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SEC clarifies required comparative periods for companies filing their registration statements

COMPANIES registering their shares with the Securities and Exchange Commission (SEC) are required to submit two comparative periods for the past three fiscal years to show changes in their financial condition, the regulator said.

The commission issued the clarification amid mixed interpretations of a specific provision under the Securities Regulations Code (SRC).

In Memorandum Circular No. 13 signed by SEC Chairperson Emilio B. Aquino on Sept. 12, the securities regulator clarified Part III, paragraph A, subparagraph 2 (a) of Annex C of the SRC regarding the comparative periods required in the management’s discussion and analysis in a company’s prospectus. 

Annex C of Rule 12 contains details for the non-financial disclosure requirements in the registration statements that should be filed with the SEC.

The circular clarified that a registrant should provide the following disclosure comprising two comparative periods for the last three fiscal years in the management’s discussion and analysis portion of its prospectus.

“The foregoing portion of Annex C gave rise to conflicting views and varying interpretations as to the number of fiscal years required to be disclosed in the management’s discussion and analysis portion of the prospectus,” the circular said.

The SEC’s markets and securities regulation department sought guidance from the commission en banc on the interpretation of the phrase “for each of the last three fiscal years” as provided in Annex C, which was subsequently clarified during an en banc meeting on Sept. 5.

According to the circular, the interpretation will apply prospectively to registrants required to file registration statements and other reportorial documents, which include disclosure of a management’s discussion and analysis.

Sought for further comment, SEC Commissioner Kelvin Lester K. Lee said the circular aims to allow easier ways to raise capital. 

“The rationale is to make it easier to file registration statements and as a result make it easier to raise capital.  This covers registration statements and/or other reportorial documents, which include a disclosure of a management’s discussion and analysis,” Mr. Lee told BusinessWorld in a Viber message.

“This is for those that intend to file registration statements,” he added.

The SEC said the interpretation under the circular would take effect 15 days from its publication. — Revin Mikhael D. Ochave

#SEC #clarifies #required #comparative #periods #companies #filing #registration #statements

SEC warns vs. investing in Mono Mall and Dermacare-Beyond Skin 

THE Securities and Exchange Commission (SEC) warned the public against investing in Mono Mall and Dermacare-Beyond Skin Care Solutions/Beyond Skincare Solutions as these entities are unauthorized to solicit investments.

In two separate advisories posted on Sept. 11, the SEC said Mono Mall and Dermacare-Beyond Skin Care Solutions/Beyond Skincare Solutions do not have the necessary registration to sell securities or solicit investments as mandated by the Securities Regulation Code. 

According to the SEC, Mono Mall claimed that it promotes and helps merchants to increase product sales and sell their products online. It also claimed to cooperate with online shopping platforms Lazada, Shopee, Zalora, and TikTok. 

“The said entity claims that they are legitimate and is registered with the SEC but upon verification with the SEC database it turned out that Mono Mall is not duly registered and the SEC certificate they are showing to the public is fake,” the SEC said.

The SEC said that individuals or a group of persons claiming to represent Mono Mall are encouraging the public to invest in the entity.

“Their tasking and recharging scheme works by luring unsuspecting victims to participate in fake online jobs, supposedly in partnership with large e-commerce platforms such as Lazada. Here, they complete tasks such as helping complete e-commerce orders to earn commissions,” the SEC said.

Meanwhile, the SEC said that Dermacare-Beyond Skin Care Solutions/Beyond Skincare Solutions is enticing the public to invest in the entity via a franchise partner agreement, which promises a guaranteed return of 12.6% interest every quarter for five years.

The franchise partner agreement also comes with complimentary services such as a 50% discount on all Dermacare/Dr. White and Glow Services, a 50% discount on all owned brand Dermacare/Dr. White and Glow Products, a 20% discount on doctors’ services, complimentary services for two extensions of choice, and a maximum of two treatments per visit.

According to the SEC, the company’s registered name is Beyond Skin Care Ventures, Inc.

“Republic Act No. 11765 or the Financial Products and Services Consumer Protection Act also prohibits investment fraud which is defined under the law as any form of deceptive solicitation of investments from the public,” the SEC said.

“The public is hereby advised to exercise caution in dealing with any individual or group of persons soliciting investments for and on behalf of Dermacare-Beyond Skin Care Solutions/Beyond Skincare Solutions/Beyond Skin Care Ventures, Inc. and not to invest or to stop investing in the investment scheme being offered by the subject entities or its representatives,” it added. — Revin Mikhael D. Ochave

#SEC #warns #investing #Mono #Mall #DermacareBeyond #Skin

SEC amends rules to support crowdfunding portals

THE Securities and Exchange Commission (SEC) has added registered funding portals as authorized registrars of qualified buyers of securities under the rules governing crowdfunding.

SEC Memorandum Circular No. 12, posted on the agency’s website on Sept. 6, has amended Section of the implementing rules and regulations of the Securities Regulation Code (SRC) to include funding portals registered under the SEC Crowdfunding Rules in the list of authorized registrars of qualified institutional buyers and individual buyers of securities.

SEC Commissioner Kelvin Lester K. Lee said the amendment is part of the corporate regulator’s efforts to give more options to stakeholders.   

“The SEC wanted to expand such functions to crowdfunding portals thus allowing more options to stakeholders. It is also part of the commission’s overall direction to boost the capital markets,” Mr. Lee told BusinessWorld via mobile phone.   

“By supporting crowdfunding portals, among others, the commission ensures that there are viable alternative means to raise capital available to the public,” he added.

Authorized registrars are entities that have been granted the appropriate secondary license by the commission. They may be authorized to act as a registrar upon proper application and compliance with registration requirements.   

Aside from funding portals registered under the SEC crowdfunding rules, the SEC said other authorized registrars are banks (with respect to their registration as broker-dealer), government securities eligible dealer, government securities brokers, and/or underwriters of securities.

Other authorized registrars are brokers, dealers, investment houses, investment company advisers, and issuer companies (with respect to offerings of their own securities).

On Aug. 18, the SEC issued the proposed amendments to the SRC and sought the comment of interested parties until Aug. 24.   

Meanwhile, the SEC said in a separate statement that it secured the conviction of six individuals involved in an investment scam operated by GDM Finance SARL, making it the 22nd conviction for violations of the Philippine securities law.

In a joint decision dated April 17, the Pasig City Regional Trial Court (RTC) Branch 158 deemed Anita E. Armada, Milany P. Cabrera, Josephine D. Maranan, Nanette D. Tongco, Gerald L. Samson, and Jacinto Lucio P. De Catalina guilty beyond reasonable doubt of violating Sections 8 and 26 of the SRC. The individuals were sentenced to pay a P100,000 fine each, with subsidiary imprisonment. 

The individuals were arrested following an entrapment operation of the SEC’s Enforcement and Investor Protection Department (EIPD) with the Philippine National Police Anti-Cybercrime Group in November 2018.

“The case stemmed from an information received by the SEC EIPD in July 2018, alleging that GDM had conducted a seminar in a mall where speakers enticed the audience to invest in GDM for a weekly return of at least 2.5%,” the corporate regulator said.

“After conducting an on-site field investigation, the EIPD confirmed that GDM indeed engaged in investment-taking activities. The investigation also uncovered that GDM had a Facebook account where it advertised that it could pay dividends to shareholders and provide a steady return on investment received,” it added. 

Under Section 8 of the SRC, the sale or distribution of securities without first being registered with the SEC is prohibited. Section 26 of the law also forbids individuals from employing fraud, deceit, and omission to garner investments from the public. 

“GDM had not registered any securities with the commission as required under the SRC. Neither had it secured a license to issue mutual funds, exchange-traded funds and proprietary or non-proprietary shares or membership certificates and timeshares,” the SEC said.

The SEC has secured the conviction of 33 individuals in 22 cases meted by the courts with a total imprisonment of 712 years and an aggregate fine of P28.4 million, as of writing.

As of September, 355 individuals are being actively prosecuted before the RTCs in 145 cases for violations of the SRC and two cases for violations of Republic Act No. 11765 or the Financial Products and Services Consumer Protection Act.

The SEC has filed criminal complaints against 31 corporations and 239 individuals before the Department of Justice as of June 30, all of which are currently pending resolution. — Revin Mikhael D. Ochave

#SEC #amends #rules #support #crowdfunding #portals

SEC targets to strictly follow 45-day processing for IPOs

THE Securities and Exchange Commission (SEC) will strictly adhere to the 45-day processing of initial public offerings (IPOs) as it aims to boost the country’s capital market.

“We are looking at being stricter about our 45-day processing for IPOs because we want to make it easier and we want to streamline the structure and process for IPOs in the future,” SEC Commissioner Kelvin Lester K. Lee said during a recent media roundtable in Makati City.

“There are minimal IPOs right now because of the interest rate environment, but we are foreseeing that IPOs will be a lot once that settles. We want to make sure that companies are ready for it, and we want to make sure that processing is much faster than before,” he added.

According to Mr. Lee, the previous average processing time was “a bit beyond the 45-day period” due to exchanges in documents that prolonged the process.

“The average before, as what I understand, is a bit beyond the 45 days. Usually, that is because, from the experience of our departments… there is often a lot of exchange of documentation. The process of IPOs is getting longer as a result. We want to make it streamlined, we want to make it faster,” Mr. Lee said.

Mr. Lee said the SEC will issue the necessary documentation informing the public of its strict adherence to the 45-day processing time for IPOs.

“We will be strictly adhering to a 45-day processing period. Technically, it is still internal rules but we will have to let the public know. That is something we want to signal to the public, that we are looking at making things easier in terms of capital markets,” Mr. Lee said.

On Aug. 24, the SEC approved and adopted the improved procedure for the processing of registration statements. The procedure adheres to the 45-day period for reviewing and processing the filed registration statements, with the SEC emphasizing adherence to Section 12.6 of the Securities Regulation Code. The provision ensures a streamlined and expedited evaluation and approval process for the registration statements.

Meanwhile, Mr. Lee said another SEC initiative to boost the capital markets was the implementation of the transaction date plus two days (T+2) settlement cycle, which started on Aug. 24.

“In fact, there were some entities pushing to extend the Aug. 24 implementation date. But we set a hard line on Aug. 24. Everyone has to implement T+2 by Aug. 24 because we want to make sure that the changes will happen,” Mr. Lee said.

“We’ve been fairly open-minded on some of the changes that we want to make with regards to the capital markets,” he added. — Revin Mikhael D. Ochave

#SEC #targets #strictly #follow #45day #processing #IPOs

SEC readies revised rules for reports on sustainability

THE Securities and Exchange Commission (SEC) is set to release a memorandum circular on the revised guidelines for publicly listed companies (PLCs) to improve their reporting and efforts on sustainability.

In a statement on Tuesday, the SEC said the soon-to-be-released circular will include the Sustainability Reporting (SuRe) form to guide PLCs with their reports.

“The revised guidelines seek to further enhance the quality of sustainability reporting and ensure consistency of non-financial information submitted by PLCs,” the SEC said. 

According to the SEC, the revised guidelines will consider global sustainability standards like the IFRS S1 (General Requirements for Disclosure of Sustainability-related Financial Information) and IFRS S2 (Climate-related Disclosures), among others.

“These standards serve as an effective and proportionate global framework of investor-focused disclosures on sustainability and climate-related risks and opportunities,” the regulator said. 

The SEC noted a steady increase in the submission of sustainability reports by PLCs as the compliance rate reached 95% in 2021, lower than 96% in 2020 but higher than 93% in 2019. 

Around 22% of PLCs disclosed their sustainability reports to the SEC before the release of the guidelines in 2017. 

“This is a significant step towards consistent, comparable, and reliable sustainability information, ending the so-called alphabet soup of voluntary adoption of various standards,” SEC Chairperson Emilio B. Aquino said. 

“The adoption of the IFRS S1 and S2 standards will complement the Commission’s adoption of frameworks under the United Nations Sustainable Development Goals, Global Reporting Initiative, Sustainability Accounting Standards Board, and United Nations Conference on Trade and Development-International Standards of Accounting and Reporting Guidance on Core Indicators,” he added. 

Earlier in the year, the SEC adopted the ASEAN Sustainable and Responsible Fund Standards, which allows both local and ASEAN-member investment companies and collective investment scheme operators to offer sustainable and responsible funds locally and across the region. — Revin Mikhael D. Ochave

#SEC #readies #revised #rules #reports #sustainability

SEC to align with Asian markets on short-selling

SEC to align with Asian markets on short-selling

THE SECURITIES and Exchange Commission (SEC) is aligning the country’s short-selling environment with other markets in Asia to boost the local equities market.

“We are pushing to align the short selling environment with the major Asian markets, which has the potential to promote liquidity, stabilize the market, protect investors, and further unlock the value of shares of Philippine corporations,” SEC Chairperson Emilio B. Aquino said in a statement on Monday.

The commission said it had looked at the adoption or non-adoption of existing practices in other markets to advance short-selling in the Philippines.

Short-selling — or betting on the decline of a stock’s price to make a profit — is allowed in other Southeast Asian countries such as Singapore, Hong Kong, Malaysia, Thailand, and Indonesia.

The SEC said it is looking at requiring the submission of a regular report on activities relating to short-selling and securities borrowing and lending (SBL), and their compliance with existing rules and policies to guide future policies. 

“We will balance our role as regulator and market innovator, imposing the necessary restrictions and safeguards while ensuring that they will not stifle investors and trading participants from fully taking advantage of this trading strategy,” Mr. Aquino said.

Short-selling happens when an investor sells a security that he or she does not own, the SEC explained. It is consummated by the delivery of a borrowed security, “with a commitment to return the borrowed security or its equivalent on a determined or determinable future date.” 

In 2018, the SEC approved the guidelines of the Philippine Stock Exchange (PSE) on short-selling transactions. The rules mandate that only the PSE index and exchange-traded funds are eligible for short-selling. Companies should also maintain a ratio of short interest to outstanding shares of at least 10%.

The SEC also approved the Capital Markets Integrity Corp. (CMIC) implementing guidelines on SBL and short-selling in 2019, which cover the recording of SBL and short-selling transactions on trading participants’ books and records. The guidelines call for trading participants to ascertain transacting parties have entered into the necessary borrowing arrangements prior to entering a short sale transaction.

Meanwhile, the SEC said in a separate statement that there is a need for digital transformation to improve the ease of doing business in the country.

“Over the years, we have adopted — and we continue to explore more — innovations in the way we receive, process and approve applications for company registration and corporate filings, as well as in the way we offer our other services to the public,” Mr. Aquino said during a seminar in Davao City on Aug. 30. 

The SEC said it is focused on digitalizing and streamlining its internal systems and direct interfaces with the transacting public and boosting digital external links with partner agencies and the private sector.

“Our digital transformation has been calibrated and tempered to the requirements of the transacting public and stakeholders,” Mr. Aquino said. “We need to adjust to our customers.” — Revin Mikhael D. Ochave

#SEC #align #Asian #markets #shortselling