover the
consideration paid for such security with interest thereon, less the amount of any income
received thereon, upon the tender of such security, or for damages if he no longer owns the
security.
Section 58. Civil Liability of Fraud in Connection with Securities Transactions. – Any person who
engages in any act or transaction in violation of Sections 19.2, 20 or 26, or any rule or regulation
of the Commission thereunder, shall be liable to any other person who purchases or sells any
security, grants or refuses to grant any proxy, consent or authorization, or accepts or declines an
invitation for tender of a security, as the case may be, for the damages sustained by such other
person as a result of such act or transaction.
Section 59. Civil Liability for Manipulation of Security Prices. – Any person who willfully
participates in any act or transaction in violation of Section 24 shall be liable to any person who
shall purchase or sell any security at a price which was affected by such act or transaction, and
the person so injured may sue to recover the damages sustained as a result of such act or
transaction.
Section 60. Civil Liability with Respect to Commodity Futures Contracts and Pre-need Plans. –
60.1. Any person who engages in any act or transactions in willful violation of any rule or
regulation promulgated by the Commission under Section 11 or 16, which the Commission
denominates at the time of issuance as intended to prohibit fraud in the offer and sale of pre-
need plans or to prohibit fraud, manipulation, fictitious transactions, undue speculation, or
other unfair or abusive practices with respect to commodity future contracts, shall be liable to
any other person sustaining damages as a result of such act or transaction.
Section 63. Amount of Damages to be Awarded. – 63.1. All suits to recover damages pursuant to
Sections 56, 57, 58, 59, 60 and 61 shall be brought before the Regional Trial Court, which shall
have exclusive jurisdiction to hear and decide such suits. The Court is hereby authorized to
award damages in an amount not exceeding triple the amount of the transaction plus actual
damages.
Exemplary damages may also be awarded in cases of bad faith, fraud, malevolence or
wantonness in the violation of this Code or the rules and regulations promulgated thereunder.
The Court is also authorized to award attorney’s fees not exceeding thirty percentum (30%) of
the award.
Section 64. Cease and Desist Order. – 64.1. The Commission, after proper investigation or
verification, motu proprio or upon verified complaint by any aggrieved party, may issue a cease
and desist order without the necessity of a prior hearing if in its judgment the act or practice,
unless restrained, will operate as a fraud on investors or is otherwise likely to cause grave or
irreparable injury or prejudice to the investing public.
Section 68. Special Accounting Rules. – The Commission shall have the authority to make,
amend, and rescind such accounting rules and regulations as may be necessary to carry out the
provisions of this Code, including rules and regulations as may be necessary to carry out the
provisions of this Code, including rules and regulations governing registration statements and
prospectuses for various classes of securities and issuers, and defining accounting, technical and
trade terms used in this Code. Among other things, the Commission may prescribe the form or
forms in which required information shall be set forth, the items or details to be shown in the
balance sheet and income statement, and the methods to be followed in the preparation of
accounts, appraisal or valuation of assets and liabilities, determination of depreciation and
depletion, differentiation of recurring and non-recurring income, differentiation of investment
and operating income, and in the preparation, where the Commission deems it necessary or
desirable of consolidated balance sheets or income accounts of any person directly or indirectly
controlling or controlled by the issuer, or any person under direct or indirect common control
with the issuer.