SECURITIES AND EXCHANGE COMMISSION
SECURITIES INVESTIGATION AND CLEARING DEPARTMENT
SEC Building, EDSA, Greenhills, City of Mandaluyong

IMPLEMENTING RULES AND REGULATIONS OF THE SECURITIES REGULATION CODE
(Republic Act No. 8799)

SRC Rule 1
Title of Rules

   SRC Rule 2
Interpretation of Rules
  SRC Rule 3
Definitions of Terms Used in the Rules and Regulations
 

 a. Commission  means the Securities and Exchange Commission.
 b. Code  means the Securities Regulation Code.
 
 c. Section  refers to a section of the Code.
 
 d. Beneficial owner  or beneficial ownership means any person who, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise has or shares: voting power, which includes the power to vote, or to direct the voting of, such security; and/or investment returns or power, which includes the power to dispose of, or to direct, the disposition of such security; provided, however, that a person shall be deemed to have an indirect beneficial ownership interest in any security which is:
i. held by members of his immediate family sharing the same household;
ii. held by a partnership in which he is a general partner;
 
iii.  held by a corporation of which he is a controlling shareholder; or
 
iv. subject to any contract, arrangement or understanding which gives him voting power or investment power with respect to such securities: Provided however, the following persons or institutions shall not be deemed to be beneficial owners of securities held by them for the benefit of third parties or in customer or fiduciary accounts in the ordinary course of business, so long as such shares were acquired by such persons or institutions without the purpose or effect of changing or influencing control of the issuer:
A.  A Broker Dealer;
B. An investment house registered under the Investment Houses Law;
 
C. A bank authorized to operate as such by the Bangko Sentral ng Pilipinas;
 
D. An insurance company subject to the supervision of the Office of the Insurance  Commission;
 
E. An investment company registered under the Investment Company Act;
 
F. A pension plan subject to regulation and supervision by the Bureau of Internal Revenue and/or the Office of the Insurance Commission; and
 
G. A group in which all of the members are persons specified above.
 
 All securities of the same class beneficially owned by a person, regardless of the form such beneficial ownership takes, shall be aggregated in calculating the number of shares beneficially owned by such person.
 
 A person shall be deemed to be the beneficial owner of a security if that person has the right to acquire beneficial ownership within thirty (30) days, including, but not limited to, any right to acquire; through the exercise of any option, warrant or right; through the conversion of any security; pursuant to the power to revoke a trust, discretionary account or similar arrangement; or pursuant to automatic termination of a trust, discretionary account or similar arrangement.
 
e. Material  information means information which a reasonable investor would consider important in determining whether to buy, sell or hold securities, or in connection with the exercise of related voting rights.
f. Control, controlling, controlled by, and under common control with, means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract, or otherwise.
g. Member of an Exchange  means any Broker Dealer who has the right, pursuant to Exchange rules, to trade on that Exchange.
h. Transfer agent  means any person who engages on behalf of an issuer of securities, or itself as an issuer of securities, in:
i. countersigning such securities upon issuance;
ii. monitoring the issuance of such securities with a view toward preventing unauthorized issuance, a function commonly performed by a person called a registrar;
 
iii. registering the transfer of such securities;
 
iv. exchange or converting such securities; and/or
 
v. transferring record ownership of securities by bookkeeping entry without physical issuance of securities certificates.
 
  i. Public company  means any corporation with a class of equity securities listed on an Exchange or with assets in excess of Fifty Million Pesos (P50,000,000.00) and having two hundred (200) or more holders, at least two hundred (200) of which are holding at least one hundred (100) shares of a class of its equity securities.
  j. Self Regulatory Organization  or SRO means an organized Exchange, registered clearing agency and any organization or association registered as an SRO under Section 39 of the Code to enforce compliance with relevant provisions of the Code and rules and regulations adopted thereunder, and mandated to make and enforce its own rules, which have been approved by the Commission, by their members and/or participants.
k. Rules and regulations  refers to all rules and regulations adopted by the Commission pursuant to the Code, including the forms for registration and reports and accompanying instructions thereto.

 SRC Rule 3.1-1
Definition of Investment Contract and Derivative
 

a. A presumption that a contract is an investment contract arises whenever a person seeks to use the money of others on the promise of profits.
b. When two or more investors “pool” their resources, there is a common enterprise, even if the promoter does not do more than receive a broker’s commission.

a. Options  are contracts that give the buyer the right, but not the obligation, to buy or sell an underlying security at a predetermined price, called the exercise or strike price, on or before a predetermined date, called the expiry date, which can only be extended in accordance with Exchange rules.


b. Call options  are rights to buy and put options are rights to sell.

.



c. Warrants  are rights to subscribe or purchase new shares or existing shares in a company, on or before a predetermined date, called the expiry date, which can only be extended in accordance with Exchange rules. Warrants generally have a longer exercise period than options.

 SRC Rule 3.3-1
Definition of Broker Dealer
   SRC Rule 3.6
Definition of Clearing Agency
 

a. makes deliveries in connection with transactions in securities;
b. reduces the number of settlements of securities transactions or to allocate securities settlement responsibilities;
c. provides for the central handling of securities so that transfers, loans, and pledges and similar transactions can be made by bookkeeping entry or otherwise to facilitate the settlement of securities transactions without physical delivery of securities certificates.

 SRC Rule 3.7.1
Definition of Facility of an Exchange

 Facility  of an Exchange includes systems, processes or services, tangible or intangible property, whether or not in a specific physical location or in an Exchange, for the purpose of effecting transactions between buyers and sellers in a securities trading market, and conveying any information required by the participants to effect such transactions.

 SRC Rule 4
Securities and Exchange Commission

a. The Market Regulation Department is responsible for developing the registration criteria for all market participants and supervising them to ensure their compliance with registration requirements and endorsing infractions of the Code and rules and regulations to the Compliance and Enforcement Department.
b. The Corporation Finance Department is responsible for registering securities before they are offered for sale or sold to the public and ensuring that adequate information is available about the said securities. It will also ensure that investors have access to all material disclosures regarding the said offering and the securities of public companies. It will likewise monitor compliance by issuers with the Code and rules and regulations adopted thereunder and endorse infractions thereof to the Compliance and Enforcement Department.
c. The Non-traditional Securities and Instruments Department is responsible for registration and licensing of non-traditional securities and instruments including but not limited to pre-need plans, commodity futures contracts proprietary or non-proprietary membership certificates and other similar instruments and for monitoring compliance with related rules and endorsing infractions thereof to the Compliance and Enforcement Department.
d. The Company Registration and Monitoring Department is responsible for the registration of domestic corporations, partnerships and associations, including representative offices and foreign corporations intending to do business in the Philippines. It is also responsible for the supervision and monitoring of such entities relative to their compliance with laws, rules and regulations administered by the Commission.
e. The Compliance and Enforcement Department is responsible for ensuring compliance by all market participants, issuers and individuals, and taking appropriate enforcement action against them for legal infraction of the Code and other relevant laws, rules and regulations implemented by the Commission.

a. The Human Resource and Administrative Department is responsible for all activities relating to personnel and human resource management, including benefits, training and development.   It will also handle the central receiving, records management, general administrative and maintenance services of the Commission.
b. The Economic Research and Information Management Department is responsible for providing investment and economic research, analysis and advice to the Commission. It is also the lead technical support group of the Commission for software development, database management, hardware procurement, and establishment and maintenance of a communication network.
c. The Financial Management Department is responsible for the internal financial management of the Commission which includes budgeting, accounting and cash management.

a. The Office of the General Counsel, headed by the General Counsel, shall serve as the lead legal adviser to the Commission. It shall also serve as legal liaison for the Commission with other government agencies, self-regulatory organizations, and foreign government regulators and agencies. It shall oversee all non-enforcement litigation and all appeals to the Commission en banc. It shall likewise oversee the office of the Commission Secretary.
b. The Office of the General Accountant, headed by the General Accountant, shall be responsible for providing advice to the Commission and the private sector in the area of accounting standards and on issues of accounting treatment for public offerings and disclosures. It shall also coordinate with any board or council in the development of accounting standards for the Philippines and its capital market.

 SRC Rule 5.1(e)
Clarification of Commission Powers to Take-Over an Exchange

SRC Rule 6.2
Rules of Conduct for Commissioners, Officers and Employees

b. Every officer who has discretionary authority shall be free from any conflicting interest or influence of such nature and importance as would make it difficult for him to provide his best efforts and loyalty to the Commission.

a. All officers, directorships, trusteeships or partnership interests in any organization or association, whether registered with the Commission or not (except charitable and civic organizations).
b. Interest in any securities or investment in any corporation, partnership or association registered under and/or required to report under the Code.
c. The receipt of compensation, wages, bonuses, benefits or privileges with monetary value for services from any corporation, partnership, or association registered with the Commission or from any person or enterprise which, though not registered with the Commission, does business with the Commission as a supplier, contractor or the like.
d. Employment of officers during their term of office or employment with the Commission and for a period of one year after resignation, retirement or separation from such office or employment.
i. employment as an officer, employee, consultant, counsel, broker, agent, trustee or nominee in any person or enterprise regulated by the Commission under the Code;
ii. private practice of their profession where such practice conflicts or tends to conflict with their official function (e.g. where such practice is in connection with any matter before the office of the Commission such officer works in or used to work in);
 
iii. the recommendation of any person to any position in a private enterprise which has a regular or pending official transaction with their office or the office such officer used to work with.
 
e. Solicitation or acceptance of any gift, loan, or other benefit from any corporation, partnership or association registered, applying or contemplating registration with the Commission, including any person or firm, though not so registered, applying or contemplating registration and/or having current or prospective dealings with the Commission as a supplier or contractor or the like, if the acceptance would influence or would create the appearance of influencing him to act other than solely in the best interest of the Commission.
i. Any gift having more than a nominal value, even if given on occasions of rejoicing or celebration such as birthdays, anniversaries or Christmas, shall not be permitted.
ii. Each officer should disclose the amount and terms (though not necessarily the purpose) of his personal transactions with any financial or lending individual or firm from which he has incurred loans of more than Pesos 250,000 at any time during the past calendar year, or if he is involved, by virtue of his position, in significant relationships with any financial or lending individual or firm.
iii. No entertainment should be accepted by any officer of a kind or amount which would influence, or would create the appearance of influencing him to act other than solely in the best interest of the Commission.

 SRC Rule 7
Periodic Review of Commission Structure
 

 SRC Rule 8
Requirement to File Registration Statement

a. No securities, except of a class exempt under Section 9 of the Code or unless sold in any transaction exempt under Section 10 thereof, shall be sold or distributed by any person within the Philippines unless such securities shall have been registered with the Commission on SEC Form 12-1 and the registration statement has been declared effective by the Commission. Moreover, no securities shall be offered unless a registration statement has been filed with the Commission.
b. If the securities which are the subject of the registration statement are intended to be listed on an Exchange, a copy of the registration statement and all other pertinent documents shall simultaneously be filed with that Exchange. All amendments to the registration statement shall also simultaneously be filed with that Exchange. Upon filing of the application for listing on that Exchange, two (2) copies of the application shall be filed with the Commission.
 
c. Upon the registration statement being declared effective by the Commission, the sale of the securities subject thereto shall be commenced within two (2) business days and be continued until they have been completely sold or until the sale has been terminated by action of the issuer. Upon completion or termination of the offering by the issuer, notification of such shall be promptly given to the Commission. Such notification shall include the number of securities sold. If attempts to sell the securities which are the subject of the registration statement have ceased, the issuer shall terminate the offering.
d. After termination of the offering, the sale or offering for sale of additional securities shall be effected through a separate registration statement relating to the additional securities irrespective of whether they had been previously registered but not sold.

a. The registrant shall prepare and file with its registration statement a notification of the filing which shall recite that a registration statement for the sale of the subject security has been filed with the Commission, that the registration statement is open to inspection by interested parties during business hours at the Commission and that copies thereof shall be furnished to everyone requesting such at a reasonable charge. The Code requires the issuer immediately to publish the notification, at its own expense, in two newspapers of general circulation in the Philippines, once a week for two consecutive weeks. The required format for this publication appears as “Annex A.”
 
b.  The registrant shall submit to the Commission, as part of its filing of the registration statement, an affidavit with a copy of the publication that was, or is to be made, attesting that such action has been or will be immediately taken.

 SRC Rule 8.1-1
Prospectus Delivery Rule
 

a. it meets all the requirements for a prospectus contained in paragraph 2 hereof;
b. it contains the following statement in bold face print, at least 12 point type prominently displayed:

a. it is the only selling document utilized in the pre-offering period, with the exception that the information contained in SRC Rule 8.3-1 may be disseminated in whole or in part to summarize the offering;
b. its use is such that wide dissemination is assured;
c. sufficient copies are made available so that all who desire may obtain one; and
d. it contains a statement whether the security is being offered in connection with a distribution by the issuer or by a security holder, or both, and whether the issue represents new financing or refunding, or both.

a. each participant in the distribution (e.g., underwriters and brokers);
b. the main and extension offices of the Commission;
 c. an Exchange if the securities will be listed thereon;

 d. the issuer; and
 e. to more than twenty (20) persons who are not qualified buyers under Section 10.1(l) of the Code.

 a.  All participants in the distribution of an offering of securities to the public shall, when inquiries are made as to the offering, inform interested persons of the availability of preliminary prospectuses and final prospectuses and provide copies if requested.
 b. A notice shall be placed on the front of the subscription agreement distributed in connection with the offering informing interested persons that they are entitled to receive a copy of a preliminary and/or final prospectus if they so desire and how and where one can be obtained.
c. Information required in subparagraphs a and b above concerning where preliminary and final prospectuses may be obtained shall include at least the following: addresses of extension and main offices of the Commission, any Exchange wherein the securities may be listed, and the issuer company, and the telephone number and the person to be contacted at each such location. A statement shall also be made that preliminary prospectuses and final prospectuses are available from all underwriters and brokers participating in the distribution.

a. there is a material change in any information contained therein (including but not limited to, the occurrence of a material event which would be required to be reported on SEC Form 17-C);
b. the financial statements contained therein are over 225 days old.

a. Appearance - The information required in the prospectus need not follow the order of the items or other requirements in Part I of SEC Form 12-1 with the exception of Items 1 and 2. However, the information shall not be presented in a manner that will obscure required information or information that is necessary to keep required information from being incomplete or misleading.
b. Captions of Headings - All information included in the prospectus should be properly captioned or headed in order to reasonably indicate covered subject matter. The information shall be divided into reasonably short paragraphs or sections (with the exception of financial statements and tabular data).
c.  Condensed or Summarized Form - Except as to information required in tabular form and financial statements, the information included in the prospectus may be expressed in condensed or summarized form.   Reference may be made to information in other parts of the prospectus instead of repeating the information in the form of notes to the financial statements.
 
d. Date of Prospectus - Each prospectus used after the effective date of the registration statement shall be dated as of the effective date of the prospectus. An amended or revised prospectus used thereafter shall bear the date of its issuance.
 Language Clear and Understandable - All information that is required to be included in the prospectus shall be clearly understandable without the necessity of referring to SEC Form 12-1 or to the general rules and regulations. The chief goal of registration (disclosure for the benefit of investors) involves, among other things, the use of language that can be understood readily by the persons to whom it is addressed. Failure to use language that is clear and understandable to the investor may operate to defeat the purpose of the prospectus.

SRC Rule 8.3-1
Written Communication Not Deemed an Offer for Sale

 a. the name of the issuer of the security;
 b. the full title of the security and the amount being offered;
 c. a brief indication of the general type of business of the issuer;
 d. the price of the security, or if the price is not known, the method of its determination or the probable price range as specified by the issuer or the managing underwriter;
 e. in the case of a debt security with a fixed (non contingent) interest provision, the yield or, if the yield is not known, the probable yield range, as specified by the issuer or the managing underwriter;
 f. the name and address of the sender of the communication and the fact that he is participating, or expects to participate, in the distribution of the security;
 g. the names of the underwriters;
 h. the approximate date upon which it is anticipated the proposed sale to the public will commence;
 i. whether the security is being offered through rights issued to existing security holders, and, if so, the class of securities the holders of which will be entitled to subscribe, the subscription ratio, the actual or proposed record date, the date upon which the rights were issued or are expected to be issued, the actual or anticipated date upon which they will expire, and the approximate subscription price, or any of the foregoing;
 j. with respect to any class of debt securities, any class of convertible debt securities or any class of preferred stock, the security rating or ratings assigned to the class of securities by any credit rating agency recognized or accredited by the Commission and the name of such rating agency/ies which assigned such rating/s.

a. If a registration statement has not yet become effective, the following statement in bold face prominent type:
 A registration statement relating to these securities has been filed with the Securities and Exchange Commission, but has not yet become effective. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This communication shall not constitute an offer to sell or the solicitation of an offer to buy.
 b.  A statement whether the security is being offered in connection with a distribution by the issuer or by a security holder, or both, and whether the issue represents new financing or refunding or both;
c. The name and address of a person or persons from whom a written prospectus meeting the requirements of Section 12 of the Code may be obtained.

 SRC Rule 9.2
Exempt Securities SRC Rule 10-1
Exempt Transactions
 

a. The provision of Section 10 of the Code under which exemption from registration is claimed;
b. Whether the Commission’s confirmation that such offer and sale qualifies as an exempt transaction has been obtained; and
c. The following statement in bold face, prominent type:

The securities being offered or sold have not been registered with the Securities and Exchange Commission under the Securities Regulation Code. any future offer or sale thereof is subject to registration requirements under the Code unless such offer or sale qualifies as an exempt transaction.

a. The issuer claiming such relief shall not engage in any form of general solicitation or advertising in connection therewith;
 b. Securities sold in any such transaction may only be sold to persons purchasing for their own account;

c. Sales may be made to no more than nineteen (19) “non-qualified” buyers. A corporation, partnership or other entity shall be counted as one buyer; provided, however, if that entity is organized for the specific purpose of acquiring the securities offered and is not a qualified buyer under Section 10.1(l) of the Code, then each beneficial owner of equity securities in the entity shall count as a separate buyer under this Rule;

d. The issuer provides any person to whom they offer for sale or sell securities pursuant thereto with the following information:

 i. the exact name of the issuer and its predecessor, if any;
 ii. address of its principal executive offices;
 iii. place of incorporation;
 iv. exact title and class of the security;
 v. par or stated value of the security;
 vi. number of shares or total amount of securities outstanding as of the end of the issuer’s most recent fiscal year;
 vii. name and address of the transfer agent;
 viii. nature of the issuer’s business;
 ix. nature of products or services offered;
 x. nature and extent of the issuer’s facilities;
 xi. name of the chief executive officers and members of the board of directors;
 xii. issuer’s most recent balance sheet and profit and loss and retained earnings statement for each of the two preceding fiscal years or such shorter period as the issuer (including its predecessor) has been in existence;
 xiii. whether the person offering or selling the securities is affiliated, directly or indirectly, with the issuer;

 xiv. whether the offering is being made directly or indirectly on behalf of the issuer, or any director, officer or person who owns directly or indirectly more than ten percent (10%) of the outstanding shares of any equity security of the issuer and, if so, the name of such person; and

 xv. information required under paragraph 1 of this Rule.

Provided, however, where the issuer is a reporting company under Section 17 of the Code, a copy of its most recent annual report (SEC Form 17-A) may be used to provide any of the required information.

e. The issuer files with the Commission a notice of exemption from registration requirements under Section 8 of the Code on SEC Form 10-1, including as an exhibit thereto, information furnished to investors in connection therewith pursuant to this paragraph, within ten (10) days after the initiation of any efforts to sell the securities which are subject thereto.

 a. In connection with a transaction under Subsection 10.1(i), any fee paid pursuant to requirements under the Corporation Code may be applied in satisfaction of fees owed under this Rule.
 b.  The Commission shall not be precluded from acting on any application for confirmation filed after the initiation of any efforts to sell the securities.

a. Unless confirmation that such exemption is available is applied for under paragraph 5 of this Rule, any person claiming an exemption under Section 10 has the burden, if challenged, of establishing that the exemption is available. The Commission may challenge such exemption at any time.
b. A presumption that an exemption is not available may arise from the failure to file a notice as required by paragraph 4 (e) of this Rule. Failure to file such notice shall also subject a person claiming an exemption under Section 10 to administrative sanctions.

 SRC Rule 11.1
Definition of Commodity Futures Contracts

SRC Rule 12
Requirements for Filings Pursuant to the Securities Regulation Code
and the Corporation Code of the Philippines

a. Registration statements for the sale and/or distribution of securities pursuant to the provisions of Sections 8 and 12 of the Code and SRC Rule 8 thereunder. Registration Statements under Section 12 of the Code shall be filed on SEC Form 12-1;
b. Prospectuses to be used in connection with the public distribution of securities pursuant to Section 8 of the Code and SRC Rule 8-1.1 thereunder;
c. Periodic and other reports required to be filed with the Commission under Section 17 of the Code as provided in SRC Rules 17 and 17-1 and SEC Forms 17-Q, 17-A, 17-C, and 17-L, as appropriate, unless exempt from the provisions thereof; and
 d.  Proxy Statements required by Section 20 of the Code and SRC Rule 20 adopted pursuant thereto, and Information Statements pursuant to Section 17.1(b) and SRC Rule 17.1(b) adopted pursuant thereto. Filings under this paragraph shall be made on SEC Forms 20-A and 17-IS.

SRC Rule 12-2
Incorporation by Reference

 a.  Financial statements incorporated by reference shall satisfy the requirements of the form or report in which they are incorporated. Financial statements or other financial data required to be given in comparative form for two or more fiscal years or periods shall not be incorporated by reference unless the material incorporated by reference includes the entire period for which the comparative data is given;
 b. Information in any part of the registration statement or other report may be incorporated by reference in answer, or partial answer, to any other item of the registration statement or other report; and
 c. other report by reference, or copies of the pertinent pages of the document containing such information or statements, shall be filed as an exhibit to the statement or report.

a. Any document or part thereof filed with the Commission pursuant to the Code may be incorporated by reference as an exhibit to any statement or report filed with the Commission by the same or any other person. Any document or part thereof filed with an Exchange pursuant to the Code may be incorporated by reference as an exhibit to any statement or report filed with that Exchange by the same or any other person.
b. If any modification has occurred in the text of any document incorporated by reference since the filing thereof, the registrant shall file with the reference a statement containing the text of any such modification and the date thereof.

 4. Prospectus. - Information shall not be incorporated by reference in a prospectus.

SRC Rule 13
Obligation of Issuers Where Registration of Securities Has Been
Suspended or Revoked  During a Public Offering

1. The Commission shall publish a notice of such revocation or suspension in a newspaper of general circulation in the Philippines or on the Commission’s web page along with a statement that the offering in its current form has been cancelled and the duty of the issuer subject to such order, or any person acting on behalf of the issuer in the distribution of the subject securities, pursuant to paragraph 2 hereof to return any and all payments made by purchasers of the subject securities within ten (10) days of such publication, and simultaneously furnish a copy of this notice to the issuer.
2. Upon receipt of a notice under paragraph 1 above, the issuer and all persons acting on its behalf in the distribution of the subject securities shall immediately terminate the offering and return any and all payments received from purchasers within ten (10) days after the notice is first published.

SRC Rule 14
Amendments to the Registration Statement

 a. file an amendment to the registration statement with the Commission explaining all proposed changes which shall be reviewed by the Commission in accordance with Section 14 of the Code;
 b. where the registration statement has been declared effective by the Commission, publish a notice in two newspapers of general circulation in the Philippines stating that the offering in its current form has been cancelled, citing the reasons for such proposed changes to the offering, and offering to rescind all transactions that have been completed for sale to date, without making any deduction pursuant to paragraph c below and wait thirty (30) days for purchasers to respond to the rescission offer before initiation of the amended offering; and
 c. where material amendments have been made to the prospectus after the effective date thereof, purchasers may, within thirty (30) days from the date of such notification, renounce their purchase of securities, whereupon the issuer, or any person acting on behalf of the issuer in connection with the distribution of said securities, shall, within ten (10) days of receipt of notification of such election, return the contributions paid by such purchasers without making any deductions. Purchasers who decide not to renounce their purchase of securities shall be subject to the terms of the amended offering.

 SRC Rule 16.1-1
Transition Rule for Pre-Need Plans

Rules and related Commission circulars governing pre-need plan companies and persons involved in the sale and distribution thereof adopted under the Revised Securities Act shall continue in force and effect until new rules are adopted under the Code.

SRC Rule 17
Requirements to File Annual, Quarterly, Current, Predecessor and Successor Reports

 (a) issuers which have sold a class of their securities pursuant to a registration under Section 12 of the Code; provided, however, the obligation of such issuers to file reports shall be suspended for any fiscal year after the year such registration became effective if such issuer, as of the first day of any such fiscal year, has less than one hundred (100) holders of such class of securities and the Commission is duly notified of such; and
 (b) public companies as defined in SRC Rule 3.

 (a)  an annual report on SEC Form 17-A for the fiscal year in which the registration statement approved by the Commission became effective, and for each fiscal year thereafter, within 105 days after the end of the fiscal year;
 (b)  a quarterly report on SEC Form 17-Q, within forty five (45) days after the end of each of the first three quarters of each fiscal year. The first quarterly report of the issuer shall be filed either within forty five (45) days after the effective date of the registration statement or on or before the date on which such report would have been required to be filed if the issuer had been required previously to file reports on SEC Form 17-Q, whichever is later;
 (c) (i) a report on SEC Form 17-C as necessary to make a full, fair and accurate disclosure to the public of every material fact or event that occurs which would reasonably be expected to affect investors' decisions in relation to those securities.

 (ii) The disclosure required by subparagraph (c)(i) above shall be made by the issuer:

 (A) promptly to the public through the news media;
 (B) if the issuer is listed on an Exchange, to that Exchange within ten (10) minutes after occurrence of the event and prior to its release to the public through the news media;
 (C) to the Commission on SEC Form 17-C within five (5) days after occurrence of the event being reported unless substantially similar information as that required by Form 17-C has been previously reported to the Commission by the registrant.

 (iii) An illustrative, non-all inclusive, list of the kinds of events which shall be reported pursuant to this paragraph is contained in SEC Form 17-C. Merely because an event does not appear on that list does not mean that it does not have to be reported if, in fact, it is material.

SRC Rule 17.1(b)
Information Statement Rule

 (a) Associate, when used to indicate a relationship with any person shall have the same meaning as that term is defined in “Annex B”.
 (b) Employee Benefit Plan means any purchase, savings, option, bonus, profit sharing, incentive, pension or similar plan primarily for employees, directors, trustees or officers.
 (c)  Entity that exercises fiduciary powers means any entity that holds securities in nominee name or otherwise on behalf of a beneficial owner.
 (d) Information statement means the statement required by paragraph 3 of this Rule
 (e)  Last fiscal year of the registrant means the last fiscal year of the registrant ending prior to the date of the meeting for which proxies are to be solicited.
 (f) Proxy includes every proxy, consent or authorization within the meaning of Section 20 of the Code.
  (g) Record date means the date as of which the record holders of securities entitled to vote at the meeting or by written consent or authorization shall be determined.
 (h) Registrant shall have the same meaning as that term is defined in “Annex B”.

a. In connection with every annual or other meeting of stockholders, the registrant shall transmit a written information statement containing the information specified in Form 17-IS to every security holder of the class that is entitled to vote or give an authorization or consent in regard to any matter to be acted upon and from whom proxy authorization or consent is not solicited on behalf of the registrant pursuant to Section 20 of the Code.
b. The information statement shall be sent or given at least fifteen (15) business days prior to the meeting date.

a. If the information statement relates to an annual (or special meeting in lieu of the annual) meeting of stockholders at which directors are to be elected, it shall be accompanied or preceded by an annual report to such stockholders.
b. The annual report shall contain the information specified in SRC Rule 20 paragraph 3(b)(i) through (vii).
c. The report required by this paragraph is deemed to satisfy Section 75 of The Corporation Code of the Philippines with respect to presenting a financial report of operations including financial statements to stockholders at their regular meeting.

a. Preliminary copies of the information statement shall be filed with the Commission along with the payment of the prescribed fee at least ten (10) business days prior to the date definitive copies of such material are first sent or given to stockholders.
 
b. Definitive copies of the information statement and the annual report pursuant to paragraph 4 above, in the form in which such material is furnished to stockholders shall be filed with, or mailed for filing to, the Commission not later than the date such material is first sent or given to any security holder. One (1) copy of such material shall at the same time be filed with, or mailed for filing to, each Exchange upon which any class of securities of the registrant is listed for trading.

a. No information statement shall contain any statement which, at the time and in the light of the circumstances under which it is made, is false or misleading with respect to any material fact, or which omits to state any material fact necessary in order to make the statements therein not false or misleading or necessary to correct any statement in any earlier communication with respect to the same meeting or subject matter which has become false or misleading.
b. The fact that an information statement has been filed with or examined by the Commission shall not be deemed a finding by the Commission that such material is accurate or complete or not false or misleading, or that the Commission has passed upon the merits of or approved any statement contained therein or any matter to be acted upon by stockholders. No representation contrary to the foregoing shall be made.

a. If the registrant knows that securities of any class entitled to vote at a meeting with respect to which the information statement is being furnished are held of record by a broker, dealer, investment house, voting trustee, bank, association, or other entity that exercises fiduciary powers in nominee name or otherwise, the registrant shall by first class mail or other equally prompt means. inquire of such record holders at least twenty (20) business days prior to the record date of the meeting:
i. whether other persons are the beneficial owners of such securities and if so, the number of copies of the information statement necessary to supply such material to such beneficial owners; and
ii. in the case of an annual (or special meeting in lieu of the annual) meeting at which directors are to be elected, the number of copies of the annual report to security holders necessary to supply such report to beneficial owners to whom such reports are to be distributed by such record holder.
 
 b. The registrant shall supply, in a timely manner, each record holder of whom the inquiries required by paragraph 7(a) of this Rule are made with copies of the information statement and/or the annual report to security holders, in such quantities, assembled in such form and at such place(s), as the record holder may reasonably request in order to send such material to each beneficial owner of securities who is to be furnished with such material by the record holder.
 c. Upon the request of any record holder that is supplied with the information statement and/or annual reports to security holders pursuant to paragraph 7(a) of this Rule, the registrant shall reimburse the record holder for its reasonable expenses for completing the mailing of such material to beneficial owners.

SRC Rule 17-1
Notification of Inability to Timely File All or Any Required Portion of an SEC FORM 17-A or 17-Q

a. The issuer files the SEC Form 17-L in compliance with paragraph 1 hereof and, when applicable, furnishes the exhibit required by paragraph 3 hereof;
b. The issuer represents in the SEC Form 17-L that:
 (i)  The reason(s) causing the inability to file timely could not be eliminated by the issuer without unreasonable effort or expense; and
 (ii)  Either the subject annual report on SEC Form 17-A, or portion thereof, will be filed no later than the fifteenth calendar day following the prescribed due date, or the subject quarterly report on SEC Form 17-Q, or portion thereof, will be filed no later than the fifth calendar day following the prescribed due date; and
 
 c.  The report/portion thereof is actually filed within the period specified by paragraph 2(b)(ii) hereof.

a. File the balance of such report and indicate on the cover page thereof which disclosure items are omitted; and
b.  Include, on the upper right corner of the amendment to the report which includes the previously omitted information, the following statement:

SRC Rule 18.1
Reports to be Filed by 5% Beneficial Owners

 i. such person has acquired such securities in the ordinary course of business and not with the purpose nor with the effect of changing or influencing the control of the issuer, nor in connection with or as a participant in any transaction having such purpose or effect;
ii. such person is:
 
A.  A broker or dealer registered under the Code;
B.  A bank authorized to operate as such by the Bangko Sentral ng Pilipinas;
C. An insurance company subject to the supervision of the Insurance Commission;
D. An investment house registered under the Investment Houses Law;
E. An investment company registered under the Investment Company Act;
F.  A pension plan subject to regulation and supervision by the Bureau of Internal Revenue and/or the Insurance Commission; or
G.   A group where all of the members are persons specified above. and
iii. such person has promptly notified any other person on whose behalf it holds, on a discretionary basis, securities exceeding five (5%) percent of the class, of any acquisition or transaction on behalf of such other person which might be reportable by that person under Section 18.1(a) of the Code.

a. A person who, in the ordinary course of business, is a pledgee of securities under a written agreement shall not be deemed to be the beneficial owner of such pledged securities until the pledgee has taken all necessary steps which are required to declare a default and determines that the power to vote or to dispose or to direct the disposition of such pledged securities will be exercised;
b. A person engaged in the business of an investment house who acquires his securities through his participation in good faith in a firm commitment underwriting shall not be deemed to be the beneficial owner of such securities until the expiration of six (6) months after the date of such acquisition; and
c. When two or more persons agree to act together for the purpose of acquiring, holding, voting or disposing of equity securities of an issuer, the group formed thereby shall be deemed to have acquired beneficial ownership, for purposes of Section 18 of the Code, as of the date of such agreement, of all equity securities of that issuer beneficially owned by such persons.

SRC Rule 19.1
Tender Offers

a. Beneficial owner shall have the same meaning as set forth in SRC Rule 3.
b. Bidder means any person who makes a tender offer or on whose behalf a tender offer is made.
c. Commencement means the date a tender offer is first published, sent or given to security holders.
d. Equity securities shall have the same meaning as set forth in SRC Rule 18.1.
e. Security holders means holders of record and beneficial owners of securities that are the subject of a tender offer.
f. Target company means any issuer of securities that are sought by a bidder pursuant to tender offer.
 g. Tender offer means a publicly announced intention by a person acting alone or in concert with other persons (hereinafter referred to as “person”) to acquire equity securities of a public company as defined in SRC Rule 3.
h. Tender offer materials means:
 
(i) the bidder’s formal offer, including all the material terms and conditions of the tender offer and all amendments thereto;
 
(ii) the related transmittal letter (whereby securities of the target company which are sought in the tender offer may be transmitted to the bidder or its depository) and all amendments thereto; and
 
(iii) press releases, advertisements, letters and other documents published by the bidder or sent or given by the bidder to security holders which, directly or indirectly, solicit, invite or request tenders of the securities being sought in the tender offer.
i. Termination means the date after which securities may not be tendered pursuant to the tender offer.

a. Except as provided in paragraph 3 below, a person is required to make a tender offer for equity shares of a public company in an amount equal to the number of shares that the person intends to acquire in the following circumstances:
i. The person intends to acquire fifteen percent (15%) or more of the equity shares of a public company pursuant to an agreement made between or among the person and one or more sellers;
ii. The person intends to acquire thirty percent (30%) or more of the equity shares of a public company within a period of 12 months; or
iii. The person intends to acquire shares that would result in ownership of more than fifty percent (50%) of the equity shares of a public company.

b. A person shall be presumed to have the intent that would mandate the making of a tender offer pursuant to paragraph (a) above when the person, respectively:

i. acquires 15% or more of the equity shares of a public company pursuant to an agreement made between or among the person and the seller or sellers;
ii. acquires 30% or more of the shares of a public company within a period of 12 months; or
iii. acquires shares that result in ownership of more than fifty percent (50%) of the equity shares of a public company.
 
c. A mandatory tender offer shall be made in accordance with this Rule.

a. The Commission, upon written application, and consistent with the policies set forth in Section 2 of the Code and pursuant to its powers under Section 72.1 thereof, may exempt from the requirement to make a mandatory tender offer the following proposed purchases of equity shares of a public company:
i. the purchase of newly issued shares from unissued capital stock;
ii.  in connection with foreclosure proceeding involving a duly constituted pledge or security arrangement where the acquisition is made by the debtor or creditor;
iii. purchases in connection with privatization undertaken by the government of the Philippines; or
iv. purchases in connection with corporate rehabilitation under court supervision.
 
b.  Purchasers who are granted an exemption are required to comply with disclosure and other obligations under SRC Rule 18, SRC Rule 23, and Section 23 of the Code: Provided however, an exemption under paragraph 3(a) of this Rule shall not become effective until publicly disclosed by the purchaser in a newspaper of general circulation. Such disclosure shall describe the proposed transaction and indicate the subsection of paragraph 3(a) above under which exemption was claimed. Any person seeking an exemption under this paragraph may not rely upon the grant of a previous exemption and shall separately apply for such relief.
c. Equity shares of a public company acquired through open market purchases at the prevailing market price shall be automatically exempted from mandatory tender offer requirements provided that such purchaser complies with disclosure requirements under Sections 18 and 23 of the Code and rules adopted thereunder.

a. A person may make a voluntary tender offer.
b. A voluntary tender offer shall be made in accordance with this Rule.
c.  A person will be presumed to be making a voluntary tender offer where some or all of the following factors are present:
i. Active and widespread solicitation of public shareholders for the shares of a public company;
ii.  Solicitation made for a substantial percentage of the issuer’s stock;
iii. Offer to purchase is made at a premium over the prevailing market price, at firm rather than negotiable terms;
iv.  An offer is contingent on the tender of a fixed number of shares; and/or
v.  Offer is only open for a limited period of time.

a.  No bidder shall make a tender offer unless as soon as practicable on the date of the commencement of the tender offer such bidder:
i.  Files with the Commission copies of SEC Form 19-1, including all exhibits thereto; and
ii. Hand delivers a copy of such SEC Form 19-1, including all exhibits thereto to the target company at its principal executive office and to each Exchange where such class of the target company’s securities are listed for trading.
 
b.  The bidder shall file with the Commission copies of any additional tender offer materials as an exhibit to the SEC Form 19-1 and, if a material change occurs in the information set forth in such SEC Form 19-1, copies of an amendment to such SEC Form. Copies of such additional tender offer materials and amendments shall be hand delivered to the company and to any Exchange as required above.
c. The bidder shall report the results of the tender offer by filing with the Commission, not later than ten (10) calendar days after the termination of the tender offer, copies of the final amendments to SEC Form 19-1.

a. The bidder shall publish, send or give to security holders in the manner prescribed in this Rule, a report containing the following information:
i. Identity of the bidder;
ii.  Identity of the target company;
iii. Amount of class of securities being sought and the type and amount of consideration being offered therefor;
iv.   The scheduled expiration date of the tender offer, whether the tender offer may be extended and, if so, the procedures for extension of the tender offer;
v. The exact dates security holders who deposit their securities will have the right to withdraw their securities pursuant to this Rule and the manner in which shares will be accepted for payment and in which withdrawal may be effected;
vi. If the tender offer is for less than all of the securities of the class and the bidder is not obligated to purchase all of the securities tendered, the exact date of the period during which securities will be accepted on a pro rata basis under this Rule and the present intention or plan of the bidder with respect to the tender offer in the event of an oversubscription by security holders;
vii. Confirmation by the bidder’s financial adviser or another appropriate third party that resources are available to the bidder sufficient to satisfy full acceptance of the offer; and
viii. The information included in SEC Form 19-1.
 
 b. If any material change occurs in the information previously disclosed to security holders, the bidder shall disclose promptly such change in the manner prescribed by this Rule.

a. A bidder may publish, send or make the tender offer by complying fully with one of the following methods of dissemination:
i. Long Form Publication. The bidder may publish in two newspapers of general circulation in the Philippines on the date of commencement of the tender offer and for two consecutive days thereafter the information required by paragraph 7 (a) of this Rule; or
ii. Summary Publication. The bidder may publish in two newspapers of general circulation in the Philippines on the date of commencement of the tender offer and for two consecutive days thereafter the information required by paragraph 7 (a)(i) through (vii) of this Rule, including appropriate instructions for security holders regarding how to obtain promptly, at the expense of the bidder, the information included in SEC Form 19-1, and furnish promptly a copy of SEC Form 19-1 to any security holder who requests a copy of such information.
 
b. If a material change occurs in the information published, sent or given to security holders, the bidder shall disseminate promptly disclosure of such change in a manner reasonably calculated to inform security holders of such change.

a. The tender offer, unless withdrawn, shall remain open until the expiration of:
i. At least twenty (20) business days from its commencement; provided, however, that an offer should generally be completed within sixty (60) days from the date it is publicly announced; and
ii. At least ten (10) business days from the date that notice of a change in the percentage of the class of securities being sought or in the consideration offered is first published, sent or given to security holders.
 
b. Where a mandatory tender offer is required, the bidder is required to offer the highest price paid by him for such shares during the past six (6) months. Where the offer involves payment by transfer or allotment of securities, such securities must be valued on an equitable basis.
c. During the course of a tender offer, or before the commencement thereof if the board of the target company has reason to believe that an offer might be imminent, it shall not engage in any of the following transactions, except in pursuance of a contract entered into earlier, or with the approval of shareholders in a general meeting or, where special circumstances exist, Commission approval has been obtained:
i. Issue any authorized but unissued shares;
ii. Issue or grant options in respect to any unissued shares;
iii. Create or issue, or permit the creation or issue of, any securities carrying rights of conversion into, or subscription for, shares;
iv. Sell, dispose of or acquire, or agree to acquire, any assets, the value of which amounts to five percent (5%) or more of the total value of assets prior to acquisition; or
v. Enter into contracts otherwise than in the ordinary course of business.
 
d. The bidder in a tender offer shall permit securities tendered to be withdrawn:
i.  At any time during the period such tender offer remains open; and
ii. If not yet accepted for payment, after the expiration of sixty (60) business days from the commencement of the tender offer.
 
e. If the tender offer is for less than all of the outstanding equity securities of a class, and if a greater number of securities is tendered pursuant thereto than the bidder is bound or willing to take up and pay for, the securities taken up and paid for shall be taken up and paid for as nearly as may be pro rata, disregarding fractions, according to the number of securities tendered by each security holder during the period such offer remains open.
 
f. In the event the bidder in a tender offer increases the consideration offered after the tender offer has commenced, such bidder shall pay such increased consideration to all security holders whose tendered securities are accepted for payment by such bidder, whether or not the securities were tendered prior to the variation of the tender offer’s terms.
g. The bidder in a tender offer shall either pay the consideration offered, or return the tendered securities, not later than ten (10) business days after the termination of withdrawal of the tender offer.
h. No tender offer may be made unless:
i. The tender offer is open to all security holders of the class of securities subject to the tender offer; and
ii. The consideration paid to any security holder pursuant to the tender offer is the highest consideration paid to any other security holder during such tender offer.
 
i. The bidder in a tender offer may not extend the length of a tender offer without issuing a notice of such extension by press release or other public announcement, which notice shall include disclosure of the appropriate number of securities deposited to date and shall be issued no later than the scheduled original expiration date of the offer.

Rule 20
The Proxy Rule

a. As used in this Rule and SEC Form 20, the following terms shall have the same meaning as defined in SRC Rule 17.1(b): associate, employee benefit plan, entity that exercises fiduciary powers, last fiscal year, proxy, and record date.
b. Proxy statement means the statement required by paragraph 3(a) of this Rule.
c. Registrant means the issuer of the securities in respect of which proxies are to be solicited.
d. Solicitation
i. The terms solicit and solicitation include:
A. any request for a proxy whether or not accompanied by or included in a form of proxy;
B. any request to execute or not to execute, or to revoke, a proxy; or
C. the furnishing of a form of proxy or other communication to security holders under circumstance reasonably calculated to result in the procurement, withholding or revocation of a proxy.
 
ii. The terms do not apply to:
A. The furnishing of a form of proxy to a security holder upon the unsolicited request of such security holder;
B. The performance by any person of ministerial acts on behalf of a person soliciting a proxy; or
C. Any solicitation made otherwise than on behalf of the registrant where the total number of persons solicited is not more than ten (10).

a. No solicitation subject to this Rule shall be made unless each person solicited is concurrently furnished or has previously been furnished with a written proxy statement containing the information specified in SEC Form 20 which has been filed with the Commission.
b.  If the solicitation is made on behalf of the registrant, and relates to an annual (or special meeting in lieu of annual) meeting of security holders at which directors are to be elected, each proxy statement shall be accompanied or preceded by an annual report to security holders as follows:

i. The report shall include, for the registrant and its subsidiaries, consolidated, audited financial statements as required by SRC Rule 68.
ii. The report shall contain information concerning disagreements with accountants on accounting and financial disclosure required by Part III(b) of “Annex C”.
iii. The report shall contain management’s discussion and analysis or plan of operation required by Part III(a) of “Annex C”.
iv. The report shall contain a brief description of the general nature and scope of the business of the registrant and its subsidiaries.
v. The report shall identify each of the registrant's directors and executive officers and shall indicate the principal occupation or employment of each such person and the name and principal business of any organization by which such person is employed.
vi. The report shall contain the market price of and dividends on the registrant’s common equity required by Part II(a) of “Annex C”.
vii. The proxy statement or the report shall contain an undertaking in bold face prominent type to provide without charge to each person solicited, on the written request of any such person, a copy of the registrant's annual report on SEC Form 17-A and shall indicate the name and address of the person to whom such a written request is to be directed. At the discretion of management, a charge may be made for exhibits, provided such charge is limited to reasonable expenses incurred by the registrant in furnishing such exhibits.
viii. Copies of the report sent to security holders pursuant to this rule shall be filed, or mailed for filing with, the Commission not later than the date on which such report is first sent or given to security holders.
ix. This report is deemed to satisfy Section 75 of The Corporation Code of the Philippines with respect to presenting a financial report of operations including financial statements to stockholders at their regular meeting.

a. The form of proxy shall:
i. indicate in bold-face type on whose behalf the solicitation is made;
ii. provide a specifically designated blank space for dating the proxy card;
iii. identify clearly and impartially each separate matter intended to be acted upon;
iv. be in writing, signed by the stockholder or his duly authorized representative; and
v. be filed with the Corporate Secretary before the scheduled meeting.
 
b. i. Means shall be provided in the form of proxy whereby the person solicited is afforded an opportunity to specify by boxes a choice between approval or disapproval of, or abstention with respect to, each separate matter referred to therein as intended to be acted upon, other than elections to office. A proxy may confer discretionary authority with respect to matters as to which a choice is not specified by the security holder provided that the form of proxy states in bold-face type how it is intended to vote the shares represented by the proxy in each such case.
ii. A form of proxy which provides for the election of directors shall set forth the names of persons nominated for election as directors. Such form of proxy shall clearly provide any of the following means for security holders to withhold authority to vote for each nominee:
A. a box opposite the name of each nominee which may be marked to indicate that authority to vote for such nominee is withheld;
B. an instruction in bold-face type which indicates that the security holder may withhold authority to vote for any nominee by lining through or otherwise striking out the name of the nominee; or
C. designated blank spaces in which the shareholder may enter the names of nominees with respect to whom the shareholder chooses to withhold authority to vote.
iii. Any form of proxy which is executed by the security holder in such manner as not to withhold authority to vote for the election of any nominee shall be deemed to grant such authority, provided that the form of proxy so states in prominent bold-face type.
c. A proxy may confer discretionary authority to vote with respect to any of the following:
i. Matters that are to be presented at the meeting but which, at a reasonable time before the solicitation, are not known to the persons making the solicitation; provided, however, that a specific statement to that effect is made in the proxy statement or form of proxy;
ii. Approval of the minutes of the prior meeting if such approval does not amount to ratification of the actions taken at that meeting;
iii. The election of any person to any office for which a bona fide nominee is named in the proxy statement and such nominee is unable to serve or for good cause will not serve; or
 iv. Matters incident to the conduct of the meeting
 
d. No proxy shall confer authority
i. to vote for the election of any person to any office for which a bona fide nominee is not named in the proxy statement;
ii. to vote with respect to more than one meeting (and any adjournment thereof), unless a specific statement is made in the proxy statement and form of proxy that the proxy is valid for more than one meeting. Provided, however, that no proxy shall be valid and effective for a period longer than five (5) years from the date of the proxy; or
iii. to consent to or authorize any action other than the action proposed to be taken in the proxy statement or matters referred to above.
e. The proxy statement or form of proxy shall provide, subject to reasonable specified conditions, that the shares represented by the proxy will be voted and that where the person solicited specifies by means of a ballot provided pursuant to this Rule a choice with respect to any matter to be acted upon, the shares will be voted in accordance with the specifications so made.
f. The form of proxy, together with the proxy statement, shall be sent or given to security holders at least fifteen (15) business days prior to the meeting date.

a. Preliminary copies of the proxy statement and form of proxy shall be filed with the Commission at least ten (10) business days prior to the date definitive copies of such material are first sent or given to security holders.
b. Copies of the definitive proxy statement, form of proxy and all other soliciting material, in the form in which such material is furnished to security holders shall be filed with, or mailed for filing to, the Commission not later than the date such material is first sent or given to security holders. One (1) copy of such material shall at the same time be filed with, or mailed for filing to, any Exchange upon which any class of securities of the registrant is listed for trading.
c. If the solicitation is to be made in whole or in part by personal solicitation, copies of all written instructions or other material which discusses or reviews, or comments upon the merits of, any matter to be acted upon and which is furnished to the persons making the actual solicitation for their use directly or indirectly in connection with the solicitation shall be filed with, or mailed for filing to, the Commission by the person on whose behalf the solicitation is made not later than the date any such material is first sent or given to such individuals.
d. If any proxy statement, form of proxy or other material filed pursuant to this Rule is amended or revised, copies of such amended or revised material shall be filed pursuant to this Rule and shall be marked to indicate clearly and precisely the changes effected therein.
e. At the time of filing the preliminary proxy solicitation material, the person upon whose behalf the solicitation is made, shall pay the Commission the prescribed fee.

a. If the registrant has made or intends to make a proxy solicitation in connection with a stockholders’ meeting and a record or beneficial holder of securities of the class entitled to vote at the meeting makes a written request to be provided with a list of stockholders or to mail the requesting stockholder’s material, the registrant may, at its option, provide the list or mail the material for the requesting stockholder.
b. If the registrant elects to mail the material for the requesting stockholder, the registrant shall:
i. advise the requesting stockholder promptly of the number of record holders and beneficial holders to whom the soliciting materials will be sent;
ii. advise the requesting stockholder of the estimated cost of mailing a proxy statement, form of proxy or other communication to such holders; and
iii. mail the materials to the stockholders with reasonable promptness.

a. No solicitation subject to this Rule shall be made by means of any proxy statement, form of proxy, notice of meeting or other communication, written or oral, containing any statement which, at the time and in the light of the circumstances under which it is made, is false or misleading with respect to any material fact, or which omits to state any material fact necessary in order to make the statements therein not false or misleading or necessary to correct any statement in any earlier communication with respect to the solicitation of a proxy for the same meeting or subject matter which has become false or misleading.
b. The fact that a proxy statement, form of proxy or other soliciting material has been filed with or examined by the Commission shall not be deemed a finding by the Commission that such material is accurate or complete or not false or misleading, or that the Commission has passed upon the merits of or approved any statement contained therein or any matter to be acted upon by security holders. No representation contrary to the foregoing shall be made.

No person making a solicitation which is subject to this Rule shall solicit:
a. any undated or post-dated proxy, or
b. any proxy which provides that it shall be deemed to be dated as of any date subsequent to the date on which it is signed by the security holder.

a. This paragraph applies to any solicitation by any person or group of persons for the purpose of opposing a solicitation subject to this Rule by any other person or group of persons with respect to the election or removal of directors at any annual meeting of security holders.
b. Notwithstanding the provisions of paragraph 3 of this Rule, a solicitation subject to this Rule may be made prior to furnishing security holders a written proxy statement containing the informaton specified in SEC Form 20 with respect to such solicitation, provided that:

i. No form of proxy is furnished to security holders prior to the time the written proxy statement required by paragraph 3 of this Rule is furnished to security holders. This subparagraph shall not apply where a proxy statement then meeting the requirements of SEC Form 20 has been furnished to security holders by or on behalf of the other party to the contest.
ii. The identity of the participants in the solicitation and a description of their interest, direct or indirect, by security holdings or otherwise, are set forth in each communication published.
iii. A written proxy statement meeting the requirements of paragraph 3(a) of this Rule is sent or given to security holders being solicited pursuant to paragraph 9(b) of this Rule at the earliest practicable date.
 
c. Copies of any soliciting material published, sent or given to security holders prior to the furnishing of the written proxy statement required by paragraph 3 of this Rule shall be filed with the Commission no later than the date such material is published, sent or given to any security holder.
d. The provisions of paragraphs b, c, and d of paragraph 5 of this Rule shall apply, to the extent pertinent, to soliciting material subject to paragraph 9(c) of this Rule.

a. If the registrant knows that securities of any class entitled to vote at a meeting with respect to which the registrant intends to solicit proxies, consents or authorizations are held of record by a broker, dealer, investment house, voting trustee, bank, association, or other entity that exercises fiduciary powers in nominee name or otherwise, the registrant shall by first class mail or other equally prompt means, inquire of such record holders at least twenty (20) business days prior to the record date of the meeting:
i. whether other persons are the beneficial owners of such securities and if so, the number of copies of the proxy and other soliciting material necessary to supply such material to such beneficial owners; and
ii. in the case of an annual (or special meeting in lieu of the annual) meeting at which directors are to be elected, the number of copies of the annual report to security holders necessary to supply such report to beneficial owners to whom such reports are to be distributed by such record holder.
 
b. The registrant shall supply, in a timely manner, each record holder of whom the inquiries required by this paragraph 10(a) are made with copies of the proxy, other proxy soliciting material, and/or the annual report to security holders, in such quantities, assembled in such form and at such place(s), as the record holder may reasonably request in order to send such material to each beneficial owner of securities who is to be furnished with such material by the record holder.
c. Upon the request of any record holder that is supplied with proxy soliciting material and/or annual reports to security holders pursuant to this paragraph 10(b), the registrant shall reimburse the record holder for its reasonable expenses in completing the mailing of such material to beneficial owners.

SRC Rule 23
Reports to be Filed by Directors, Officers and Principal Stockholders

a. within ten (10) days after the effective date of the registration statement for that security, or within ten (10) days after he becomes such beneficial owner, director or officer, subsequent to the effective date of the registration statement, whichever is earlier, file a statement with the Commission, and with an Exchange if the security is listed on that Exchange, on Form 23-A indicating the amount of all equity securities of such issuer of which he is the beneficial owner;
b. within ten (10) days after the close of each calendar month thereafter, if there has been any change in such ownership during the month, file a statement with the Commission, and with an Exchange if the security is listed on that Exchange, on Form 23-B indicating his ownership at the close of the calendar month and such changes in his ownership as have occurred during that calendar month; and
c. notify the Commission if his direct or indirect beneficial ownership of equity securities falls below ten percent (10%), or if he ceases to be an officer or director of the issuer. After filing such notification, he shall no longer be required to file a Form 23-B.

SRC Rule 24.1(b)-1
Manipulative Practices

a. Whether the order, or execution of the order, would materially alter the market for, and/or the price of, the securities;
b. The time the order is entered or any instructions concerning the time of entry of the order;
c. Whether the person on whose behalf the order is placed, or another person who the Broker Dealer knows to be a related party of that person, may have an interest in creating a false or misleading appearance of active trading in any security or with respect to the market for, or the price of, any security;
d. Whether the order is accompanied by settlement, delivery or security arrangements which are unusual;
e. Whether the order appears to be part of a series of orders, whether when put together with orders which appear to make up the series, the order or the series is unusual having regard to the matters referred to in this paragraph 3; and
f. Whether there appears to be a legitimate commercial reason for that person placing the order, unrelated to an intention to create a false or misleading appearance of active trading in or with respect to the market for, or price of, any security.
Failure to consider these factors shall raise a presumption that a transaction/s is manipulative.

a. Engaging in a series of transactions in securities that are reported publicly to give the impression of activity or price movement in a security (e.g. painting the tape);
b. Buying and selling securities at the close of the market in an effort to alter the closing price of the security (marking the close);
c. Engaging in transactions where both the buy and sell orders are entered at the same time with the same price and quantity by different but colluding parties (improper matched orders);
d. Engaging in buying activity at increasingly higher prices and then selling securities in the market at the higher prices (hype and dump);
e. Engaging in transactions in which there is no genuine change in actual ownership of a security (wash sales);
f. Taking advantage of a shortage of securities in the market by controlling the demand side and exploiting market congestion during such shortages in a way as to create artificial prices (squeezing the float); or
g. Disseminating false or misleading market information through media, including the internet, or any other means to move the price of a security in a direction that is favorable to a position held or a transaction.

SRC Rule 24.1(d)-1
Advertisements and Communications with the Public

1. All communications by Broker Dealers or associated persons or salesmen of Broker Dealers (hereinafter “registered persons”), with the public shall be based on principles of fair dealing and good faith and should provide a sound basis for evaluating the facts in regard to any particular security or securities or type of security, industry discussed, or service offered. No material fact or qualification may be omitted if the omission, in the light of the context of the material presented, would cause the advertising or sales literature to be misleading.

2. Exaggerated, unwarranted or misleading statements or claims are prohibited in all public communications of registered persons. In preparing such literature, it must be borne in mind by registered persons that inherent in investment are the risks of fluctuating prices and the uncertainty of dividends, rates of return and yield, and no registered person shall, directly or indirectly, publish, circulate or distribute any public communication that he knows, or had reason to know, contains any untrue statement of a material fact or is otherwise false or misleading.

3. Communications with the public shall not contain promises of specific results, exaggerated or unwarranted claims or unwarranted superlatives, opinions for which there is no reasonable basis, or forecasts of future events which are unwarranted, or which are not clearly labeled as forecasts.

4. In judging whether a communication or a particular element of a communication may be misleading, several factors should be considered, including but not limited to:

a. the overall context in which the statement or statements are made. A statement made in one context may be misleading even though such a statement could be perfectly appropriate in another context. An essential test in this regard is the balance of treatment of risks and potential benefits;
b. the audience to which the communication is directed. Different levels of explanation or detail may be necessary depending on the audience to which a communication is directed and the ability of the registered person given the nature of the media used, to restrict the audience appropriately. If the statements made in a communication would be applicable only to a limited audience, or if additional information might be necessary for other audiences, it should be kept in mind that it is not always possible to restrict the readership of a particular communication; and/or
c. the overall clarity of the communication. A statement or disclosure made in an unclear manner obviously can result in a lack of understanding of the statement, or in a serious misunderstanding. A complex or overly technical explanation may be worse than too little information. Likewise material disclosure relegated to legends or footnotes realistically may not enhance the reader's understanding of the communication.

SRC Rule 24.1(d)-2
Publication of Transactions and Quotations SRC Rule 24.1(d)-3
Payment to Influence Market Prices SRC Rule 24.2-3
Prohibition on Guarantees against Loss

No Broker Dealer or salesman shall guarantee a customer against loss in any securities account of such customer carried by the Broker Dealer or in any securities transaction effected by the Broker Dealer with or for the customer.

SRC Rule 25.1
Definition of Put, Call, Straddle and Option SRC Rule 26.3-1
Use of Information Obtained in Fiduciary Capacity

SRC Rule 26.3-2
Prohibited Representations

a. Person to represent that he has been registered as a securities intermediary with the Commission unless such person is registered under the Code. Registration under the Corporation Code shall not be deemed to be registration under the Code;
b. Broker Dealer to represent that the registration of the Broker Dealer under the Code, or the failure of the Commission to deny, suspend, or revoke such registration, indicates in any way that the Commission has passed upon or approved the financial standing, business, or conduct of such Broker Dealer, or the merits of any security or any transaction/s conducted thereby; and/or
c. Person to represent that a security is a particular type of security when such representation is inconsistent with a stated definition under the Code or rules or regulations adopted thereunder, or internationally accepted practice.

SRC Rule 28.1-1
Registration of Brokers and Dealers

a. Whether he is an Exchange member or non-Exchange Member;
b. If an Exchange member, whether he shall engage in market making transactions;
c. If a non-Exchange member, whether he is operating a seat for or using the trading rights of an Exchange member;
d. If a non-Exchange member, whether he shall deal only with proprietary shares.

a. by a Broker Dealer which complies with Commission and Exchange rules regarding its duty as a market maker; and
b. to ensure two way quotes, provide liquidity, and maintain a fair and orderly trading market therein.

a. A continuing authorization for the Commission’s duly authorized representative to verify the applicant’s bank accounts. The authorization shall be for all banks wherein accounts are maintained by the Broker Dealer, its subsidiaries or affiliates, and persons under common control with the Broker Dealer and shall be continuous with registration by the Commission;
b.  Indicating compliance with paid up capital requirements pursuant to paragraph 5(e) of this rule in lieu of the surety bond to secure compliance with the Code: Provided, however, that Broker Dealers who do not meet the new paid up capital requirements under paragraph 5(e) of this Rule, are seeking new registration under the Code shall obtain a surety bond in compliance with SRC Rule 28.1-5;
c. Valid work permit of foreigners connected in any capacity with the applicant;
d. Copies of identity cards/passports of individual applicants and directors and persons who control more than ten percent (10%) of a class of voting securities of corporate applicants;
e. Written supervision and control procedures, including procedures for establishing and maintaining a “Chinese wall” pursuant to SRC 34.1-3;
f. A schedule of minimum commission charges as required by SRC Rule 30.2-5;
 g. Calculation of net capital requirements in accordance with paragraph 5(b) of this Rule and SRC Rule 49.1-1;
h. Evidence of educational, professional/technical or other academic qualifications of Officers, Associated Persons and Salesmen;
i. Latest audited financial statement;
j. Where applicant has been in existence for more than one year, certified copies of income tax returns for the two years preceding date of application;
k. Organization chart, including branch offices;
l. If the applicant is a corporation, a certified copy of the following documents under oath, by the corporate secretary:

1. With respect to a foreign corporation, certificate that the board of directors has authorized, in a resolution, the President and Secretary to sign an irrevocable consent to service of process upon the Commission as service to the corporation;
2. Articles of Incorporation indicating that the purpose of the applicant is to engage in the business of a Broker Dealer; and
3. Board resolution attesting to particulars contained in the application; and

m. Business plan regarding proposed and/or current operations, including projected volume of business. Such plan should reflect applicant’s ability and plans to engage in a profitable level of business.

a. Applicant shall be a member in good standing of an SRO; Provided, however that any applicant who is not a member of an SRO may only be granted registration conditioned upon future membership in an SRO;
b. Net Capital in the amount of Five Million Pesos or five percent (5%) of aggregate indebtedness whichever is higher, calculated in accordance with SRC Rule 49.1-1;
c. Membership or participation in a Trust Fund accredited by the Commission under SRC Rule 36.4 (a)-1;
d. Where the Broker Dealer is a participant in a registered clearing agency, which is not solely engaged in the business of a securities depository, fulfillment of its obligation to contribute to the guarantee fund;
e. Unimpaired paid up capital for Broker Dealers who are seeking new registration under the Code, including those acquiring existing Broker Dealers, in the amount of 100 Million Pesos: Provided, however, that any existing Broker Dealer who is currently registered under the Revised Securities Act and plans on engaging in market making transactions shall likewise have the same paid-up capital: Provided further, that non Exchange member applicants who will deal only with proprietary shares shall have unimpaired paid-up capital of P5 Million: Provided, finally, that other existing Broker Dealer applicants currently registered under the Revised Securities Act and seeking new registration under the Code, who are not seeking authorization to engage in market making transactions, and who do not have an unimpaired paid up of 100 Million Pesos, shall file the required surety bond in lieu of new paid up capital until such time that the Exchange is demutualized and the Commission mandates a new paid-up capital requirement in view thereof;
f. Registration of each branch office;
g. At least one trained and registered salesman at each registered branch office. All salesmen of the applicant shall apply for registration as a salesman under SRC Rule 28.1-1;
h. At least one registered Associated Person. Any person with supervisory responsibility for the applicant shall apply for registration as an Associated Person under SRC Rule 28.1-1;
i. A sufficient number of back office staff at the main office of the applicant;
j. A computerized and effective recording and accounting system;
k. Separate bank accounts for client funds;
l. Separate bank account for firm funds;
m. Separate office premises and facilities;
n. Reporting, using SEC Form 28-BDA, any changes in the information provided in the application form to the Commission in writing with seven (7) days of such changes; and
o. Timely payment of prescribed annual fees and filing of reports required under the rules and regulations.

SRC Rule 28.1.2
Registration of Successor to Broker Dealer

a. An unregistered entity purchases or assumes substantially all of the assets and liabilities of a Broker Dealer, and the unregistered entity then operate the business of the Broker Dealer;
b. If two or more registered Broker Dealers consolidate their firms and conduct their business through a new unregistered entity which assumes substantially all of the assets and liabilities of the predecessor entities, the new entity shall file a complete application on SEC Form 28-BD, while the predecessor firms shall each be required to file for withdrawal from registration under SRC Rule 28.1-3.

a. A corporate reorganization or restructuring that does not result in a change in control of the Broker Dealer; or
b. A succession resulting from a change in the form of business, such as from a partnership to a corporation.

SRC Rule 28.1-3
Withdrawal from Registration of a Broker Dealer  SRC Rule 28.1-4
Registration of Salesmen and Associated Persons of Broker Dealers

 a. Salesman shall not include any employee of an issuer whose compensation is not determined directly or indirectly on sales of securities of the issuer.
b. Associated person shall mean any person employed by the Broker Dealer whose responsibilities include supervision of other employees, agents, salesmen, officers, directors, clerks and stockholders of such Broker Dealer for compliance with the Code and rules and regulations adopted thereunder.

a. Valid work permit if the applicant is a foreigner;
b. Copies of identity cards/passports of applicant;
c. Evidence that such person has complied with applicable examination requirements or meets other educational, professional or technical qualifications; and
d. Evidence that a Broker Dealer has agreed to employ such person contingent upon such person’s registration as a salesman or associated person.

a. Applicants shall be only natural persons employed by a Broker Dealer;
b. Applicants for salesmen shall be at least 18 years of age and applicants for associated person shall be at least 21 years of age;
c. Applicants for registration as a salesman shall have no disciplinary history that would subject them to disqualification from registration under Section 29 of the Code;
d. Applicants for registration as an associated person, shall not have been censured or reprimanded by a professional, trade or regulatory body for negligence, incompetence or mismanagement, or dismissed or requested to resign from any position or office for negligence, incompetence or mismanagement, or be subject to any other disqualification under Section 29 of the Code;
e. If the applicant is applying for registration as a salesman or associated person for the first time, he must first be certified by the SRO with whom his employer is a member or participant, as a Certified Securities Representative or Certified Associated Person; and
f. Applicants shall have at least three (3) years experience as a registered salesman or associated person or no later than three (3) years from date of application passed applicable examination requirements; Provided, however, that all applicants shall be able to demonstrate an understanding of the Code and rules and regulations adopted thereunder, the particular Exchange and/or clearing agency rules that apply to the functions that they would perform, any obligations imposed by those provisions and rules, and the fiduciary obligations owed to clients and the general obligations owed to employers.

a. actively participate in the business of the Broker Dealer for whom he is employed;
b. be responsible for supervising other employees, agents, salesmen, officers, directors, clerks and stockholders of the Broker Dealer for compliance with the Code and rules and regulations adopted thereunder;
c.  be responsible for overseeing compliance with legislative and other regulatory requirements (such as notifying the Commission of material changes in information previously filed, maintaining registers, books of accounts and other records, compliance with rules, orders and laws relating to trading, issuing confirmation receipts, compliance with margin rules, net capital and other financial requirements);
d. ensuring that all salesmen of the Broker Dealer are registered and that the Commission is notified when any salesmen is no longer employed by the Broker Dealer;
e. developing procedures and monitoring on a daily basis compliance with financial resource requirements; and
f. ensuring that there is an audit trail which enables compliance with applicable laws, Exchange, clearing agency and other SRO rules.

a. Report any changes in the information provided in the application form to the Commission in writing within seven (7) days of such changes, using SEC Form 28-AMD;
b. Observe at all times the provisions of this Code, all rules and regulations adopted thereunder, and applicable Exchange, clearing agency and other SRO rules; and
c. Be able to demonstrate an on-going understanding of applicable regulatory requirements and Exchange, clearing agency, and other SRO rules.

SRC Rule 28.1-5
Broker Dealer Surety Bond

SRC Rule 28.2-3
Compliance with Qualification Requirements of Self Regulatory Organizations

SRC Rule 29
Protection of Customer Accounts Where Registration of a Broker Dealer is Suspended or Revoked

1. Where such Broker Dealer is a Member of an Exchange, the Exchange shall immediately arrange for another Member to take over any outstanding contracts relating to securities, simultaneously notify the Commission in writing of such transfer and any affected customers that their accounts have been transferred, and provide such customers with the opportunity to re-transfer their account to another Broker Dealer of their choice; or
2. Where such Broker Dealer is not a Member of an Exchange, the Commission shall notify any affected customers of such suspension or revocation and require that they transfer their account to another Broker Dealer.

SRC Rule 30.1
Monitoring of Affiliated Transactions by Broker Dealers SRC Rule 30.2-1
Ethical Standards Rule

1. Every Broker Dealer, associated person and salesman of a Broker Dealer (hereinafter referred to as a “registered person”), in the conduct of his business, shall observe high standards of commercial honor and just and equitable principles of trade.

2. In considering whether a registered person is conducting his business in an ethical and fair manner, the Commission, in addition to requirements imposed under other SRC rules, will be guided by the following principles and requirements which incorporate International Organization of Securities Commission standards:

a. Honesty and fairness - In conducting his business activities, a registered person should act honestly, fairly and in the best interest of his client and the integrity of the market.
Where a registered person advises or acts on behalf of a client, he shall ensure at all times that any representations or other communications made and information provided to the client are accurate and not misleading and do not violate SRC Rule 24.1(d)-1.
b. Diligence. - In conducting his business activities, a registered person should act with due skill, care and diligence, in the best interests of his clients and the integrity of the market:
i. A registered person shall take all reasonable steps to execute promptly client orders in accordance with the instruction of clients.
ii. A registered person when acting for or with clients shall always execute client orders on the best available terms in compliance with SRC rule 32.2(a)-2.
iii. A registered person shall ensure that transactions executed on behalf of clients are promptly and fairly allocated to the accounts of the clients on whose behalf the transactions were executed.
iv. When providing advice to a client, a registered person shall act diligently and ensure that his advice and recommendations in relation to clients are based on thorough analysis and take into account available alternatives.
c. Capabilities. - A registered person should have and employ effectively the resources and procedures which are needed for the proper performance of his business activities:
i. A registered person shall ensure at all times that any person he employs or appoints to conduct business for or with clients or other registered persons is qualified, including having relevant training or experience to act in the capacity so employed or appointed in compliance with SRC Rules 28.1-4 and 28.2-3.
ii. A registered person shall ensure that at all times, pursuant to SRC Rule 30.2-7 he has:
A. adequate resources to supervise diligently and does supervise diligently his employees and persons appointed by him to conduct business for or with clients or other registered persons; and
B. satisfactory internal control procedures and financial and operational capabilities which can be reasonably expected to protect his operations, his clients and other registered persons from financial loss arising from the theft, fraud and other dishonest acts, professional misconduct or omissions.
d. Information about clients. -
i. A registered person should seek from his clients information about their financial situation, investment experience and investment objectives relative to the services to be provided pursuant to SRC Rule 52.1-6.
ii. A registered person shall take all reasonable steps to establish the true and full identity of each of his clients, their financial situation, investment experience, and investment objectives.
iii. Having regard to information disclosed by a client and other circumstances relating to the client which the registered person is or should be aware of through the exercise of due diligence, the registered person shall, when making a recommendation or solicitation, ensure the suitability of such recommendation or solicitation for that client is reasonable in all circumstances pursuant to SRC Rule 30.2-4.
iv.  A registered person providing services to any client, in relation to derivatives, including options and warrants, or any leveraged transaction, shall assure himself that the client understands the nature and risks of these instruments and has sufficient net worth to be able to assume the risks and bear the potential losses of trading in such instruments.
v. A registered person shall be satisfied on reasonable grounds about the identity, address and contact details of the person ultimately responsible for originating the instruction in relation to a transaction, the person who stands to gain the commercial or economic benefit of the transaction and/or bears the commercial or economic risk: Provided, however, that in relation to an investment company, or discretionary account, the person referred to above is the investment company or account, not those who hold a beneficial interest therein.
vi. A registered person shall keep in the Philippines a record of the details referred to above and provide the Commission with access to those records upon request pursuant to Section 52 of the Code and SRC Rule 52.1-1.
vii. As required in SRC Rule 30.2-4, a registered person shall not do any thing to effect a transaction unless he has first complied with the requirements of this Rule.
a. Information for clients. - A registered person shall make adequate disclosure of material information in his dealings with his clients.
i. A registered person shall ensure that a written agreement which complies with SRC Rule 30.2-3 is entered into with a client before any services are provided to that client.
ii.  A registered person shall provide clients with adequate information about his firm, including his business address, any relevant conditions or restrictions under which the registered person conducts his business, and the identity or status of employees and others acting on his behalf with whom the client may have contact.
iii.  After a registered person has effected a transaction for a client, he shall endeavor to confirm promptly with the client, in writing, the essential features of the transaction pursuant to SRC Rule 30.2-2.
iv. A registered person shall comply with SRC Rule 52-1.8, regarding customer account statements.
v. A registered person shall disclose the financial condition of his business to a client upon request by providing a copy of the most recent report required to be filed with the Commission under SRC Rule 52.1-5 (net capital) and disclose any material changes which adversely affect the registered person’s financial condition after the date of such filing.
b. Conflicts of Interest. - A registered person should avoid conflicts of interest and when they can not be avoided, should ensure that his clients are fairly treated.
i. Client priority: A registered person shall handle orders of clients fairly and in the order in which they are received in compliance with SRC Rule 34.1-2.
A.  Orders of clients, or transactions to be undertaken on behalf of clients, shall have in all cases priority over orders for the account of the registered person, and otherwise comply with SRC Rule 34.1-2 where the Broker is a Member of an Exchange.
B.  A registered person shall, where he has aggregated an order for a client with an order for another client, or with an order for his own account, give priority to satisfying orders of clients, in any subsequent allocation, if all orders can not be filled.
C.  A registered person shall not deal in any securities for himself or for any account in which he has an interest based upon advance knowledge he possesses of pending transactions for or with clients or any other non public information, the disclosure of which would be expected to affect the price of such securities and violate Section 27 of the Code (insider trading prohibition).
D.  A registered person who withdraws in whole or in part from providing any investment or related service shall ensure that affected clients are promptly notified of such action and that any business which remains outstanding is promptly completed or transferred to another registered person in accordance with SRC Rule 29 and any instruction of the affected clients.
ii.  Conflicts of interest: Where a registered person has a material interest in a transaction with or for a client, or a relationship which gives rise to an actual or potential conflict of interest in relation to such transaction, he shall neither advise, nor deal in relation to the transaction unless he has disclosed that material interest or conflict to the client and has taken all reasonable steps to ensure fair treatment of the client.
iii.  Client assets: A registered person shall, in the handling of client transactions and assets, act to ensure that client assets are accounted for properly and promptly and comply with SRC Rule 52.1-10. Where the registered person, or a third party on behalf of the registered person, is in possession or control of client positions or assets, the  registered person shall ensure that client positions or assets are adequately safeguarded.
c. Compliance. - A registered person shall comply with all regulatory requirements applicable to the conduct of his business activities so as to promote the best interest of clients and the integrity of the market.
i. A registered person shall comply with the Code, rules and regulations adopted thereunder, and rules of any Exchange, clearing agency, or other SRO, of which he is a member of or participant in.
ii.  A registered person shall have a policy, which has been communicated to employees in writing, on whether employees are permitted to deal for their own accounts in securities. If employees are permitted to deal, the conditions on which they may do so, including those imposed under SRC Rule 34.1-2, shall be set out in writing and communicated to each employee.
iii. A registered person shall ensure that complaints from clients relating to his business are adequately addressed in compliance with SRC Rule 30.2(g) and sufficient records of such complaints are made in compliance with SRC Rule 52.1-9.
iv. Pursuant to Section 51 of the Code, a registered person shall at all times be responsible for the acts or omissions of his employees and agents in respect to the conduct of his business.
v. All registered persons, as a condition of their registration, shall undertake in writing to uphold the Code, and rules and regulations adopted thereunder.
2. This Rule applies to all registered persons, although the Commission recognizes that certain requirements of the Code and rules adopted thereunder may not be within the control of an associated person. In considering the conduct of an associated person, the Commission will consider such person’s level of responsibility within the Broker Dealer firm, and the level of control or knowledge he may have considering any failure by his firm or persons under his supervision to follow the Code.
3. Where the Commission makes an inquiry under Section 53 of the Code, the Commission will refer to requirements set forth in this Rule in considering whether any person is guilty of a violation of this Code and should remain registered.

SRC Rule 30.2-2
Confirmation of Customer Orders

 i.  a statement as to whether the Broker Dealer is brokering for a customer or another Broker Dealer or is dealing for himself pursuant to Section 34.1 (a) to (d) of the Code and SRC Rule 34.1-2;
ii. that the Broker Dealer is controlled by, or controls, or is under common control with the issuer of such security if such be the fact; and
iii. whether the transaction was solicited or unsolicited by the Broker Dealer or whether the transaction was executed pursuant to the exercise of discretionary power.

SRC Rule 30.2-3
Client Agreement

a. full name and address of the client, as verified by a retained copy of the identity card, relevant sections of the passport, business registration certificate, corporation documents, or any other official document which uniquely identifies the client;
b. the full name and registered address of the Broker Dealer’s business;
c. the Broker Dealer’s registration status with the Commission;
d. undertakings by the Broker Dealer and the client to notify the other in the event of any material change to the information provided in the agreement;
e. a description of the nature of services to be provided to or available to the client, such as securities cash account, securities margin account, discretionary account, portfolio management, investment advice, derivatives trading;
f. a description of any remuneration (and the basis for payment) that is to be paid by the client to the Broker Dealer, such as commission, brokerage, and any other fees and charges;
g. a statement indicating the circumstances under which the Broker Dealer will be acting as principal in relation to the client and that in all other circumstances the Broker Dealer will be acting as agent for the client;
h. if the Broker Dealer is acting as a Dealer in relation to securities and is a member of an Exchange, a statement explaining the application of Section 34 of the Code, and if the client specifically authorizes the Dealer to pledge the client’s securities or subject such securities to liens of third parties, the client faces a loss of such securities;
i. if margin or short selling facilities are to be provided to the client, details of margin requirements, interests charges, margin calls, and the circumstances under which a client’s position may be closed without the client’s consent; and
j. risk disclosure statement as set forth in “Annex D”.

SRC Rule 30.2-4
Suitability Rule

SRC Rule 30.2-5
Commissions and Charges for Services Performed by a Broker Dealer

a. miscellaneous services such as collection of monies due for principal, dividends or interest;
b. exchange or transfer of securities; and
c. appraisals, safekeeping or custody of securities, and other services,  shall be reasonable.

 SRC Rule 30.2-6
Supervision
 

a. the establishment and maintenance of written supervisory procedures;
b. the designation of one or more Associated Persons with the authority and responsibility to carry out the supervision of each type of business in which it engages;
c. the titles, registration status and locations of the required Associated Person/s and the responsibilities of each Associated Person as these relate to the types of business engaged in;
d. written documentation to prove that all Associated Persons are qualified by virtue of experience or training to carry out their assigned supervisory responsibilities;
e. written documentation to prove that each person engaged in securities transactions, either collectively or individually, no less than annually has participated in an interview or meeting conducted by the Associated Person/s designated by the firm at which compliance matters relevant to the activities of these persons are discussed. There shall be prompt notification in writing to each such person of new or modified compliance obligations;
f. establishment of an effective management and organizational structure which ensures that the operations of the business are conducted in a sound, efficient and effective manner; and
g. establishment, maintenance and enforcement of policies and procedures to ensure the proper handling of complaints from clients and that appropriate remedial action is promptly taken. Where possible, complaints should be investigated by the Associated Person performing the compliance function who is not directly involved in the subject matter of the complaint. Where a complaint is not remedied promptly, the client shall be advised of any further steps which may be available to the client under the law.

3. Associated Persons shall promptly report to management all occurrences of material non-compliance by the firm or its staff with legal and regulatory requirements, as well as with the firm’s own policies and procedures. Management shall then promptly notify any self regulatory organization which such Broker Dealer is a member or participant in and the Commission of occurrences of material non-compliance by the firm or its staff with relevant legal and regulatory requirements.

 SRC Rule 30.2-7
Internal Training Program

a. ensuring the continuous improvement in critical areas of its principal activities and operations; and
b. enhancing the technical knowledge of its employees to enable them to understand the operational and internal control policies and procedures of that Broker Dealer and all applicable legal and regulatory requirements.

a. set out details of the training programs which the Broker Dealer proposes to implement; and
b. be regularly updated in line with the development in the securities industry.

 SRC Rule 30.2-8
Block Sale

a. no order shall be executed by the Exchange at a price inferior to the best-bid-offer;

b. all existing bids and offers are satisfied before a transaction can occur that establishes a new price;
c. such transaction complies with Exchange rules, which have been approved by the Commission, regarding block sales; and
d.  no later than one business day after the date such transaction has been executed, the Exchange provides the Commission with written notification that a block sale has occurred, and the price and number of shares subject to such transaction.

 SRC Rule 30.2-9
Submission of Names of Stockholders, Members, Participants, Clients and Related Information

SRC Rule 31
Commission Role in Development of Securities Market Professionals  SRC Rule 32.1-1
Trading Limited to Listed Securities and Exchanges Registered under the Code

 SRC Rule 32.2(a) –2
Best Execution

 SRC Rule 33.1
Registration of Exchange

SRC Rule 33.2(c)
Ownership of an Exchange

a. The Exchange Controller shall become registered with the Commission as a Self Regulatory Organization under Section 40 of the Code and comply with its duties regarding rulemaking under this section and rules adopted thereunder: Provided, however, that for purposes of Section 40 and SRC Rule 39.1-1, the enforcement responsibilities of an SRO shall be delegated to the Exchange which is being controlled by the Exchange Controller.
b. The Board of an Exchange Controller shall include in its composition, the president of the Exchange Controller, and unless the Commission otherwise agrees to a different governance structure based on findings that the Exchange Controller can operate the Exchange in the public interest and that the Exchange can effectively operate as an SRO, no less than fifty one (51%) percent of the remaining members of the Board shall be comprised of three independent directors and persons who represent the interest of issuers, investors and other market participants who are not associated with any Broker Dealer or member of the Exchange controlled by the Exchange Controller, for a period of two (2) years prior to his/her appointment. No officer or employee of a Broker Dealer, its subsidiaries or affiliates or related interests may become an independent director.
c. No person shall beneficially own or control, directly or indirectly, more than five percent (5%) of the voting rights of the Exchange Controller and no industry or business group shall beneficially own or control, directly or indirectly, more than twenty percent (20%) of the voting rights of the Exchange Controller; Provided that pursuant to paragraph 3 below, the Exchange Controller shall disclose the names of its beneficial owners, their business or industry affiliation, and share ownership to the Commission and, no less than once a month, update such disclosure.
d. An Exchange Controller shall obtain prior Commission approval regarding share ownership or any other investment in any clearing agency, other securities related business, or any other non-related business.

i. Agriculture, Hunting, Forestry, Fishing, Mining and Quarrying;
ii. Manufacturing;
iii. Electricity, Gas, Water Supply, and Construction;
ii. Wholesale and Retail Trade, Hotels and Restaurants;
iii. Transport, Storage and Communications;
iv. Banking and other Financial Institutions;
v. Brokers and Dealers;
vi. Compulsory Social Security (Government);
vii. Real Estate including leasing; and
viii. Education, Health, Social Work and other community, social and personal services.

 SRC Rule 33.2(d)-1
Protection of Customer Accounts in Case of Business Failure of an Exchange Member

1. Suspend such Failed Member Firm’s membership, immediately arrange for another Member to take over the outstanding contracts relating to securities and simultaneously notify the Commission of such suspension and take-over;
2. Promptly notify customers of the Failed Member that their accounts have been transferred to another Member, and provide such customers with the opportunity to re-transfer their accounts to another Member of their choice;
3. Settle the Failed Member’s liabilities to customers through the sale of the Member’s seat or trading rights, liquidation of paid up capital and/or oversee payment of claims made against the surety bond;
4. Where after such settlement, there are outstanding liabilities to customers of the Failed Member, inform that Member’s customers that the matter has been transferred to a Trust Fund accredited under Section 36.5 of the Code to which such Failed Member is a Member or Participant and procedures for claiming compensation for losses which have not been satisfied; and
5. Simultaneously inform that Accredited Trust Fund of such take-over and any outstanding liabilities of the Failed Member firm remaining after liquidation.

SRC Rule 34.1-2
Segregation of Broker and Dealer Function. Affiliations and Practices

a. The transaction is of a kind described in paragraphs (a) through (d) of Section 34.1 of the Code and is effected in accordance with applicable rules and regulations adopted thereunder; or
b. The transaction is effected in compliance with the following conditions:

i. the initiating Member Broker transmits an order for the transaction to another Member Broker (executing Member Broker) for execution: Provided however that the order may only be transmitted to one executing Member Broker;
 ii. the executing Member Broker is not an affiliated person of the initiating Member Broker;
iii. the order ticket states that the order is for the account of the initiating Member Broker, associated person, other employees, owners, officers, or directors of an Initiating Member Broker, or discretionary account on behalf thereof (collectively referred to as “Member Orders");
iv. the initiating Member Broker retains a copy of the order ticket with the date and time of its transmittal, which shall be time stamped thereon;
v. in compliance with SRC Rule 52.1-7, the executing Member Broker dates and time stamps the order ticket to reflect the time that he received the order from the Initiating Member Broker and the time that the order was transmitted for execution;
vi. the executing Member Broker gives priority to the execution of non-Member orders over Member Orders at the same price;
vii. neither the initiating Member Broker nor an associated person of the initiating Member Broker participates in the execution of the transaction at any time after the order for the transaction has been transmitted to the executing Member Broker;
viii. in the case of a transaction effected for an account with respect to which the initiating Member Broker or an associated person of the initiating Member Broker exercises investment discretion, neither the initiating Member Broker nor any associated person thereof retains any compensation in connection with effecting the transaction unless:

A. the person or persons authorized to transact business for the account have expressly provided otherwise by written contract with the initiating Member Broker or the associated person thereof; and
B. the initiating Member Broker or the associated person furnished at least annually to the person or persons authorized to transact business for the account, a statement setting forth the total amount of compensation retained by the initialing Member Broker or any associated person thereof in connection with effecting transactions for the account in the period covered by the statement, which amount shall be exclusive of all amount paid to others during the period for services rendered in effecting such transactions;
ix. the initiating Member Broker and the executing Member Broker retain all order tickets in chronological order for a period of six (6) years; and
x. the initiating Member Broker and the executing Member Broker retain in chronological order for a period of six (6) years records in hard or soft copy of all orders executed by them containing their date, time, price, and other significant details.

a. undertakes in writing, under oath, that its trading system will be able to prioritize orders in accordance with this Rule; or
b. obtains a contrary certification from its software vendor and Commission approval of an alternate means to ensure compliance.

a.  Affiliated person of a Member Broker is any person who (i) controls, is controlled by, or is under common control with the Member Broker, (ii) has officers, directors, or associated persons who are also officers, directors, or associated persons of the Member Broker, (iii) directly or indirectly controls more than ten percent (10%) of the equity interest in the Member Broker, or (iv) has more than ten percent (10%) of its equity interest owned by the Member Broker and/or associated persons of the Member Broker.
b. A Member Broker effects a securities transaction when it performs any function in connection with the processing of that transaction, including, but not limited to, (1) transmission of an order for execution, (2) execution of the order, (3) clearance and settlement of transaction, and (4) arranging for the performance of any such function.
c. Compensation in connection with effecting the transaction refers to compensation directly or indirectly received or calculated on a transaction-related basis for the performance of any function involved in effecting securities transactions.

SRC Rule 34.1-3
Segregation of Functions (Chinese Walls)

a. the flow of information between the different parts of its organization which perform each function; and
b. any conflict of interest which may result.

a. of a specific nature which has not been made public;
b. relating to one or more public companies or any securities of a public company; and
c. which, if it were made public, would likely affect the market price of the securities.

SRC Rule 36-4.1
Registration of Transfer Agents

a. be a corporation or a partnership;
b. have paid-up capital of at least P 1,000,000.00, and
c. have a partner or officer who is a certified public accountant.

a. grant registration or approve the amendment; or
b. deny registration or the amendment, place limitations on the activities, functions or operations of, suspend or revoke registration, if the Commission finds, after notice and opportunity for hearing:

i. that such order is in the public interest;
ii. that the registrant does not meet applicable qualifications;
iii. the application is incomplete, inaccurate or misleading; or
iv. that the transfer agent has been found to:

A. be insolvent or not in sound financial condition;
B. have violated or not have complied with the applicable provisions of the Code or the rules and regulations adopted thereunder, or any order of the Commission;
C. have engaged in or be engaged in or about to engage in fraudulent transactions;
D. be in any other way dishonest or not of good repute;
E. have not conducted its business in accordance with law or be engaged in a business that is illegal or contrary to government rules and regulations;
F. have an officer, member of the board of directors or principal shareholder who is disqualified to be such an officer, director or principal shareholder;
G. have a backlog of share certificate transfers which indicates an inability of the registrant to fulfill its responsibilities as a transfer agent;
H. have repeatedly or materially failed to comply with its procedures or those of a registered clearing agency; or
I. have filed an application for registration or an amendment thereto which is incomplete or inaccurate in any material respect or which 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 application or amendment not misleading.

 SRC Rule 36-4.2
Reports from Transfer Agents

a. any delay in the turnaround or processing of an issue, transfer or replacement of a security;
b. any discrepancy between its records and those of the registered clearing agency, if applicable;
c. any loss of securities reported to it; and/or
d. the termination of its function as a transfer agent for a particular security.

a. the name of the security holder and a description of the security;
b. the date of the complaint or claim and a complete description thereof; and
c. the steps taken by the transfer agent, the manner in which the complaint or claim is resolved and any subsequent action taken or to be taken by the holder or the transfer agent.

SRC Rule 36-4.3
Records Retention by Transfer Agents

a. its rules and procedures;
b. exception reports filed with the Commission pursuant to SRC Rule 36-4.2.2;
c. complaint log as required to be maintained under SRC Rule 36-4.2.5;
d. reports to the issuers for whom the firm acts as transfer agent as required under SRC Rule 36-4.2.3; and
e. Annual report on SEC Form 36-AR.

 SRC Rule 36.4(a)-1
Trust Funds for Broker Dealer Customers

a. data on its organization, rules of procedure and membership/participation;
b. copies of its rule; and
c. list of directors and officers and a list of their affiliations.

a. The initial and the continuing required balanced for the Fund;
b. Assessments to be imposed on members/participants and procedures for collecting such assessment;
c. Borrowing by the Fund;
d. Investment of Fund assets;
e.   Procedures for paying customers for the extraordinary losses or damage they may suffer due to business failure or fraud or mismanagement of the Broker Dealer;
f. Role and duty of the trust fund as trustee; and
g. The composition of the trust fund’s board of Directors.

 SRC Rule 38.1
Definition of “Independent Director”

a. Is not a director or officer of the corporation or of its related companies or any of its substantial shareholders (other than as an independent director of any of the foregoing);
b. Is not a substantial shareholder of the corporation or of its related companies or any of its substantial shareholders;
c. Is not a relative of any director, officer or substantial shareholder of the corporation, any of its related companies or any of its substantial shareholders. For this purpose, relatives includes spouse, parent, child, brother, sister, and the spouse of such child, brother or sister;
d. Is not acting as a nominee or representative of any director or substantial shareholder of the corporation, any of its related companies or any of its substantial shareholders;
e. Has not been employed in any executive capacity by that public company, any of its related companies or by any of its substantial shareholders within the last five (5) years;
f. Is not retained as professional adviser by that public company, any of its related companies or any of its substantial shareholders within the last five (5) years;
g. Is not retained as professional adviser, by that public company, any of its related companies or by any of its substantial shareholders, either personally or through his firm; or
h. Has not engaged and does not engage in any transaction with the corporation or with any of its related companies or with any of its substantial shareholders,   whether by himself or with other persons or through a firm of which he is a partner or a company of which he is a director or substantial shareholder, other than transactions which are conducted at arms length and are immaterial.

a. Related company  means another company which is: (a) its holding company, (b) its subsidiary, or (c) a subsidiary of its holding company; and
b.  Substantial shareholder  means any person who is directly or indirectly the beneficial owner of more than ten percent (10%) of any class of its equity security.

SRC Rule 39.1-1
Rules Governing a Self Regulatory Organizations which is an Organized Exchange

a. Organized Exchange or Exchange means a registered Exchange, whether or not registered as an SRO under the Code.
b. Participant refers to any person who has been approved to use the SRO’s services and facilities but is not a member therein.
c. Securities laws refers to the Code and rules, regulations and orders issued by the Commission.
d. SRO means a Self Regulatory Organization which is an organized Exchange.
e. SRO rule refers to the constitution, articles of incorporation, by-laws and rules, or instruments corresponding to the foregoing and such policies, practices and interpretations of the SRO, other than those designated by the SRO as constituting a policy, practice or interpretation of an existing rule or establishing or concerning solely matters of SRO administration under Section 4(c) of this Rule.

a. Subject to Commission approval and pursuant to the procedures set forth herein, an SRO’s power to adopt and amend rules shall also include the power to repeal existing rules, implement such rules and provide interpretative guidance to aid in compliance.
b. An SRO shall adopt comprehensive rules governing its organization and governance, qualifications and rights of shareholders, listing of securities, trading of securities, settlement of contracts, qualification of members and other participants, ethical conduct of members and other participants, supervision and control of members, financial and operational responsibility of members, and discipline of members and other participants.

a. An SRO shall submit to the Commission for prior approval any proposed rule or amendment thereto (hereinafter collectively referred to as “proposal”), together with a concise statement of the reason and effect of the proposal.   If the Commission believes that such proposal is of “major significance”, at least thirty (30) days before approving such proposal, the Commission shall direct the SRO to publish the text of the proposal and a statement of the reasons and effect in a newspaper of general circulation or by some other means to guarantee the public circulation thereof, and shall afford interested persons an opportunity to submit written data, views and arguments, provided that comment period shall not exceed a period of twenty (20) days. The SRO shall file with the Commission a written summary of the comments received, along with responses thereto, no later than thirty (30) days after the end of the comment period. Where the comments cause the SRO proposal to be changed in a material manner, a new review period shall be triggered.
b.  Except as provided in paragraph (c) below, within the later of sixty (60) days after submission of the proposal or summary of comments required to be filed with the Commission pursuant to paragraph (a) above, the Commission shall, by order, approve the proposal, or institute proceedings to determine whether the proposal should be disapproved. If the Commission does not institute proceedings to disapprove the proposal within such period, the proposal may be declared effective by the SRO. If a proceeding is instituted, the Commission shall provide notice to the SRO of the proposed grounds for disapproval, and an opportunity for hearing, at the conclusion of which the Commission shall grant or deny approval of the proposal. The Commission shall approve a proposal where it finds that the proposal is consistent with the requirements of the securities law, and shall disapprove if it does not make such findings. If the proceeding is not concluded within ninety (90) days following its commencement, the proposal shall be made effective by the SRO.
c. Notwithstanding paragraph (b) above, a proposal may take effect within ten (10) business days after its submission to the Commission if designated by the SRO as constituting a policy, practice or interpretation of an existing rule, establishing or concerning solely matters of administration of the SRO (e.g. setting of dues, fees and charges ) or such other matters as the Commission by rule or order, may prescribe, unless the Commission, within the ten (10) day period, provides written notice to the SRO of its determination to review such proposal for prior approval pursuant to paragraphs (a) and (b) above.
d. Notwithstanding any other provision of this section, in an emergency requiring action for the protection of investors, the maintenance of fair and orderly markets, or the safeguarding of securities and funds, the SRO may summarily put into effect a proposal; provided however that the proposal made effective shall be promptly submitted to the Commission pursuant to paragraph (a) above.
e. Commission directions regarding rulemaking
i. The Commission may request in writing that the SRO effect on its own behalf specified changes in its rules and practices which are necessary or appropriate for the protection of investors, to insure fair dealing in securities traded on the SRO, insure fair administration of the SRO, conform SRO rules to the requirements set forth in the securities law, or to otherwise further the purpose of the securities law on such matters as:

1.  safeguards in respect of the financial responsibility of members and adequate provision against the evasion of financial responsibility through the use of corporate forms or special partnerships;
2. supervision of trading practices;
3. listing or delisting any security;
4. hours of trading;
5. manner, method and place of soliciting business;
6. fictitious accounts;
7. time and method of making settlements, payments and deliveries and of closing accounts;
8. transparency of securities transactions and prices;
9. fixing of reasonable rates of fees, interest, listing and other charges but not rates of commission;
10. minimum units of trading;
11. odd-lot purchases and sales;
12. minimum deposits on margin accounts; and
13. supervision, auditing and disciplining of members or participants.

The SRO shall be solely responsible for processing and approving or rejecting applications for new listing of shares, suspension and de-listing of listed issues and imposition of sanctions on listed companies for violation of SRO rules; provided, however, that such powers shall be exercised pursuant to SRO rules.

a. An SRO shall establish a separate audit, compliance and surveillance department/s, overseen by at least one “independent” member of the Board of Directors, and one other non-broker member.  Such department shall not be subordinated or otherwise controlled in its activity by the Exchange Board and shall be responsible for carrying out the SRO’s enforcement role pursuant to the securities law and the disciplining of participants, with findings to be provided simultaneously to the Commission and Exchange Board which shall notify the Commission within forty five (45) days as to the Board’s decision.
b.  Absent reasonable justification or excuse, the SRO shall enforce compliance with provisions of the securities laws regulating brokers, dealers and trading on the SRO and SRO rules by its members.
c.  An SRO shall enter into a Memorandum of Understanding with other SROs to clarify its oversight responsibilities over persons who are members of or participants in more than one SRO and coordinate with other SROs to ensure adequate oversight. Such plan shall be submitted to the Commission for approval under SRC Rule 39.1-6.
d.  An SRO shall monitor market conditions and trading activity to detect violations of the securities law and SRO rules:

i. The SRO shall conduct market surveillance of all trading activity on the SRO pursuant to SRO rules setting forth surveillance procedures and guidelines.
ii. The SRO shall monitor compliance by listed companies with continuing listing obligations; provided however, primary oversight for compliance with full disclosure regulation under the securities law shall remain the responsibility of the Commission.
e. The Commission may, on its own initiative, monitor the market to ensure that the SRO is fulfilling its SRO functions.

 7. Periodic Examinations

a. An SRO shall investigate suspected violations of the securities law and SRO rules based on complaints, examination/audit findings or unusual trading activities and take disciplinary action, where appropriate, pursuant to SRO rules.
b.  The SRO shall be primarily responsible for conducting investigations which concern suspected violation of rules governing sales practices, financial and operational requirements, trading and floor related violations, and compliance procedures/supervision of members.
c. The SRO shall promptly notify the Commission of any investigation which involves suspected violations of the securities law involving persons not subject to the SRO’s jurisdiction, concerning the disclosure obligations of listed companies under the securities law, and/or involving fraud or manipulation. The SRO shall cooperate with the Commission which shall have primary investigative authority over such suspected violations.

a.  An SRO shall discipline a member, including suspension or expulsion of a member, if such person has been found to have been engaged in a violation of SRO rules or provisions of the securities law, including, but not limited to, illegal sales practices, financial and operational requirements, trading and floor related violations, and/or violation of SRO listing rules.
b. In any disciplinary hearing by the SRO, other than a proceeding brought pursuant to paragraph (c) below, the SRO shall bring specific charges, provide notice to the member or participant charged, afford such person charged with an opportunity to defend against the charges, and keep a written record of the proceeding. A determination to bring a disciplinary sanction shall be supported by a written statement of the offense, a summary of the evidence presented and a statement of the sanction imposed.
c. The SRO may summarily suspend a member or person associated with a member who has been expelled or suspended from another SRO, and/or suspend a member who the SRO finds to be in such financial or operating difficulty that the member cannot be permitted to do business as a member with safety to investors, creditors, other members, or the SRO; provided, however that the SRO immediately provides written notice to the Commission of the action taken. Any person aggrieved by a summary action pursuant to this paragraph shall be promptly afforded an opportunity for a hearing by the SRO in accordance with paragraph (b) above. The Commission, by order, may stay a summary action on its own motion or upon application by any person aggrieved thereby if the Commission determines summarily or after notice and an opportunity for hearing (which may consist solely of the submission of affidavits or presentation of oral arguments) that a stay is consistent with the public interest and the protection of investors.
d. The SRO shall promptly notify the Commission in written reports of any disciplinary sanction imposed on any member or participant. Within thirty (30) days after receipt of such notice, any aggrieved person may appeal to the Commission from, or the Commission on its own motion within such period, may institute review of, the decision of the SRO, at the conclusion of which, after due notice and opportunity for hearing which may consist solely of review of the record before the SRO, the Commission shall affirm, modify or set aside the sanction. In such proceeding, the Commission shall determine whether the aggrieved person has engaged or omitted to engage in the acts and practices as found by the SRO, whether such acts and practices constitute willful violations of the securities law or SRO rules, whether such provisions were applied in a manner consistent with the purposes of the securities law, and whether, with due regard for the public interest and the protection of investors, the sanction is excessive or oppressive.

a. suspend for a period not to exceed twelve (12) months or revoke the registration of an SRO, or censure or impose limitations on the activities, functions and operations of the SRO as an SRO, if the Commission finds that the SRO has willfully violated or is unable to comply with any provision of the securities law or SRO rules, or without reasonable justification or excuse has failed to enforce compliance therewith by a member or participant;
b. take over the activities of an SRO pursuant to SRC rule 40.5.1;
c. suspend for a period not exceeding twelve (12) months or to expel from the SRO any member who is subject to an order of the Commission under Section 29 of the Code or is found to have willfully violated any provision of the securities law, or effected, directly or indirectly, any transaction for any person who such member had reason to believe was violating in respect of such transaction any of such provisions;
d. remove from office or censure any officer or director of the SRO if it finds that such officer or director has violated any provision of the securities law or the rules of such SRO, abused his authority or without reasonable justification or excuse, has failed to enforce compliance with any of such provisions; and/or
e. Take other actions as provided by the Code.

a. Monthly reports on dockets of examinations and investigations being conducted, containing the docket number, name of SRO examiner/investigator, how audit/examination originated (investor complaint, examination, surveillance), name of the member or participant, including a listed company being audited/investigated, nature of the violations alleged, status, findings, sanctions imposed and other courses of action taken by the SRO relative thereto;
b. Monthly reports on capital adequacy requirements by members;
c. Quarterly reports on the result of the monitoring of trading of listed companies and investigations conducted with respect thereto;
d. Semi- annual report on the number of newly listed issues, delisted/suspended issues and reasons therefor, and the number, type and issuer of current listed issues;
e. Semi-annual report containing information on the number of investor complaints received, investigated, nature of claim, status and manner of disposition; and
 f. Such other information as may, from time to time, be required by the Commission from the SRO.

a. In order to enhance investor protection and more effectively utilize existing resources, the Commission and SRO shall work towards a more harmonious and cooperative relationship among their officers and personnel. Commission staff working in the area of Broker Dealer and market regulation and corporate disclosure shall meet with their SRO counterparts at least once a month to discuss issues and concerns relating to the operation of the SRO as an SRO. Minutes of such meetings shall be prepared and circulated to SRO management and Commissioners of the Commission. This monthly meeting may, at the discretion of the Commission and SRO, involve officials of the Commission and/or SRO, directors of the Commission and their SRO counterparts, or technical working groups from both sides.
b. The Commission and SRO shall work closely and try to coordinate their media campaigns on the securities industry to generate positive public opinion and increase investor confidence.

SRC Rule 39.1-2
Registration of Associations of Brokers and Dealers and Other Self Regulatory Organizations

 SRC Rule 39.1.6-
Allocation of Regulatory Responsibilities Among Self Regulatory Organizations

SRC Rule  40.5.1
Commission Powers over Exchanges, Clearing Agencies and Self Regulatory Organizations

a. suspend registration of an Exchange, clearing agency and/or self regulatory organization (hereinafter collectively “Exchange”) upon findings that such Exchange has willfully violated or is unable to comply with any provision of this Code, or the rules and regulations hereunder, or its own rules, or has failed to enforce compliance therewith by a member of, person associated therewith, or a participant in such Exchange; or