THE
REVISED SECURITIES ACT
CHAPTER
I
Title
and Definitions
.chan
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virtual law library
Section
1. Title. — This Act shall be
known as the "Revised Securities Act."
Sec.
2. Definitions. — For purposes
of this Act: .chan
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(a) "Securities"
shall include bonds, debentures, notes, evidences of indebtedness,
shares
in a company, pre-organization certificates or subscriptions,
investment
contracts, certificates of interest or participation in a profit
sharing
agreement, collateral trust certificates, equipment trust certificates
(including conditional sale contracts or similar interests or
instruments
serving the same purpose), voting trust certificates, certificates of
deposit
for a security, or fractional undivided interest in oil, gas, or other
mineral rights, or, in general, interests or instruments commonly
considered
to be "securities", or certificates of interests or participation in,
temporary
or interim certificates for, receipts for, guarantees of, or warrants
or
rights to subscribe to or buy or sell any of the foregoing; or
commercial
papers evidencing indebtedness of any person, financial or
non-financial
entity, irrespective of maturity, issued, endorsed, sold, transferred
or
in any manner conveyed to another, with or without recourse, such as
promissory
notes, repurchase agreements, certificates of assignments, certificates
of participation, trust certificates or similar instruments; or
proprietary
or non-proprietary membership certificates, commodity futures
contracts,
transferable stock options, pre-need plans, pension plans, life plans,
joint venture contracts, and similar contracts and investments where
there
is no tangible return on investments plus profits but an appreciation
of
capital as well as enjoyment of particular privileges and
services.
(b) "Person"
means an individual, a corporation, a partnership, an association, a
joint-stock
company, a trust, any business organization, or a government or
political
subdivision thereof. As used in this paragraph, the term "trust" shall
include only a trust where the interest or interests of the beneficiary
or beneficiaries are evidenced by a security. .chan
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(c) "Sale"
or "sell" shall include every contract of sale or disposition of a
security
or interest in a security, for value. The terms "offer to sell" "offer
for sale", or "offer" shall include every attempt or offer to dispose
of,
or solicitation of an offer to buy, a security or interest in a
security,
for value. .chan
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(d) "Buy"
and "purchase" shall include any contract to buy, purchase, or
otherwise
acquire. .chan
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(e) "Issuer"
means every person who issues or proposes to issue any security; except
that with respect to certificates of deposit, voting trust
certificates,
or certificates of interest or shares in an unincorporated investment
trust,
not having a board of directors or persons performing similar functions
or of the fixed restricted management, or unit type, the term "issuer"
means any person or persons performing the acts and assuming the duties
of depositor or manager pursuant to the provisions of the trust or
other
agreement or instrument under which such securities are issued; and
except
that with respect to fractional undivided rights in oil, gas, or other
mineral rights, claims or properties, the term "issuer" means the owner
of any such right or property or of any interest therein, whether whole
or fractional, who creates fractional interests therein for the purpose
of public offering.
(f) "Dealer"
means any person engaged in the business of buying and selling
securities
for his own account, through a broker or otherwise, but does not
include
any person insofar as he buys or sells securities for his own account,
either individually or in some fiduciary capacity, but not as a part of
a regular business.
(g) "Salesman"
shall include every natural person, other than a dealer, employed or
appointed
or authorized by a dealer, issuer or broker to sell securities in any
manner.
The partners in a partnership and the executive officers of a
corporation
or other association registered as a dealer shall not be salesmen
within
the meaning of this definition.
(h) "Broker"
means any person engaged in the business of effecting transactions in
securities
for the account of others but does not include a bank. .chan
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(i) "Exchange"
means any organization, association, or group of persons, whether
incorporated
or unincorporated which constitutes, maintains, or provides a market
place
or facilities for bringing together purchasers and sellers of
securities
or for otherwise performing with respect to securities the functions
commonly
performed by a stock exchange as that term is generally understood, and
includes the market place and the market facilities maintained by such
exchange.
(j) "Facility",
when used with respect to an exchange, includes its premises, tangible
or intangible property, whether on the premises or not, any right to
the
use of such premises or property or any service thereof for the purpose
of effecting or reporting a transaction on an exchange including, among
other things, any system of communication to or from the exchange, by
ticker
or otherwise, maintained by or with the consent of the exchange, and
any
right of the exchange to the use of any property or service.
(k) "Member",
when used with respect to an exchange, means (1) any natural person
permitted
to effect transactions on the floor of the exchange without the
services
of another person acting as broker, (2) any registered broker or dealer
with which such a natural person is associated, (3) any registered
broker
or dealer permitted to designate as a representative such a natural
person,
and (4) any other registered broker or dealer which agrees to be
regulated
by such exchange and with respect to which the exchange undertakes to
enforce
compliance with the provisions of this Act, the rules and regulations
thereunder,
and its own rules.
(l) "Bank"
means an institution authorized to operate as such by the Central Bank
of the Philippines.
(m) "Director"
means any director of a corporation or any person performing similar
functions
with respect to any organization, whether incorporated or
unincorporated. .chan
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(n) "Commission"
means the Securities and Exchange Commission.
(o) "Clearing
agency" means any person who acts as an intermediary in making payments
or deliveries or both in connection with transactions in securities or
who provides facilities for comparison of data respecting the terms of
settlement of securities transactions, to reduce the number of
settlements
of securities transactions, or for the allocation of securities
settlement
responsibilities. Such term also means any person, such as a securities
depository, who (1) acts as a custodian of securities in connection
with
a system for the central handling of securities whereby all securities
of a particular class or series of any issuer deposited within the
system
are treated as fungible and may be transferred, loaned, or pledged by
bookkeeping
entry without physical delivery of securities certificates, or (2)
otherwise
permits or facilitates the settlement of securities transactions
without
physical delivery of securities certificates.
(p) "Transfer
agent" means any person who engages on behalf of an issuer of
securities
or on behalf of itself as an issuer of securities in (1) countersigning
such securities upon issuance; (2) monitoring the issuance of such
securities
with a view to preventing unauthorized issuance, a function commonly
performed
by a person called a registrar; (3) registering the transfer of such
securities;
(4) exchanging or converting such securities; or (5) transferring
record
ownership of securities by bookkeeping entry without physical issuance
of securities certificates. .chan
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(q) "Underwriter"
means any person who has purchased from an issuer with a view to, or
offers
or sells for an issuer in connection with, the distribution of any
security,
or participates or has a direct or indirect participation in any such
undertaking,
or participates or has a participation in the direct or indirect
underwriting
of any such undertaking; but such term shall not include a person whose
interest is limited to a commission from an underwriter or dealer not
in
excess of the usual and customary distributors' or sellers' commission.
As used in this paragraph, the term "issuer" shall include, in addition
to an issuer, any person directly or indirectly controlling or
controlled
by the issuer, or any person under direct or indirect common control
with
the issuer.
(r) "Promoter"
includes (1) any person who, acting alone or in conjunction with one or
more other persons, directly or indirectly, takes initiative in
founding
and organizing the business or enterprise of an issuer; or (2) any
person
who, in connection with the founding and organizing of the business of
an issuer, directly or indirectly, receives in consideration of
services
or property or both services or property ten (10%) per centum or more
of
any class of securities of the issuer or ten (10%) per centum or more
of
the proceeds from the sale of any class of such securities. However, a
person who receives such securities or proceeds either solely as
underwriting
commissions or solely as consideration of property shall not be deemed
a promoter within the meaning of this paragraph if such person does not
otherwise take part in founding and organizing the
enterprise. .chan
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Sec.
3. Administrative agency. — This
Act shall be administered by the Commission which shall continue to
have
the organization, powers, and functions provided by Presidential
Decrees
Numbered 902-A, 1653, 1758 and 1799 and Executive Order No. 708. The
Commission
shall, except as otherwise expressly provided, have the power to
promulgate
such rules and regulations as it may consider appropriate in the public
interest for the enforcement of the provisions hereof. .chan
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CHAPTER
II
Registration
of Securities
Sec.
4. Requirement of registration
of securities. — (a) No securities, except of a class exempt under any
of the provisions of Section five hereof or unless sold in any
transaction
exempt under any of the provisions of Section six hereof, shall be sold
or offered for sale or distribution to the public within the Philippine
unless such securities shall have been registered and permitted to be
sold
as hereinafter provided.
(b) Notwithstanding
the provisions of paragraph (a) of this Section and the succeeding
Sections
regarding exemptions, no commercial paper as defined in Section two
hereof
shall be issued, endorsed, sold, transferred or in any other manner
conveyed
to the public, unless registered in accordance with the rules and
regulations
that shall be promulgated in the public interest and for the protection
of investors by the Commission. The Commission, however, with due
regard
to the public interest and the protection of investors, may, by rules
and
regulations, exempt from registration any commercial paper that may
otherwise
be covered by this paragraph. In either case, the rules and regulations
promulgated by the Commission shall be subject to the approval of the
Monetary
Board of the Central Bank of the Philippines. The Monetary Board shall,
however, have the power to promulgate its own rules on the monetary and
credit aspects of commercial paper issues, which may include the
imposition
of ceilings on issues by any single borrower, and the authority to
supervise
the enforcement of such rules and to require issues of commercial
papers
to submit their financial statements and such periodic reports as may
be
necessary for such enforcement. As far as practicable, such financial
statements
and periodic reports, when required by both the Commission and the
Monetary
Board, shall be uniform. .chan
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(c) A
record of the registration of securities shall be kept in a Register of
Securities in which shall be recorded orders entered by 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 the
public inspection at reasonable hours on business days. .chan
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Sec.
5. Exempt securities. —
(a) Except as expressly provided, the requirement of registration under
subsection (a) of Section four of this Act shall not apply to any of
the
following classes of securities: .chan
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(1) Any
security issued or guaranteed by the Government of the Philippines, or
by any political subdivision or agency thereof or by any of its public
instrumentalities, or by any person controlled or supervised by, and
acting
as an instrumentality of said Government, or any certificate of deposit
for any of the foregoing..chan
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(2) Any
security issued or guaranteed by the government of any country with
which
the Philippines is, at the time of the sale or offer of sale thereof,
maintaining
diplomatic relations, or by any state, province or political
subdivision
thereof having the power of taxation or assessment, which security is
recognized
at the time of the sale or the offer to sell in the Philippines as a
valid
obligation by such foreign government or by such state, province or
political
subdivision thereof using the same.
(3) Any
security issued or guaranteed by any banking institution authorized to
do business in the Philippines, the business of which is substantially
confined to banking or a financial institution licensed to engage in
quasi-banking,
and is supervised by the Central Bank. .chan
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(4) Any
security issued by a building and loan association, non-stock savings
and
loan association, or similar institution, substantially all the
business
of which is confined to the making of loans to members but does not
include
any such security where the issuer takes from the total amount paid or
deposited by the purchaser, by way of any fee, cash value or other
device
whatsoever, either upon termination of the investment at maturity or
before
maturity an aggregate amount in excess of three per centum of the face
value of such security; or any security issued by rural credit
associations
or by cooperative marketing associations which are subject to
regulation
and supervision by the proper government agency. .chan
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(5) Certificates
issued by a receiver or by a trustee in bankruptcy duly approved by the
court.
(6) Any
insurance or endowment policy or annuity contract, or optional annuity
contract, issued by a corporation subject to the supervision of the
Insurance
Commission.
(7) Any
security covering any right or interest in real property, including a
subdivision
lot or a condominium unit, where the sale or transfer of such security
is subject to the supervision and regulation of the Ministry of Human
Settlements
or any of its authorized constituent or attached agencies..chan
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(8) Pension
plans subject to regulation and supervision by the Bureau of Internal
Revenue
and/or the Insurance Commission.
(b) The
Commission may, from time to time and subject to such terms and
conditions
as may be prescribed after public hearing, add to the foregoing any
class
of securities similar to these above-enumerated if it finds that the
enforcement
of this Act with respect to such securities is not necessary in the
public
interest and for the protection of investors. .chan
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Sec.
6. Exempt transactions.
— (a) The requirement of registration under subsection (a) of Section
four
of this Act shall not apply to the sale of any security in any of the
following
transactions:
(1) At
any judicial sale, or sale by an executor, administrator, guardian or
receiver
or trustee in insolvency or bankruptcy.
(2) By
or for the account of a pledge holder, or mortgagee, or any other
similar
lienholder selling or offering for sale or delivery in the ordinary
course
of business and not for the purpose of avoiding the provisions of this
Act, to liquidate a bona fide debt, a security pledged in good faith as
security for such debt. .chan
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(3) An
isolated transaction in which any security is sold, offered for sale,
subscription
or delivery by the owner thereof, or by his representative for the
owner's
account, such sale or offer for sale, subscription or delivery not
being
made in the course of repeated and successive transactions 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.
(4) 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; or the issuance of securities to the security holder or other
creditors of a corporation in the process of a bona fide reorganization
of such corporation made in good faith and not for the purpose of
avoiding
the provisions of this Act, either in exchange for the securities of
such
security holders or claims of such creditors or partly for cash and
partly
in exchange for the securities or claims of such security holders or
creditors;
or the issuance of additional capital stock of a corporation sold or
distributed
by it among its own stockholders exclusively, where no commission or
other
remuneration is paid or given directly or indirectly in connection with
the sale or distribution of such increased capital stock. .chan
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(5) The
transfer or exchange by one corporation to another corporation of their
own securities in connection with a consolidation or merger of such
corporations.
(6) The
issuance of bonds or notes secured by mortgage upon real estate or
tangible
personal property, where the entire mortgage together with all the
bonds
or notes secured thereby are sold to a single purchaser at a single
sale.
(7) 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 and permitted to
be
sold under this Act or was, when sold, exempt from the provisions of
this
Act, 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 Act. 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.
(8) Broker's
transactions, executed upon customer's orders on any exchange or in the
over-the-counter market but not those made upon the solicitation by
brokers
of such orders. .chan
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(9) Subscriptions
for shares of the capital stock of a corporation prior to the
incorporation
thereof under the Corporation Code, when no expense is incurred, or no
commission, compensation or remuneration is paid or given in connection
with the sale or disposition of such securities, and only when the
purpose
for soliciting, giving or taking, of such subscriptions is to comply
with
the requirements of such law as to the percentage of the capital stock
of a proposed corporation which should be subscribed before it can be
registered
and duly incorporated.
(10) The
exchange of securities by the issuer with its existing security holders
exclusively, where no commission or other remuneration is paid or given
directly or indirectly for soliciting such exchange. .chan
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(11) Any
issuance of any security by a public utility or service corporation
which,
in compliance with or pursuant to law, regulation or decree, is
intended
to broaden its equity base as well as to finance a part of the capital
investment thereof through the issuance and sale of stocks.
(b) The
Commission may, from time to time and subject to such terms and
conditions
as it may prescribe, exempt transactions other than those provided in
the
preceding paragraph, if it finds that the enforcement of the
requirements
of registration under this Act with respect to such transactions is not
necessary in the public interest and for the protection of the
investors
by reason of the small amount involved or the limited character of the
public offering. .chan
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(c) A
fee equivalent to one-tenth of one per centum of the maximum aggregate
price or issued value of the securities shall be collected by the
Commission
for granting a general or particular exemption from the registration
requirements
of this Act. (6a)
Sec.
7. Commodity futures contracts.
— Notwithstanding the provisions of paragraph (a) of Section 4 and of
Section
5 and 6 regarding exemptions, commodity futures contracts may be
registered
or otherwise regulated, and futures commission merchants, futures
brokers,
floor brokers, pool operators and advisors licensed and supervised in
accordance
with the rules and regulations that shall be promulgated in the public
interest and for the protection of investors by the Commission, with
the
approval of the Monetary Board of the Central Bank of the Philippines.
Such rules and regulations may, among other things, provide for the
establishment
and maintenance by futures commission merchants, futures brokers, floor
brokers, pool operators and advisors of bank accounts exclusively for
margin
deposit of and/or other receipts from customers, the monitoring of
withdrawals
from such account through periodic reports and/or examination, the
requirement
that at least one of the signatories to fund withdrawals from such
account
must be a Filipino citizen and a resident of the Philippines, the
posting
by futures commission merchants, futures brokers, floor brokers, poll
operators
and advisors of a bond in an amount sufficient to meet possible claims
against them, taking into account the volume of margin deposits held by
them, the establishment of a common compensation fund to be contributed
by all futures commission merchants, futures brokers, floor brokers,
pool
operators and advisors and subject to the control and supervision of
the
Commission, and the registration and use by futures commission
merchants,
futures brokers, floor brokers, pool operators and advisors of official
receipts to evidence commissions received by them from customers.
However,
the Commission shall, after proper notice and opportunity for hearing,
prohibit transactions with respect to all or specified commodity
futures
contracts it shall find that such transactions will be inimical to the
economic interest of the country or may cause grave or irreparable
injury
or prejudice to the investing public. .chan
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Sec.
8. Procedure for registration.
— (a) All securities required to be registered under subsection (a) of
Section four of this Act shall be registered through the filing by the
issuer or by any dealer or underwriter interested in the sale thereof,
in the office of the Commission, of a sworn registration statement with
respect to such securities, containing or having attached thereto, the
following:
(1) Name
of issuer and, if incorporated, place of incorporation. .chan
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(2) The
location of the issuer's principal business office, and if such issuer
is a non-resident or its place of office is outside of the Philippines,
the name and address of its agent in the Philippines authorized to
receive
notice. .chan
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(3) The
names and addresses of the directors or persons performing similar
functions,
and the chief executive, financial and accounting officers, chosen or
to
be chosen, if the issuer be a corporation, association, trust, or other
entity; of all the partners, if the issuer be a partnership; and of the
issuer, if the issuer be an individual; and of the promoters in the
case
of a business to be formed.
(4) The
names and addresses of the underwriters. .chan
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(5) The
general character of the business actually transacted or to be
transacted
by, and the organization and financial structure of, the issuer
including
identities of all companies controlling, controlled by or commonly
controlled
with the issuer.
(6) The
names and addresses of all persons, if any, owning of record or
beneficially,
if known, more than ten (10%) per centum in the aggregate of the
outstanding
stock of the issuer as of a date within twenty days prior to the filing
of the registration statement.
(7) The
amount of securities of the issuer held by any person specified in
subparagraphs
(3), (4), and (6) of this subsection, as of a date within twenty days
prior
to the filing of the registration statement, and, if possible, as of
one
year prior thereto, and the amount of the securities, for which the
registration
statement is filed, to which such persons have indicated their
intention
to subscribe.
(8) A
statement of the capitalization of the issuer and of all companies
controlling,
controlled by or commonly controlled with the issuer, including the
authorized
and outstanding amounts of its capital stock and the proportion thereof
paid up; the number and classes of shares in which such capital stock
is
divided; par value thereof, or if it has no par value, the stated or
assigned
value thereof; a description of the respective voting rights,
preferences,
conversion and exchange rights, rights to dividends, profits, or
capital
of each class, with respect to each other class, including the
retirement
and liquidation rights or values thereof.
(9) A
copy of the security for the registration of which application is
made.
(10) A
copy of any circular, prospectus, advertisement, letter, or
communication
to be used for the public offering of the security. .chan
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(11) A
statement of the securities, if any, covered by options outstanding or
to be created in connection with the security to be offered, together
with
the names and addresses of all persons, if any, to be allotted more
than
ten (10%) per centum in the aggregate of such options.
(12) The
amount of capital stock of each class issued or included in the shares
of stock to be offered.
(13) The
amount of the funded indebtedness outstanding and to be created by the
security to be offered, with a brief statement of the date, maturity,
and
character of such debt, rate of interest, character or amortization
provisions,
other terms and conditions thereof and the security, if any, therefor.
If substitution of any security is permissible, a summarized statement
of the conditions under which such substitution is permitted. If
substitution
is permissible without notice, a specific statement to that
effect. .chan
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(14) The
specific purposes in detail and the approximate amounts to be devoted
to
such purposes, so far as determinable, for which the security to be
offered
is to supply funds, and if the funds are to be raised in part from
other
sources, the amounts and the sources thereof.
(15) The
remuneration, paid or estimated to be paid, by the issuer or its
predecessor,
directly or indirectly, during the past year and the ensuing year to
(a)
the directors or persons performing similar functions, and (b) its
officers
and other persons, naming them whenever such remuneration exceeded
sixty
thousand (P60,000.00) pesos during any such year.
(16) The
amount of issue of the security to be offered. .chan
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(17) The
estimated net proceeds to be derived from the security to be
offered.
(18) The
price at which the security is proposed to be offered to the public or
the method by which such price is computed and any variation therefrom
at which any portion of such security is proposed to be offered to
persons
or classes of persons, other than the underwriters, naming them or
specifying
the class. A variation in price may be proposed prior to the date of
the
public offering of the security by filing an amended registration
statement. .chan
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(19) All
commissions or discounts paid or to be paid, directly or indirectly, by
the issuer to the underwriters in respect of the sale of the security
to
be offered. Commissions shall include all cash, securities, contracts,
or anything of value, paid, to be set aside, or disposed of, or
understanding
with or for the benefit of any other person in which any underwriter is
interested, made in connection with the sale of such security. A
commission
paid or to be paid in connection with the sale of such security by a
person
in which the issuer has an interest or which is controlled by, or under
common control with, the issuer shall be deemed to have been paid by
the
issuer. Where any such commission is paid, the amount of such
commission
paid to each underwriter shall be stated.
(20) The
amount or estimated amounts, itemized in reasonable detail, of
expenses,
other than commission specified in the next preceding paragraph,
incurred
or to be incurred by or for the account of the issuer in connection
with
the sale of the security to be offered or properly chargeable thereto,
including legal, engineering, certification, authentication, and other
charges.
(21) The
net proceeds derived from any security sold by the issuer during the
two
years preceding the filing of the registration statement, the price at
which such security was offered to the public, and the names of the
principal
underwriters of such security.
(22) Any
amount paid within two years preceding the filing of the registration
statement
or intended to be paid to any promoter and the consideration for any
such
payment..chan
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(23) The
names and addresses of the vendors and the purchase price of any
property
or goodwill, acquired or to be acquired, not in the ordinary course of
business, which is to be defrayed in whole or in part from the proceeds
of the security to be offered, the amount of any commission payable to
any person in connection with such acquisition, and the name or names
of
such person or persons, together with any expense incurred or to be
incurred
in connection with such acquisition, including the cost of borrowing
money
to finance such acquisition.
(24) Full
particulars of the nature and extent of the interest, if any, of every
director, principal executive officer, and of every stockholder holding
more than ten (10%) per centum in the aggregate of the stock of the
issuer,
in any property acquired, not in the ordinary course of business of the
issuer, within two years preceding the filing of the registration
statement
or proposed to be acquired at such date. .chan
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(25) The
names and addresses of independent counsel who have passed on the
legality
of the issue.
(26) Dates
of and parties to, and the general effect concisely stated of every
material
contract made, not in the ordinary course of business, which contract
is
to be executed in whole or in part at or after the filing of the
registration
statement or which has been executed not more than two years before
such
filing. Any management contract or contract providing for special
bonuses
or profit-sharing arrangements, and every material patent or contract
for
a material patent right, and every contract by or with a public utility
company or an affiliate thereof, providing for the giving or receiving
of technical or financial advice or service shall be deemed a material
contract.
Any
contract, whether or not made in the ordinary course of business with
any
stockholder, whether a natural or juridical person, owning more than
ten
(10%) per centum of the shares of the issuer shall be deemed a material
contract for the purpose of this Act.
(27) A
balance sheet as of a date not more than ninety days prior to the date
of the filing of the registration statement showing all of the assets
of
the issuer, the nature and cost thereof, whenever determinable with
intangible
items segregated, including any loan to or from any officer, director,
stockholder or person directly or indirectly controlling or controlled
by the issuer, or person under direct or indirect common control with
the
issuer. In the event any such assets consist of shares of stock in
other
companies, the balance sheet and profit and loss statements of such
companies
for the past three years shall likewise be enclosed. All the
liabilities
of the issuer, including surplus of the issuer, showing how and from
what
sources such surplus was created, all as of a date not more than ninety
days prior to the filing of the registration statement. If such
statement
is not certified by an independent certified public accountant, in
addition
to the balance sheet required to be submitted under this schedule, a
similar
detailed balance sheet of the assets and liabilities of the issuer,
certified
by an independent certified public accountant, of a date not more than
one year prior to the filing of the registration statement, shall be
submitted. .chan
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(28) A
profit and loss statement of the issuer showing earnings and income,
the
nature and source thereof, and the expenses and fixed charges in such
detail
and such form as the Commission shall prescribe for the latest fiscal
year
for which such statement is available and for the two preceding fiscal
years, year by year, or, if such issuer has been in actual business for
less than three years, then for such time as the issuer has been in
actual
business, year by year. If the date of the filing of the registration
statement
is more than six months after the close of the last fiscal year, a
statement
from such closing date to the latest practicable date. Such statement
shall
show what the practice of the issuer has been during the three years or
lesser period as to the character of the charges, dividends or other
distributions
made against its various surplus accounts, and as to depreciation,
depletion,
and maintenance charges, and if stock dividends or avails from the sale
of rights have been credited to income, they shall be shown separately
with statement of the basis upon which credit is computed. Such
statement
shall also differentiate between recurring and nonrecurring income and
between any investment and operating income. Such statement shall be
certified
by an independent certified public accountant. .chan
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(29) Any
liabilities of the issuer to companies controlling or controlled by the
issuer shall be disclosed in full detail as to use of the proceeds
thereof,
the maturity and repayment schedule, nature of security thereof, the
rate
of interest and other terms and conditions thereof. If the proceeds, or
any part of the proceeds, of the security to be issued is to be applied
directly or indirectly to the purchase of any business, a profit and
loss
statement of such business, certified by an independent certified
public
accountant, meeting the requirements of subparagraph (28) of this
subsection,
for the three preceding fiscal years, together with a balance sheet,
similarly
certified, of such business, meeting the requirements of subparagraph
(27)
hereof of a date not more than ninety days prior to the filing of the
registration
statement or at the date such business was acquired by the issuer more
than ninety days prior to the filing of the registration
statement. .chan
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(30) A
copy of any agreement or agreements or, if identical agreements are
used,
the forms thereof made with any underwriter, including all contracts
and
agreements referred to in subparagraph (19) hereof.
(31) A
copy of the opinion or opinions of independent counsel in respect to
the
legality of the issue.
(32) A
copy of all material contracts referred to in subparagraph (26) hereof,
but no disclosure shall be required by the Commission of any portion of
any such contract if the disclosure of such portion would impair the
value
of the contract and would not be necessary for the protection of the
investors.
(33) A
detailed statement showing the items of cash, property, services,
patents,
goodwill, and any other consideration for which securities have been or
are to be issued in payment. .chan
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(34) The
amount of cash to be paid as promotion fees, or of capital stock which
is to be set aside and disposed of as promotion stock, and a statement
of all stock issued from time to time as promotion stock.
(35) In
connection with securities issued by a person engaged in the business
of
developing, exploiting or operating mineral claims, a sworn statement
of
a mining engineer stating the ore possibilities of the mine and such
other
information in connection therewith as will show the quality of the ore
in such claims, and the unit cost of extracting it.
(36) Unless
previously filed and registered with the Commission and brought up to
date:
(a) A
copy of its articles of incorporation with all amendments thereof and
its
existing by-laws or instruments corresponding thereto, whatever the
name,
if the issuer be a corporation;
(b) A
copy of all instruments by which the trust is created or declared and
in
which it is accepted and acknowledged, if the issuer is a trust;
(c) A
copy of its articles of partnership or association and all the papers
pertaining
to its organization, if the issuer is a partnership, unincorporated
association,
joint-stock company, syndicate, or any other form of organization.
(37) A
copy of the underlying agreements or indentures affecting any stock,
bonds,
or debentures offered or to be offered by the issuer and outstanding on
the part of companies controlling or controlled by the issuer.
(38) Where
the issuer or registrant is not formed, organized and existing under
the
laws of the Philippines or is not domiciled in the Philippines, a
written
power of attorney, certified and authenticated in accordance with law,
designating some individual person, who must be a resident of the
Philippines,
on whom any summons and other legal processes may be served in all
actions
or other legal proceedings against him, and consenting that service
upon
such resident agent shall be admitted as valid and proper service upon
the issuer or registrant, and if at any time that service cannot be
made
upon such resident agent, service shall be made upon the
Commission.
Additional
information or documents, including written information from an expert,
may be required, or anyone of the above requirements may be dispensed
with,
depending on the necessity thereof for the protection of the public
investors,
or their applicability to the class of securities sought to be
registered,
as the case may be. .chan
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The
registration statement shall be signed by the issuer, its principal
executive
officer, its principal operating officer, its principal financial
officer,
its comptroller or principal accounting officer or persons performing
similar
functions. 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.
Upon
filing of the registration statement, the registrant shall pay to the
Commission
a fee of not more than one-tenth of one per centum of the maximum
aggregate
price at which such securities are proposed to be offered and the fact
of such filing shall be immediately published by the Commission, at the
expense of the registrant, in two newspapers of general circulation in
the Philippines, once a week for two consecutive weeks, reciting that a
registration statement for the sale of such security has been filed
with
it, and that the aforesaid registration statement, as well as the
papers
attached thereto, are open to inspection during business hours, by
interested
parties, and copies thereof, photostatic or otherwise, shall be
furnished
to every applicant at such reasonable charge as the Commission may
prescribe.
Any
interested party may file an opposition to the registration within ten
days from the publication. .chan
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If
after the completion of the aforesaid publication, the Commission finds
that the registration statement together with all the other papers and
documents attached thereto, is on its face complete and that the
requirements
and conditions for the protection of the investors have been complied
with,
and unless there are grounds to reject a registration statement as
herein
provided, it shall as soon as feasible enter an order making the
registration
effective, and issue to the registrant a permit reciting that such
person,
its brokers or agents, are entitled to offer the securities named in
said
certificate, with such terms and conditions as it may impose in the
public
interest and for the protection of investors.
The
Commission shall, however, advise the public that the issuance of such
permit shall not be deemed a finding by the Commission that the
registration
statement is true and accurate on its face or that it does not contain
an untrue statement of fact or omit to state a material fact, or be
held
to mean that the Commission has in any way given approval to the
security
included in the registration statement. Every permit and any other
statement,
printed or otherwise, for public consumption, that makes reference to
such
permit shall clearly and distinctively state that the issuance thereof
is only permissive and does not constitute a recommendation or
endorsement
of the securities permitted to be offered for sale. It shall be
unlawful
to make, or cause to be made, to any prospective purchaser any
representation
contrary to the foregoing.
Notwithstanding
the foregoing, the Commission, for the guidance of investors, may
require
issuers to submit their securities to rating by securities rating
agencies
accredited by the Commission, to provide all information necessary
therefor,
and to report such rating in the registration statement and prospectus,
if any, offering the securities. .chan
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If
any change occurs in the facts set forth in the registration statement,
it shall be the obligation of the issuer, dealer or underwriter who
filed
the original registration statement to submit to the Commission for
approval
an amended registration statement.
The
Commission, in its order, may fix the maximum amount of commission or
other
form of remuneration to be paid in cash or otherwise, directly or
indirectly,
for or in connection with the sale or offering for sale of such
securities
in the Philippines and the maximum amount of compensation which the
issuer
shall pay for mining claims and mineral rights for which provision is
made
by the issuer for payment in cash or securities. The amount of
compensation
which shall be paid the owner or holder of such mining claims or
mineral
rights shall be a fair valuation thereof, as may be fixed by the
Commission,
after consultation with the Bureau of Mines, and after receiving such
technical
information as the issuer or dealer or the owner or owners of such
claims
may care to submit in the premises.
A
copy of the order of the Commission making the registration effective,
together with the registration statement, shall be transmitted to the
exchange
wherein the security may be listed and shall be available for
inspection
by any interested party during reasonable hours on any business
day.
The
order shall likewise be published, at the expense of the registrant,
once
in a newspaper of general circulation within ten days from its
promulgation.
The
same rules shall apply to any amendment to the registration
statement. .chan
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Sec.
9. Grounds for the rejection
of registration. — The Commission may reject a registration statement
and
refuse to issue a permit to sell the securities included in such
registration
statement if it finds that:.chan
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(1) The
registration statement is on its face incomplete or inaccurate in any
material
respect or includes any untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to
make
the statements therein not misleading; or
(2) The
issuer or registrant:
(i) is
not solvent or not in sound financial condition;
(ii) has
violated or has not complied with the provisions of this Act, or the
rules
promulgated pursuant thereto, or any order of the Commission;
(iii) has
failed to comply with any of the applicable requirements and conditions
that the Commission may, in the public interest and for the protection
of investors, impose before the security can be registered;
(iv) has
been engaged or is engaged or is about to engage in fraudulent
transactions;
(v) is
in any other way dishonest or is not of good repute; or .chan
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(vi) does
not conduct its business in accordance with law or is engaged in a
business
that is illegal or contrary to government rules and regulations. .chan
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(3) The
enterprise or the business of the issuer is not shown to be sound or to
be based on sound business principles;
(4) An
officer, member of the board of directors, or principal stockholder of
the issuer is disqualified to be such officer, director, or principal
stockholder;
or
(5) The
issuer or registrant has not shown to the satisfaction of the
Commission
that the sale of its security would not work to the prejudice of the
public
interest or as a fraud upon the purchasers or investors. .chan
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Sec.
10. Amendments to the registration
statement. — (a) If
a registration statement is on its face incomplete or inaccurate in any
material respect, the Commission may, after notice by personal service
or the sending of confirmed telegraphic notice to the registrant, issue
an order denying action on the registration statement until it has been
amended in accordance with such order. When such statement has been
amended
in accordance with such order the Commission shall act on the amended
registration
in accordance with the procedure mentioned in Section eight
hereof. .chan
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(b) An
amendment filed after the effective date of the registration statement,
shall become effective upon its approval by the Commission.
(c) If
the registration statement includes any untrue statement of a material
fact or omits to state any material fact required to be stated therein
or necessary to make the statements therein not misleading, the
Commission
may, after notice by personal service or by sending a confirmed
telegraphic
notice by personal service or by sending a confirmed telegraphic notice
and after opportunity for hearing has been granted, issue an order
suspending
the effectivity of the registration statement. If the statement is
amended
in accordance with requirements, the suspension order shall be
lifted. .chan
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(d) The
Commission may conduct an examination in any case in order to determine
whether an order should issue under subsection (c) hereof. In making
such
examination the Commission or any officer or officers designated by it
shall have access to, and may demand the production of, any books and
records
of, and may administer oaths and affirmations to and examine, the
issuer,
underwriter, or any other person, in respect of any matter relevant to
the examination, and may in its discretion, require the production of
the
corporate books and records, showing, among others, its assets and
liabilities
and income statement of the issuer, certified to by a certified public
accountant. Failure of the issuer or underwriter to cooperate, or his
obstruction
or refusal to undergo an examination, shall be a ground for the
issuance
of a suspension order. .chan
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Sec.
11. Periodic and other
reports. — (a) Every issuer of a security registered pursuant to this
Act
shall file with the Commission:
(1) Such
information and documents as shall keep reasonably current the
information
and documents required to be included in or filed with an application
or
registration statement filed; .chan
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(2) Such
annual reports and such periodicals and other reports as may be
necessary
to update information on the operation of the business of the issuer or
registrant; and .chan
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(3) Such
copies of all circulars, prospectuses, and other advertising matter,
before
or at the time of their issuance for publication, as the issuer or any
person acting for him may issue from time to time, which shall in all
cases
fully set forth the amount and nature of the fees or expenses, payable
in cash or securities, for goodwill, organization or promotion and such
other matters as may be necessary for the protection of investors. .chan
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Every
issuer of a security registered with an exchange shall file a duplicate
original of such information, documents, and reports with the
exchange. .chan
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(b) The
Commission may prescribed, in regard to reports made pursuant to this
Act,
the form or forms in which the required information shall be set forth,
and the items or details to be shown therein.
(c) If
any report required under subsection (a) is inapplicable to any
specified
class or classes of issuers such reports of comparable character as may
be applicable to such class or classes of issuers shall be submitted in
lieu thereof. .chan
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.
Sec.
12. Civil liabilities on
account of false registration statement. — (a) 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, unless it is proved that at the
time of such acquisition he knew of such untrue statement or omission,
may sue in a court of competent jurisdiction:
(1) Every
person who signed the registration statement; .chan
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(2) 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; .chan
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(3) 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;
(4) Every
person whose profession gives authority to a statement made by him, who
with his written consent, which shall be filed with the registration
statement,
has been named as having prepared or certified any part of the
registration
statement, or as having prepared or certified any report or valuation
which
is used in connection with the registration statement, with respect to
the statement in such registration statement, report, or valuation,
which
purports to have been prepared or certified by him.
(5) Every
underwriter with respect to such security. .chan
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(b) Notwithstanding
the provisions of subsection (a) no person, other than the issuer,
shall
be liable as provided therein if he proves —
(1) That
before the effective date of the part of the registration statement
with
respect to which his liability is asserted (A) he had resigned from or
had taken such steps as are permitted by law to resign from, or ceased
or refused to act in, every office, capacity, or relationship in which
he was described in the registration statement as acting or agreeing to
act, and (B) he had advised the Commission and the issuer in writing
that
he had taken such action and that he would not be responsible for such
part of the registration statement; or .chan
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(2) That
(A) as regards any part of the registration statement not purporting to
be a copy of or extract from a report or valuation of an expert, and
not
purporting to be made on the authority of a public official document or
statement, he had, after reasonable investigation, reasonable ground to
believe and did believe, at the time such part of the registration
statement
became effective, that the statements therein were true and that there
was no omission to state a material fact required to be stated therein
or necessary to make the statements therein not misleading; and (B) as
regards any part of the registration statement purporting to be made
upon
his authority as an expert or purporting to be a copy of or extract
from
a report or valuation of himself as an expert, (i) he had, after
reasonable
investigation, reasonable ground to believe and did believe, at the
time
such part of the registration statement became effective, that the
statements
therein were true and that there was no omission to state a material
fact
required to be stated therein or necessary to make the statements
therein
not misleading, or (ii) such part of the registration statement did not
fairly represent his statement as an expert or was not a fair copy of
or
extract from his report or valuation as an expert; and (C) as regards
any
part of the registration statement purporting to be made on the
authority
of an expert (other than himself) or purporting to be a copy of or
extract
from a report or valuation of an expert (other than himself), he had no
reasonable ground to believe and did not believe, at the time such part
of the registration statement became effective, that the statements
therein
were untrue or that there was an omission to state a material fact
required
to be stated therein or necessary to make the statements therein not
misleading,
or that such part of the registration statement did not fairly
represent
the statement of the expert or was not a fair copy of or extract from
the
report or valuation of the expert; and (D) as regards any part of the
registration
statement purporting to be a statement made by a public official or
purporting
to be a copy of or extract from a public official document, he had no
reasonable
ground to believe and did not believe, at the time such part of the
registration
statement became effective, that the statements therein were untrue, or
that there was an omission to state a material fact required to be
stated
therein or necessary to make the statements therein not misleading, or
that such part of the registration statement did not fairly represent
the
statement made by the public official or was not a fair copy of or
extract
from the public official document.
(c) In
determining, for the purpose of paragraph (2) of subsection (b) of this
Section, what constitutes reasonable investigation and reasonable
ground
for belief, the standard of reasonableness shall be that required of a
prudent man in the management of his own property.
.
(d) The
suit authorized under subsection (a) may be filed to recover such
damages
as shall represent double the difference between the amount paid and
committed
to be paid for the security, not exceeding the price at which the
security
was offered to the public, and (1) the value thereof as of the time
such
suit was brought, or in case the security has been disposed of, (2) the
price at which such security shall have been disposed of in the market
before the suit, or (3) the price at which such security shall have
been
disposed of after the filing of the suit but before judgment. No
underwriter
shall be liable in any suit or as a consequence of suits authorized
under
subsection (a) hereof for damages in excess of the total price at which
the securities underwritten by him and distributed to the public were
offered
to the public.
.
In
any suit under this or any other section of this Act, the court may, in
its discretion, require an undertaking for the payment of the costs of
such suit, including reasonable attorney's fees. Costs may be allowed
by
the Court to the prevailing party litigant in accordance with Rule 142
of the Rules of Court.
Exemplary
damages may also be awarded in cases of bad faith, fraud, malevolence
or
wantonness in the violation of this Act or the rules and regulations
promulgated
thereunder. .chan
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(e) The
persons specified in subsection (a) hereof shall be jointly and
severally
liable for the payment of damages. However, any person who becomes
liable
for the payment of such damages may recover contribution from any other
person who, if sued separately, would have been liable to make the same
payment, unless the former was guilty of fraudulent representation and
the latter was not.
(f) In
no case shall the amount recoverable under this Section exceed double
the
price at which the security was offered to the public and such
exemplary
damages as may be awarded by the court. .chan
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(g) Notwithstanding
any provision of law to the contrary, all persons, including the
issuer,
held liable under this Section, shall contribute equally to the total
liability
adjudged herein. In no case shall the principal stockholders, directors
and other officers of the issuer or persons occupying similar positions
therein, recover their contribution to the liability from the issuer.
However,
the right of the issuer to recover from the guilty parties the amount
it
has contributed under this Section shall not be prejudiced. (n)
.
Sec.
13. Civil liabilities arising
in connection with prospectuses, communications and reports. — (a) Any
person who:
(1) offers
to sell or sells a security in violation of Chapter II, or .chan
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(2) offers
to sell or sells a security, whether or not exempted by the provisions
of this Act, by the use of any means or instruments of transportation
or
communication, by means of a prospectus 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 known, 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, in any court of competent
jurisdiction,
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.
Exemplary
damages may likewise be awarded in cases of bad faith, fraud,
malevolence
or wantonness.
(b) Any
person who shall make or cause to be made any statement in any report,
or document filed pursuant to this Chapter or any rule or regulation
thereunder,
which statement was at the time and in the light of the circumstances
under
which it was made false or misleading with respect to any material
fact,
shall be liable to any person who, not knowing that such statement was
false or misleading, and relying upon such statement, shall have
purchased
or sold a security at a price which was affected by such statement, for
damages caused by such reliance, unless the person sued shall prove
that
he acted in good faith and had no knowledge that such statement was
false
or misleading. In any such suit the court may, in its discretion,
require
an undertaking for the payment of the costs of such suit, and assess
reasonable
costs, including reasonable attorney's fees against either party
litigant. .chan
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Every
person who becomes liable to make payment under this subsection may
recover
contribution as in cases of contract from any person who, if joined in
the original suit, would have been liable to make the same payment.
(n)
Sec.
14. Limitation of actions.
— (a) No action shall be maintained to enforce any liability created
under
Section 12 or Section 13 of this Act unless brought within two years
after
the discovery of the untrue statement or the omission, or, if the
action
is to enforce a liability created under Section 13(a) (1), unless
brought
within two years after the violation upon which it is based. In no
event
shall any such action be brought to enforce a liability created under
Section
12 of 13(a) (1) more than five years after the security was bona fide
offered
to the public, or under Section 13(a) (2) more than five years after
the
sale.
(b) No
action shall be maintained to enforce any liability created under
Section
13(b) or any other provision of this Act unless brought within two
years
after the discovery of the facts constituting the cause of action and
within
five years after such cause of action and within five years after such
cause of action accrued. .chan
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Sec.
15. Suspension of registration.
— If, at any time, the information contained in the statement filed is
or has become misleading, incorrect, inadequate or incomplete, or the
sale
or offering for sale of the security may work or tend to work a fraud,
the Commission may require from the person filing such statement such
further
information as may in its judgment be necessary to enable the
Commission
to ascertain whether the registration of such security should be
revoked
on any ground specified in this Act, and the Commission may also
suspend
the right to sell such security pending further investigation, by
entering
an order specifying the grounds for such action, and by notifying by
mail
or personally or by telephone confirmed in writing, or by telegraph,
the
person filing such statement and every dealer and broker who shall have
notified the Commission of an intention to sell such security. The
refusal
to furnish information required by the Commission, within a reasonable
time to be fixed by the Commission, may be a proper ground for the
entry
of such order of suspension. Upon the entry of any such order of
suspension,
no further sales of such security shall be made until the Commission
orders
otherwise. Any such sale shall be void. .chan
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In
the event of the entry of such order of suspension, the Commission
shall
give a prompt hearing to the parties interested. If upon such hearing,
the Commission shall determine that the sale of any such security
should
be revoked on any ground specified in this Act, it shall make the
necessary
findings and enter a final order prohibiting sales of such security.
Until
the entry of such final order, the suspension of the right to sell,
though
binding upon the persons notified thereof, shall be deemed
confidential,
and shall not be published, unless it shall appear that the order of
suspension
has been violated after notice. If however, upon such hearing the
Commission
finds that the sale of the security will neither be fraudulent nor
result
in fraud, it shall forthwith enter an order revoking such order of
suspension,
and such security shall be restored to its status as a security
registered
under this Act, as of the date of such order of suspension. .chan
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Sec.
16. Revocation of registration
of securities. — (a) The Commission may, after due notice and hearing,
revoke the registration of any security and the permit to sell such
security
by issuing an order to this effect, setting forth its findings in
respect
thereto, if upon examination it shall appear that the issuer: .chan
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(1) Is
insolvent;
(2) Has
violated any of the provisions of this Act, or the rules promulgated
pursuant
thereto, or any order of the Commission of which the issuer has
notice;
(3) Has
been or is engaged or is about to engage in fraudulent
transactions;
(4) Is
in any other way dishonest or has made any fraudulent representation in
any prospectus or in any circular or other literature that has been
distributed
concerning the issuer of its securities; or
(5) Does
not conduct its business in accordance with law. .chan
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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
issuer
or any other person connected therewith as to its business and affairs,
and may also require a balance sheet exhibiting the assets and
liabilities
of any such issuer or his income statement or both to be certified to
by
an independent certified public accountant.
Whenever
the Commission may deem it necessary, it may also require the
submission
of such balance sheet or income or profit statement, or both, with such
particulars as the Commission shall point out or brought down to the
latest
practicable date.
If
any issuer shall refuse to permit an examination to be made by the
Commission,
its refusal shall be proper ground for the revocation of the
registration
of and permission to sell its securities. .chan
robles virtual law library
If
the Commission deems it necessary, it may issue an order suspending the
right to sell 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 sale of such security shall be made until the same is lifted
or set aside by the Commission. Any such sale shall be void. .chan
robles virtual law library
Notice
of issuance of such order shall be given by mail, or personally, or by
telephone, confirmed in writing, or by telegram, to the issuer and
every
dealer and broker who shall have notified the Commission of an
intention
to sell such security.
(b) A
registration statement may be revoked by the Commission upon petition
made
for its withdrawal by the issuer only with the consent of the
Commission
and in accordance with such rules and regulations which the Commission
may prescribe: Provided, That no party stands to suffer damage
thereby. .chan
robles virtual law library
Sec.
17. Promotion fees. — If
the statement containing information as to securities to be registered,
as provided for in Section eight of this Act, shall disclose that any
such
securities or any securities senior thereto shall have been or shall be
intended to be issued for goodwill, or for organization or promotion
fees
or expenses, or that payment in cash shall have been or will be made
for
organization or promotion fees or expenses or for goodwill, the amount
and nature thereof shall be fully set forth in the notification
published
by the Commission as required in Section 8 of this Act, and in all
prospectuses,
circulars, or other advertisements of the issuer, and should also
appear
upon the face or on the back of the security itself. .chan
robles virtual law library
Sec.
18. Substituted service
upon the Commission. — Whenever service of summons or other process
shall
be made upon the Commission in actions or legal proceedings against an
issuer or any person liable under this Act who is not domiciled in the
Philippines or is not formed, organized and existing under the laws of
the Philippines, the Commission shall within ten (10) days thereafter,
transmit by registered mail a copy of such summons and the complaint or
other legal process to such issuer or person at his last known address
or principal office. The sending thereof by the Commission, the
expenses
for which shall be advanced by the party at whose instance it is made,
shall complete such service. .chan
robles virtual law library
.
CHAPTER
III
Brokers,
Dealers and Salesmen
.
Sec.
19. Registration of brokers,
dealers and salesmen. — No broker, dealer or salesman shall engage in
business
in the Philippines as such broker, dealer or salesman or sell any
securities,
including securities exempted under this Act, except in exempt
transactions,
unless he has been registered as a broker, dealer, or salesman pursuant
to the provisions of this Section. .chan
robles virtual law library
An
application for registration in writing shall be filed in the office of
the Commission in such form as the Commission may prescribe, duly
verified
under oath, which shall state the principal office of the applicant,
wherever
situated and its principal office and all branch offices in the
Philippines,
if any; the name or style of doing business; the corporate or business
names; residences and business addresses of all persons interested in
the
business as principals, co-partners, officers and directors, specifying
as to each his capacity and title; and the character of the business
and
the length of time the applicant has been engaged in said business. The
Commission may also require such additional information, under oath, as
to applicant's previous history, record and connection with other
companies,
as it may deem necessary to establish the good repute in business of
the
applicant.
There
shall be filed with such application an irrevocable written consent to
the service of process upon the Commission in actions against such
broker
or dealer in the manner and form as herein provided. .chan
robles virtual law library
If
the Commission finds that the applicant is of good repute and has
complied
with the provisions of this Act, including the payment of the fee
herein
provided, it shall register such applicant as a broker or dealer upon
his
filing a bond, or other security in lieu thereof, in such sum as may be
fixed by the Commission which it may deem adequate for the protection
of
the public, running to the Government of the Philippines, and
conditioned
upon the faithful compliance with the provisions of this Act by said
broker
or dealer and by all salesmen registered by the latter while acting for
him. Such bond shall be executed by a surety company authorized to do
business
in the Philippines. In lieu of such bond, he may file bonds of the
Government
of the Philippines. If a bond is filed, any person damaged by the
failure
of such broker or dealer or of any salesman registered by the latter
while
acting for him, to comply with the provisions of this Act, shall be
entitled
to sue the sureties under such bond and to recover the damages so
suffered
thereunder. If other securities are filed in lieu thereof, such person
may subject such securities to the payment of such damage. .chan
robles virtual law library
Upon
the written application of a registered dealer or broker and general
satisfactory
showing as to good character and the payment of the fee prescribed in
this
Act, the Commission shall register as salesman of such dealer or broker
such natural person as the dealer or broker may request. Such
registration
shall cease upon the termination of employment of such salesman by such
dealer or broker.
The
names and addresses of all persons approved for registration as
brokers,
dealers or salesmen and all orders with respect thereto shall be
recorded
in a Register of Brokers, Dealers and Salesmen kept in the office of
the
Commission which shall be open to public inspection. Every registration
under this Section shall expire on the thirty-first day of December in
each year, but new registration for the succeeding year shall be issued
upon written application and upon payment of the fee as hereinafter
provided,
without filing of further statements or furnishing any further
information
unless specifically required by the Commission. Application for
renewals
must be made not less than thirty nor more than sixty days before the
first
day of the ensuing year, otherwise they shall be treated as original
applications.
The fee for such registration and for each annual renewal shall be in
such
reasonable amount as may be determined by the Commission.
Changes
in registration occasioned by changes in the personnel of a partnership
or in the principals, co-partners, officers or directors of any broker
or dealer may be made from time to time by written application setting
forth the facts with respect to such change.
Every
registered broker or dealer who intends to offer any security for sale
shall notify the Commission in writing of his intention to do so. The
notice
shall contain the name of the broker or dealer and shall state the name
of the security to be offered for sale. Whenever a broker or dealer
shall
have prepared such notice and shall have forwarded the same by
registered
mail,
