securities regulation code (ra 8799)

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REPUBLIC ACT NO. 8799 SECURITIES REGULATION CODE CHAPTER I Title and Definitions SECTION 1. Title. – This shall be known as “The Securities Regulation Code”. SEC. 2. Declaration of State Policy. – The State shall establish a socially conscious, free market that regulates itself, encourage the widest participation of ownership in enterprises, enhance the democratization of wealth, promote the development of the capital market, protect investors, ensure full and fair disclosure about securities, minimize if not totally eliminate insider trading and other fraudulent or manipulative devices and practices which create distortions in the free market. To achieve these ends, this Securities Regulation Code is hereby enacted. SEC. 3. Definition of Terms. – 3.1. “Securities” are shares, participation or interests in a corporation or in a commercial enterprise or profit‐making venture and evidenced by a certificate, contract, instrument, whether written or electronic in character. It includes: (a) Shares of stock, bonds, debentures, notes, evidences of indebtedness, asset‐ backed securities; (b) Investment contracts, certificates of interest or participation in a profit sharing agreement, certificates of deposit for a future subscription;

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Page 1: Securities Regulation Code (RA 8799)

REPUBLICACTNO.8799

SECURITIESREGULATIONCODE

CHAPTERI

TitleandDefinitions

SECTION1.Title.–Thisshallbeknownas“TheSecuritiesRegulationCode”.

SEC.2.DeclarationofStatePolicy.–TheStateshallestablishasociallyconscious,freemarketthatregulatesitself,encouragethewidestparticipationofownershipinenterprises,enhancethedemocratizationofwealth,promotethedevelopmentofthecapitalmarket,protectinvestors,ensurefullandfairdisclosureaboutsecurities,minimizeifnottotallyeliminateinsidertradingandotherfraudulentormanipulativedevicesandpracticeswhichcreatedistortionsinthefreemarket.

Toachievetheseends,thisSecuritiesRegulationCodeisherebyenacted.

SEC.3.DefinitionofTerms.–

3.1.“Securities”areshares,participationorinterestsinacorporationorinacommercialenterpriseorprofit‐makingventureandevidencedbyacertificate,contract,instrument,whetherwrittenorelectronicincharacter.Itincludes:

(a)Sharesofstock,bonds,debentures,notes,evidencesofindebtedness,asset‐backedsecurities;

(b)Investmentcontracts,certificatesofinterestorparticipationinaprofitsharingagreement,certificatesofdepositforafuturesubscription;

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(c)Fractionalundividedinterestsinoil,gasorothermineralrights;

(d)Derivativeslikeoptionandwarrants;

(e)Certificatesofassignments,certificatesofparticipation,trustcertificates,votingtrustcertificatesorsimilarinstruments;

(f)Proprietaryornonproprietarymembershipcertificatesincorporations;and

(g)OtherinstrumentsasmayinthefuturebedeterminedbytheCommission.

3.2“Issuer”istheoriginator,maker,obligor,orcreatorofthesecurity.

3.3“Broker”isapersonengagedinthebusinessofbuyingandsellingsecuritiesfortheaccountofothers.

3.4“Dealer”meansanypersonwhobuysandsellssecuritiesforhis/herownaccountintheordinarycourseofbusiness.

3.5.“Associatedpersonofabrokerordealer”isanemployeethereofwho,directlyexercisescontrolofsupervisoryauthority,butdoesnotincludeasalesman,oranagentorapersonwhosefunctionsaresolelyclericalorministerial.

3.6.“ClearingAgency”isanypersonwhoactsasintermediaryinmakingdeliveriesuponpaymenttoeffectsettlementinsecuritiestransactions.

3.7.“Exchange”isanorganizedmarketplaceorfacilitythatbringstogetherbuyersandsellersandexecutestradesofsecuritiesand/orcommodities.

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3.8.“Insider”means:(a)theissuer;(b)adirectororofficer(orpersonperformingsimilarfunctions)of,orapersoncontrollingtheissuer;(c)apersonwhoserelationshiporformerrelationshiptotheissuergivesorgavehimaccesstomaterialinformationabouttheissuerorthesecuritythatisnotgenerallyavailabletothepublic;(d)agovernmentemployee,ordirector,orofficerofanexchange,clearingagencyand/orself‐regulatoryorganizationwhohasaccesstomaterialinformationaboutanissuerorasecuritythatisnotgenerallyavailabletothepublic;or(e)apersonwholearnssuchinformationbyacommunicationfromanyoftheforegoinginsiders.

3.9.“Pre‐NeedPlans”arecontractswhichprovidefortheperformanceoffutureservicesorthepaymentoffuturemonetaryconsiderationsatthetimeofactualneed,forwhichplanholderspayincashorinstallmentatstatedprices,withorwithoutinterestorinsurancecoverageandincludeslife,pension,education,interment,andotherplanswhichtheCommissionmayfromtimetotimeapprove.

3.10.“Promoter”isapersonwho,actingaloneorwithothers,takesinitiativeinfoundingandorganizingthebusinessorenterpriseoftheissuerandreceivesconsiderationtherefor.

3.11.“Prospectus”isthedocumentmadebyoronbehalfofanissuer,underwriterordealertoselloroffersecuritiesforsaletothepublicthrougharegistrationstatementfiledwiththeCommission.

3.12.“Registrationstatement”istheapplicationfortheregistrationofsecuritiesrequiredtobefiledwiththeCommission.

3.13.“Salesman”isanaturalperson,employedassuchorasanagent,byadealer,issuerorbrokertobuyandsellsecurities.

3.14.“Uncertificatedsecurity”isasecurityevidencedbyelectronicorsimilarrecords.

3.15.“Underwriter”isapersonwhoguaranteesonafirmcommitmentand/ordeclaredbesteffortbasisthedistributionandsaleofsecuritiesofanykindbyanothercompany.

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CHAPTERII

SecuritiesandExchangeCommission

SEC.4.AdministrativeAgency.‐

4.1.ThisCodeshallbeadministeredbytheSecuritiesandExchangeCommission(hereafterthe“Commission”)asacollegialbody,composedofaChairpersonandfour(4)Commissioners,appointedbythePresidentforatermofseven(7)yearseachandwhoshallserveassuchuntiltheirsuccessorshallhavebeenappointedandqualified.ACommissionerappointedtofillavacancyoccurringpriortotheexpirationofthetermforwhichhis/herpredecessorwasappointed,shallserveonlyfortheunexpiredportionofsuchterm.TheincumbentChairpersonandCommissionersattheeffectivityofthisCode,shallservetheunexpiredportionoftheirtermsunderPresidentialDecreeNo.902‐A.Unlessthecontextindicatesotherwise,theterm“Commissioner”includestheChairperson.

4.2.TheCommissionersmustbenatural‐borncitizensofthePhilippines,atleastforty(40)yearsofagefortheChairpersonandatleastthirty‐five(35)yearsofagefortheCommissioners,ofgoodmoralcharacter,ofunquestionableintegrity,ofknownprobityandpatriotism,andwithrecognizedcompetenceinsocialandeconomicdisciplines:Provided,ThatthemajorityofCommissioners,includingtheChairperson,shallbemembersofthePhilippineBar.

4.3.TheChairpersonisthechiefexecutiveofficeroftheCommission.TheChairpersonshallexecuteandadministerthepolicies,decisions,ordersandresolutionsapprovedbytheCommissionandshallhavethegeneralexecutivedirectionandsupervisionoftheworkandoperationoftheCommissionandofitsmembers,bodies,boards,offices,personnelandallitsadministrativebusiness.

4.4.ThesalaryoftheChairpersonandtheCommissionersshallbefixedbythePresidentofthePhilippinesbasedonanobjectiveclassificationsystem,atasumcomparabletothemembersoftheMonetaryBoardandcommensuratetotheimportanceandresponsibilitiesattachedtotheposition.

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4.5.TheCommissionshallholdmeetingsatleastonceaweekfortheconductofbusinessorasoftenasmaybenecessaryuponcalloftheChairpersonorupontherequestofthree(3)Commissioners.ThenoticeofthemeetingshallbegiventoallCommissionersandthepresenceofthree(3)Commissionersshallconstituteaquorum.IntheabsenceoftheChairperson,themostseniorCommissionershallactaspresidingofficerofthemeeting.

4.6.TheCommissionmay,forpurposesofefficiency,delegateanyofitsfunctionstoanydepartmentorofficeoftheCommission,anindividualCommissionerorstaffmemberoftheCommissionexceptitsrevieworappellateauthorityanditspowertoadopt,alterandsupplementanyruleorregulation.

TheCommissionmayreviewuponitsowninitiativeoruponthepetitionofanyinterestedpartyanyactionofanydepartmentoroffice,individualCommissioner,orstaffmemberoftheCommission.

SEC.5.PowersandFunctionsoftheCommission.‐5.1.TheCommissionshallactwithtransparencyandshallhavethepowersandfunctionsprovidedbythisCode,PresidentialDecreeNo.902‐A,theCorporationCode,theInvestmentHousesLaw,theFinancingCompanyActandotherexistinglaws.PursuanttheretotheCommissionshallhave,amongothers,thefollowingpowersandfunctions:

(a)Havejurisdictionandsupervisionoverallcorporations,partnershipsorassociationswhoarethegranteesofprimaryfranchisesand/oralicenseorpermitissuedbytheGovernment;

(b)Formulatepoliciesandrecommendationsonissuesconcerningthesecuritiesmarket,adviseCongressandothergovernmentagenciesonallaspectsofthesecuritiesmarketandproposelegislationandamendmentsthereto;

(c)Approve,reject,suspend,revokeorrequireamendmentstoregistrationstatements,andregistrationandlicensingapplications;

(d)Regulate,investigateorsupervisetheactivitiesofpersonstoensurecompliance;

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(e)Supervise,monitor,suspendortakeovertheactivitiesofexchanges,clearingagenciesandotherSROs;

(f)Imposesanctionsfortheviolationoflawsandtherules,regulationsandordersissuedpursuantthereto;

(g)Prepare,approve,amendorrepealrules,regulationsandorders,andissueopinionsandprovideguidanceonandsupervisecompliancewithsuchrules,regulationsandorders;

(h)Enlisttheaidandsupportofand/ordeputizeanyandallenforcementagenciesoftheGovernment,civilormilitaryaswellasanyprivateinstitution,corporation,firm,associationorpersonintheimplementationofitspowersandfunctionsunderthisCode;

(i)Issueceaseanddesistorderstopreventfraudorinjurytotheinvestingpublic;

(j)PunishforcontemptoftheCommission,bothdirectandindirect,inaccordancewiththepertinentprovisionsofandpenaltiesprescribedbytheRulesofCourt;

(k)Compeltheofficersofanyregisteredcorporationorassociationtocallmeetingsofstockholdersormembersthereofunderitssupervision;

(l)IssuesubpoenaducestecumandsummonwitnessestoappearinanyproceedingsoftheCommissionandinappropriatecases,ordertheexamination,searchandseizureofalldocuments,papers,filesandrecords,taxreturns,andbooksofaccountsofanyentityorpersonunderinvestigationasmaybenecessaryfortheproperdispositionofthecasesbeforeit,subjecttotheprovisionsofexistinglaws;

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(m)Suspend,orrevoke,afterpropernoticeandhearingthefranchiseorcertificateofregistrationofcorporations,partnershipsorassociations,uponanyofthegroundsprovidedbylaw;and

(n)Exercisesuchotherpowersasmaybeprovidedbylawaswellasthosewhichmaybeimpliedfrom,orwhicharenecessaryorincidentaltothecarryingoutof,theexpresspowersgrantedtheCommissiontoachievetheobjectivesandpurposesoftheselaws.

5.2.TheCommission’sjurisdictionoverallcasesenumeratedunderSection5ofPresidentialDecreeNo.902‐AisherebytransferredtotheCourtsofgeneraljurisdictionortheappropriateRegionalTrialCourt:Provided,thattheSupremeCourtintheexerciseofitsauthoritymaydesignatetheRegionalTrialCourtbranchesthatshallexercisejurisdictionoverthesecases.TheCommissionshallretainjurisdictionoverpendingcasesinvolvingintra‐corporatedisputessubmittedforfinalresolutionwhichshouldberesolvedwithinone(1)yearfromtheenactmentofthisCode.TheCommissionshallretainjurisdictionoverpendingsuspensionofpayments/rehabilitationcasesfiledasof30June2000untilfinallydisposed.

SEC.6.IndemnificationandResponsibilitiesofCommissioners.‐6.1.TheCommissionshallindemnifyeachCommissionerandotherofficialsoftheCommission,includingpersonnelperformingsupervisionandexaminationfunctionsforallcostsandexpensesreasonablyincurredbysuchpersonsinconnectionwithanycivilorcriminalactions,suitsorproceedingstowhichtheymaybeormadeapartybyreasonoftheperformanceoftheirfunctionsorduties,unlesstheyarefinallyadjudgedinsuchactionsorproceedingstobeliableforgrossnegligenceormisconduct.

Intheeventofsettlementorcompromise,indemnificationshallbeprovidedonlyinconnectionwithsuchmatterscoveredbythesettlementastowhichtheCommissionisadvisedbyexternalcounselthatthepersonstobeindemnifieddidnotcommitanygrossnegligenceormisconduct.

Thecostsandexpensesincurredindefendingtheaforementionedaction,suitorproceedingmaybepaidbytheCommissioninadvanceofthefinaldispositionofsuchaction,suitorproceedinguponreceiptofanundertakingbyoronbehalfoftheCommissioner,officeroremployeetorepaytheamountadvancedshouldit

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ultimatelybedeterminedbytheCommissionthathe/sheisnotentitledtobeindemnifiedasprovidedinthissubsection.

6.2.TheCommissioners,officersandemployeesoftheCommissionwhowillfullyviolatethisCodeorwhoareguiltyofnegligence,abuseoractsofmalfeasanceorfailtoexerciseextraordinarydiligenceintheperformanceoftheirdutiesshallbeheldliableforanylossorinjurysufferedbytheCommissionorotherinstitutionsasaresultofsuchviolation,negligence,abuse,malfeasance,orfailuretoexerciseextraordinarydiligence.SimilarresponsibilityshallapplytotheCommissioners,officersandemployeesoftheCommissionfor(1)thedisclosureofanyinformation,discussionorresolutionoftheCommissionofaconfidentialnature,orabouttheconfidentialoperationsoftheCommission,unlessthedisclosureisinconnectionwiththeperformanceofofficialfunctionswiththeCommissionorwithpriorauthorizationoftheCommissioners;or(2)theuseofsuchinformationforpersonalgainortothedetrimentofthegovernment,theCommissionorthirdparties:Provided,however,ThatanydataorinformationrequiredtobesubmittedtothePresidentand/orCongressoritsappropriatecommittee,ortobepublishedundertheprovisionsofthisCodeshallnotbeconsideredconfidential.

SEC.7.Reorganization.‐7.1.ToachievethegoalsofthisCode,consistentwithCivilServicelaws,theCommissionisherebyauthorizedtoprovideforitsreorganization,tostreamlineitsstructureandoperations,upgradeitshumanresourcecomponentandenableittomoreefficientlyandeffectivelyperformitsfunctionsandexerciseitspowersunderthisCode.

7.2.AllpositionsoftheCommissionshallbegovernedbyacompensationandpositionclassificationsystemsandqualificationstandardsapprovedbytheCommissionbasedonacomprehensivejobanalysisandauditofactualdutiesandresponsibilities.ThecompensationplanshallbecomparablewiththeprevailingcompensationplanintheBangkoSentralngPilipinasandothergovernmentfinancialinstitutionsandshallbesubjecttoperiodicreviewbytheCommissionnomorethanonceeverytwo(2)yearswithoutprejudicetoyearlymeritreviewsorincreasesbasedonproductivityandefficiency.TheCommissionshall,therefore,beexemptfromlaws,rules,andregulationsoncompensation,positionclassificationandqualificationstandards.TheCommissionshall,however,endeavortomakeitssystemconformascloselyaspossiblewiththeprinciplesundertheCompensationandPositionClassificationActof1989(RepublicActNo.6758,asamended).

CHAPTERIII

RegistrationofSecurities

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SEC.8.RequirementofRegistrationofSecurities.–8.1.SecuritiesshallnotbesoldorofferedforsaleordistributionwithinthePhilippines,withoutaregistrationstatementdulyfiledwithandapprovedbytheCommission.Priortosuchsale,informationonthesecurities,insuchformandwithsuchsubstanceastheCommissionmayprescribe,shallbemadeavailabletoeachprospectivepurchaser.

8.2.TheCommissionmayconditionallyapprovetheregistrationstatementundersuchtermsasitmaydeemnecessary.

8.3.TheCommissionmayspecifythetermsandconditionsunderwhichanywrittencommunication,includinganysummaryprospectus,shallbedeemednottoconstituteanofferforsaleunderthisSection.

8.4.ArecordoftheregistrationofsecuritiesshallbekeptinaRegisterofSecuritiesinwhichshallberecordedordersenteredbytheCommissionwithrespecttosuchsecurities.Suchregisterandalldocumentsorinformationwithrespecttothesecuritiesregisteredthereinshallbeopentopublicinspectionatreasonablehoursonbusinessdays.

8.5.TheCommissionmayauditthefinancialstatements,assetsandotherinformationofafirmapplyingforregistrationofitssecuritieswheneveritdeemsthesamenecessarytoinsurefulldisclosureortoprotecttheinterestoftheinvestorsandthepublicingeneral.

SEC.9.ExemptSecurities.‐

9.1.TherequirementofregistrationunderSubsection8.1shallnotasageneralruleapplytoanyofthefollowingclassesofsecurities:

(a)AnysecurityissuedorguaranteedbytheGovernmentofthePhilippines,orbyanypoliticalsubdivisionoragencythereof,orbyanypersoncontrolledorsupervisedby,andactingasaninstrumentalityofsaidGovernment.

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(b)AnysecurityissuedorguaranteedbythegovernmentofanycountrywithwhichthePhilippinesmaintainsdiplomaticrelations,orbyanystate,provinceorpoliticalsubdivisionthereofonthebasisofreciprocity:Provided,ThattheCommissionmayrequirecompliancewiththeformandcontentofdisclosurestheCommissionmayprescribe.

(c)Certificatesissuedbyareceiverorbyatrusteeinbankruptcydulyapprovedbytheproperadjudicatorybody.

(d)Anysecurityoritsderivativesthesaleortransferofwhich,bylaw,isunderthesupervisionandregulationoftheOfficeoftheInsuranceCommission,HousingandLandUseRegulatoryBoard,ortheBureauofInternalRevenue.

(e)Anysecurityissuedbyabankexceptitsownsharesofstock.

9.2.TheCommissionmay,byruleorregulationafterpublichearing,addtotheforegoinganyclassofsecuritiesifitfindsthattheenforcementofthisCodewithrespecttosuchsecuritiesisnotnecessaryinthepublicinterestandfortheprotectionofinvestors.

SEC.10.ExemptTransactions.‐10.1.TherequirementofregistrationunderSubsection8.1.shallnotapplytothesaleofanysecurityinanyofthefollowingtransactions:

(a)Atanyjudicialsale,orsalebyanexecutor,administrator,guardianorreceiverortrusteeininsolvencyorbankruptcy.

(b)Byorfortheaccountofapledgeholder,ormortgageeoranyothersimilarlienholdersellingorofferingforsaleordeliveryintheordinarycourseofbusinessandnotforthepurposeofavoidingtheprovisionsofthisCode,toliquidateabonafidedebt,asecuritypledgedingoodfaithassecurityforsuchdebt.

(c)Anisolatedtransactioninwhichanysecurityissold,offeredforsale,subscriptionordeliverybytheownerthereof,orbyhisrepresentativeforthe

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owner’saccount,suchsaleorofferforsale,subscriptionordeliverynotbeingmadeinthecourseofrepeatedandsuccessivetransactionsofalikecharacterbysuchowner,oronhisaccountbysuchrepresentativeandsuchownerorrepresentativenotbeingtheunderwriterofsuchsecurity.

(d)Thedistributionbyacorporation,activelyengagedinthebusinessauthorizedbyitsarticlesofincorporation,ofsecuritiestoitsstockholdersorothersecurityholdersasastockdividendorotherdistributionoutofsurplus.

(e)Thesaleofcapitalstockofacorporationtoitsownstockholdersexclusively,wherenocommissionorotherremunerationispaidorgivendirectlyorindirectlyinconnectionwiththesaleofsuchcapitalstock.

(f)Theissuanceofbondsornotessecuredbymortgageuponrealestateortangiblepersonalproperty,wheretheentiremortgagetogetherwithallthebondsornotessecuredtherebyaresoldtoasinglepurchaseratasinglesale.

(g)Theissueanddeliveryofanysecurityinexchangeforanyothersecurityofthesameissuerpursuanttoarightofconversionentitlingtheholderofthesecuritysurrenderedinexchangetomakesuchconversion:Provided,ThatthesecuritysosurrenderedhasbeenregisteredunderthisCodeorwas,whensold,exemptfromtheprovisionsofthisCode,andthatthesecurityissuedanddeliveredinexchange,ifsoldattheconversionprice,wouldatthetimeofsuchconversionfallwithintheclassofsecuritiesentitledtoregistrationunderthisCode.Uponsuchconversiontheparvalueofthesecuritysurrenderedinsuchexchangeshallbedeemedthepriceatwhichthesecuritiesissuedanddeliveredinsuchexchangearesold.

(h)Broker’stransactions,executeduponcustomer’sorders,onanyregisteredExchangeorothertradingmarket.

(i)SubscriptionsforsharesofthecapitalstockofacorporationpriortotheincorporationthereoforinpursuanceofanincreaseinitsauthorizedcapitalstockundertheCorporationCode,whennoexpenseisincurred,ornocommission,compensationorremunerationispaidorgiveninconnectionwiththesaleordispositionofsuchsecurities,andonlywhenthepurposeforsoliciting,givingortakingofsuchsubscriptionsistocomplywiththerequirementsofsuchlawastothe

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percentageofthecapitalstockofacorporationwhichshouldbesubscribedbeforeitcanberegisteredanddulyincorporated,oritsauthorizedcapitalincreased.

(j)Theexchangeofsecuritiesbytheissuerwithitsexistingsecurityholdersexclusively,wherenocommissionorotherremunerationispaidorgivendirectlyorindirectlyforsolicitingsuchexchange.

(k)Thesaleofsecuritiesbyanissuertofewerthantwenty(20)personsinthePhilippinesduringanytwelve‐monthperiod.

(l)Thesaleofsecuritiestoanynumberofthefollowingqualifiedbuyers:

(i)Bank;

(ii)Registeredinvestmenthouse;

(iii)Insurancecompany;

(iv)PensionfundorretirementplanmaintainedbytheGovernmentofthePhilippinesoranypoliticalsubdivisionthereoformanagedbyabankorotherpersonsauthorizedbytheBangkoSentraltoengageintrustfunctions;

(v)Investmentcompany;or

(vi)SuchotherpersonastheCommissionmaybyruledetermineasqualifiedbuyers,onthebasisofsuchfactorsasfinancialsophistication,networth,knowledge,andexperienceinfinancialandbusinessmatters,oramountofassetsundermanagement.

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10.2.TheCommissionmayexemptothertransactions,ifitfindsthattherequirementsofregistrationunderthisCodeisnotnecessaryinthepublicinterestorfortheprotectionoftheinvestorssuchasbyreasonofthesmallamountinvolvedorthelimitedcharacterofthepublicoffering.

10.3.AnypersonapplyingforanexemptionunderthisSection,shallfilewiththeCommissionanoticeidentifyingtheexemptionreliedupononsuchformandatsuchtimeastheCommissionbyrulemayprescribeandwithsuchnoticeshallpaytotheCommissionafeeequivalenttoone‐tenth(1/10)ofonepercent(1%)ofthemaximumaggregatepriceorissuedvalueofthesecurities.

SEC.11.CommodityFuturesContracts.‐Nopersonshalloffer,sellorenterintocommodityfuturescontractsexceptinaccordancewithrules,regulationsandorderstheCommissionmayprescribeinthepublicinterest.TheCommissionshallpromulgaterulesandregulationsinvolvingcommodityfuturescontractstoprotectinvestorstoensurethedevelopmentofafairandtransparentcommoditiesmarket.

SEC.12.ProcedureforRegistrationofSecurities.‐

12.1.AllsecuritiesrequiredtoberegisteredunderSubsection8.1shallberegisteredthroughthefilingbytheissuerinthemainofficeoftheCommission,ofaswornregistrationstatementwithrespecttosuchsecurities,insuchformandcontainingsuchinformationanddocumentsastheCommissionshallprescribe.TheregistrationstatementshallincludeanyprospectusrequiredorpermittedtobedeliveredunderSubsections8.2,8.3and8.4.

12.2.Inpromulgatingrulesgoverningthecontentofanyregistrationstatement(includinganyprospectusmadeapartthereoforannexedthereto),theCommissionmayrequiretheregistrationstatementtocontainsuchinformationordocumentsasitmay,byrule,prescribe.Itmaydispensewithanysuchrequirement,ormayrequireadditionalinformationordocuments,includingwritteninformationfromanexpert,dependingonthenecessitythereofortheirapplicabilitytotheclassofsecuritiessoughttoberegistered.

12.3.Theinformationrequiredfortheregistrationofanykind,andallsecurities,shallinclude,amongothers,theeffectofthesecuritiesissueonownership,onthemixofownership,especiallyforeignandlocalownership.

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12.4.Theregistrationstatementshallbesignedbytheissuer’sexecutiveofficer,itsprincipaloperatingofficer,itsprincipalfinancialofficer,itscomptroller,principalaccountingofficer,itscorporatesecretaryorpersonsperformingsimilarfunctionsaccompaniedbyadulyverifiedresolutionoftheboardofdirectorsoftheissuercorporation.Thewrittenconsentoftheexpertnamedashavingcertifiedanypartoftheregistrationstatementoranydocumentusedinconnectiontherewithshallalsobefiled.Wheretheregistrationstatementincludessharestobesoldbysellingshareholders,awrittencertificationbysuchsellingshareholdersastotheaccuracyofanypartoftheregistrationstatementcontributedtobysuchsellingshareholdersshallalsobefiled.

12.5.(a)Uponfilingoftheregistrationstatement,theissuershallpaytotheCommissionafeeofnotmorethanone‐tenth(1/10)ofonepercentum(1%)ofthemaximumaggregatepriceatwhichsuchsecuritiesareproposedtobeoffered.TheCommissionshallprescribebyrulediminishingfeesininverseproportiontothevalueoftheaggregatepriceoftheoffering.

(b)Noticeofthefilingoftheregistrationstatementshallbeimmediatelypublishedbytheissuer,atitsownexpense,intwo(2)newspapersofgeneralcirculationinthePhilippines,onceaweekfortwo(2)consecutiveweeks,orinsuchothermannerastheCommissionbyruleshallprescribe,recitingthataregistrationstatementforthesaleofsuchsecurityhasbeenfiled,andthattheaforesaidregistrationstatement,aswellasthepapersattachedtheretoareopentoinspectionattheCommissionduringbusinesshours,andcopiesthereof,photostaticorotherwise,shallbefurnishedtointerestedpartiesatsuchreasonablechargeastheCommissionmayprescribe.

12.6.Withinforty‐five(45)daysafterthedateoffilingoftheregistrationstatement,orbysuchlaterdatetowhichtheissuerhasconsented,theCommissionshalldeclaretheregistrationstatementeffectiveorrejected,unlesstheapplicantisallowedtoamendtheregistrationstatementasprovidedinSection14hereof.TheCommissionshallenteranorderdeclaringtheregistrationstatementtobeeffectiveifitfindsthattheregistrationstatementtogetherwithalltheotherpapersanddocumentsattachedthereto,isonitsfacecompleteandthattherequirementshavebeencompliedwith.TheCommissionmayimposesuchtermsandconditionsasmaybenecessaryorappropriatefortheprotectionoftheinvestors.

12.7.Uponeffectivityoftheregistrationstatement,theissuershallstateunderoathineveryprospectusthatallregistrationrequirementshavebeenmetandthatall

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informationaretrueandcorrectasrepresentedbytheissuerortheonemakingthestatement.Anyuntruestatementoffactoromissiontostateamaterialfactrequiredtobestatedthereinornecessarytomakethestatementthereinnotmisleadingshallconstitutefraud.

SEC.13.RejectionandRevocationofRegistrationofSecurities.‐13.1.TheCommissionmayrejectaregistrationstatementandrefuseregistrationofthesecuritythereunder,orrevoketheeffectivityofaregistrationstatementandtheregistrationofthesecuritythereunderafterduenoticeandhearingbyissuinganordertosucheffect,settingforthitsfindingsinrespectthereto,ifitfindsthat:

(a)Theissuer:

(i)Hasbeenjudiciallydeclaredinsolvent;

(ii)HasviolatedanyoftheprovisionsofthisCode,therulespromulgatedpursuantthereto,oranyorderoftheCommissionofwhichtheissuerhasnoticeinconnectionwiththeofferingforwhicharegistrationstatementhasbeenfiled;

(iii)Hasbeenorisengagedorisabouttoengageinfraudulenttransactions;

(iv)Hasmadeanyfalseormisleadingrepresentationofmaterialfactsinanyprospectusconcerningtheissueroritssecurities;

(v)HasfailedtocomplywithanyrequirementthattheCommissionmayimposeasaconditionforregistrationofthesecurityforwhichtheregistrationstatementhasbeenfiled;or

(b)Theregistrationstatementisonitsfaceincompleteorinaccurateinanymaterialrespectorincludesanyuntruestatementofamaterialfactoromitstostateamaterialfactrequiredtobestatedthereinornecessarytomakethestatementsthereinnotmisleading;or

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(c)Theissuer,anyofficer,directororcontrollingpersonoftheissuer,orpersonperformingsimilarfunctions,oranyunderwriterhasbeenconvicted,byacompetentjudicialoradministrativebody,uponpleaofguilty,orotherwise,ofanoffenseinvolvingmoralturpitudeand/orfraudorisenjoinedorrestrainedbytheCommissionorothercompetentjudicialoradministrativebodyforviolationsofsecurities,commodities,andotherrelatedlaws.

Forpurposesofthissubsection,theterm“competentjudicialoradministrativebody”shallincludeaforeigncourtofcompetentjurisdictionasprovidedforundertheRulesofCourt.

13.2.TheCommissionmaycompeltheproductionofallthebooksandpapersofsuchissuer,andmayadministeroathsto,andexaminetheofficersofsuchissueroranyotherpersonconnectedtherewithastoitsbusinessandaffairs.

13.3.IfanyissuershallrefusetopermitanexaminationtobemadebytheCommission,itsrefusalshallbegroundfortherefusalorrevocationoftheregistrationofitssecurities.

13.4.IftheCommissiondeemsitnecessary,itmayissueanordersuspendingtheofferandsaleofthesecuritiespendinganyinvestigation.Theordershallstatethegroundsfortakingsuchaction,butsuchorderofsuspensionalthoughbindinguponthepersonsnotifiedthereof,shallbedeemedconfidential,andshallnotbepublished.Upontheissuanceofthesuspensionorder,nofurtherofferorsaleofsuchsecurityshallbemadeuntilthesameisliftedorsetasidebytheCommission.Otherwise,suchsaleshallbevoid.

13.5.NoticeofissuanceofsuchordershallbegiventotheissuerandeverydealerandbrokerwhoshallhavenotifiedtheCommissionofanintentiontosellsuchsecurity.

13.6.AregistrationstatementmaybewithdrawnbytheissueronlywiththeconsentoftheCommission.

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SEC.14.AmendmentstotheRegistrationStatement.‐14.1.Ifaregistrationstatementisonitsfaceincompleteorinaccurateinanymaterialrespect,theCommissionshallissueanorderdirectingtheamendmentoftheregistrationstatement.Uponcompliancewithsuchorder,theamendedregistrationstatementshallbecomeeffectiveinaccordancewiththeprocedurementionedinSubsection12.6hereof.

14.2.Anamendmentfiledpriortotheeffectivedateoftheregistrationstatementshallrecommencetheforty‐five(45)dayperiodwithinwhichtheCommissionshallactonaregistrationstatement.AnamendmentfiledaftertheeffectivedateoftheregistrationstatementshallbecomeeffectiveonlyuponsuchdateasdeterminedbytheCommission.

14.3.Ifanychangeoccursinthefactssetforthinaregistrationstatement,theissuershallfileanamendmenttheretosettingforththechange.

14.4.If,atanytime,theCommissionfindsthataregistrationstatementcontainsanyfalsestatementoromitstostateanyfactrequiredtobestatedthereinornecessarytomakethestatementsthereinnotmisleading,theCommissionmayconductanexamination,and,afterduenoticeandhearing,issueanOrdersuspendingtheeffectivityoftheregistrationstatement.Ifthestatementisdulyamended,thesuspensionordermaybelifted.

14.5.InmakingsuchexaminationtheCommissionoranyofficerorofficersdesignatedbyitmayadministeroathsandaffirmationsandshallhaveaccessto,andmaydemandtheproductionof,anybooks,recordsordocumentsrelevanttotheexamination.Failureoftheissuer,underwriter,oranyotherpersontocooperate,orhisobstructionorrefusaltoundergoanexamination,shallbeagroundfortheissuanceofasuspensionorder.

SEC.15.SuspensionofRegistration.‐15.1.If,atanytime,theinformationcontainedintheregistrationstatementfiledisorhasbecomemisleading,incorrect,inadequateorincompleteinanymaterialrespect,orthesaleorofferingforsaleofthesecurityregisteredthereundermayworkortendtoworkafraud,theCommissionmayrequirefromtheissuersuchfurtherinformationasmayinitsjudgmentbenecessarytoenabletheCommissiontoascertainwhethertheregistrationofsuchsecurityshouldberevokedonanygroundspecifiedinthisCode.

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TheCommissionmayalsosuspendtherighttosellandofferforsalesuchsecuritypendingfurtherinvestigation,byenteringanorderspecifyingthegroundsforsuchaction,andbynotifyingtheissuer,underwriter,dealerorbrokerknownasparticipatinginsuchoffering.

15.2.TherefusaltofurnishinformationrequiredbytheCommissionmaybeagroundfortheissuanceofanorderofsuspensionpursuanttoSubsection15.1.Upontheissuanceofanysuchorderandnotificationtotheissuer,underwriter,dealerorbrokerknownasparticipatinginsuchoffering,nofurtherofferorsaleofanysuchsecurityshallbemadeuntilthesameisliftedorsetasidebytheCommission.Otherwise,suchsaleshallbevoid.

15.3.Uponissuanceofanorderofsuspension,theCommissionshallconductahearing.IftheCommissiondeterminesthatthesaleofanysecurityshouldberevoked,itshallissueanorderprohibitingsaleofsuchsecurity.

Untiltheissuanceofafinalorder,thesuspensionoftherighttosell,thoughbindinguponthepersonsnotifiedthereof,shallbedeemedconfidential,andshallnotbepublished,unlessitshallappearthattheorderofsuspensionhasbeenviolatedafternotice.If,however,theCommissionfindsthatthesaleofthesecuritywillneitherbefraudulentnorresultinfraud,itshallforthwithissueanorderrevokingtheorderofsuspension,andsuchsecurityshallberestoredtoitsstatusasaregisteredsecurityasofthedateofsuchorderofsuspension.

CHAPTERIV

RegulationofPre‐NeedPlans

SEC.16.Pre‐NeedPlans.‐Nopersonshallsellorofferforsaletothepublicanypre‐needplanexceptinaccordancewithrulesandregulationswhichtheCommissionshallprescribe.Suchrulesshallregulatethesaleofpre‐needplansby,amongotherthings,requiringtheregistrationofpre‐needplans,licensingpersonsinvolvedinthesaleofpre‐needplans,requiringdisclosurestoprospectiveplanholders,prescribingadvertisingguidelines,providingforuniformaccountingsystem,reportsandrecordkeepingwithrespecttosuchplans,imposingcapital,bondingandotherfinancialresponsibility,andestablishingtrustfundsforthepaymentofbenefitsundersuchplans.

CHAPTERV

ReportorialRequirements

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SEC.17.PeriodicandOtherReportsofIssuers.‐17.1.EveryissuersatisfyingtherequirementsinSubsection17.2hereofshallfilewiththeCommission:

(a)Withinonehundredthirty‐five(135)days,aftertheendoftheissuer’sfiscalyear,orsuchothertimeastheCommissionmayprescribe,anannualreportwhichshallinclude,amongothers,abalancesheet,profitandlossstatementandstatementofcashflows,forsuchlastfiscalyear,certifiedbyanindependentcertifiedpublicaccountant,andamanagementdiscussionandanalysisofresultsofoperations;and

(b)SuchotherperiodicalreportsforinterimfiscalperiodsandcurrentreportsonsignificantdevelopmentsoftheissuerastheCommissionmayprescribeasnecessarytokeepcurrentinformationontheoperationofthebusinessandfinancialconditionoftheissuer.

17.2.ThereportorialrequirementsofSubsection17.1shallapplytothefollowing:

(a)AnissuerwhichhassoldaclassofitssecuritiespursuanttoaregistrationunderSection12hereof:Provided,however,Thattheobligationofsuchissuertofilereportsshallbesuspendedforanyfiscalyearaftertheyearsuchregistrationbecameeffectiveifsuchissuer,asofthefirstdayofanysuchfiscalyear,haslessthanonehundred(100)holdersofsuchclassofsecuritiesorsuchothernumberastheCommissionshallprescribeanditnotifiestheCommissionofsuch;

(b)AnissuerwithaclassofsecuritieslistedfortradingonanExchange;and

(c)AnissuerwithassetsofatleastFiftymillionpesos(P50,000,000.00)orsuchotheramountastheCommissionshallprescribe,andhavingTwohundred(200)ormoreholderseachholdingatleastOnehundred(100)sharesofaclassofitsequitysecurities:Provided,however,Thattheobligationofsuchissuertofilereportsshallbeterminatedninety(90)daysafternotificationtotheCommissionbytheissuerthatthenumberofitsholdersholdingatleastonehundred(100)sharesisreducedtolessthanOnehundred(100).

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17.3.EveryissuerofasecuritylistedfortradingonanExchangeshallfilewiththeExchangeacopyofanyreportfiledwiththeCommissionunderSubsection17.1hereof.

17.4.Allreports(includingfinancialstatements)requiredtobefiledwiththeCommissionpursuanttoSubsection17.1hereofshallbeinsuchform,containsuchinformationandbefiledatsuchtimesastheCommissionshallprescribe,andshallbeinlieuofanyperiodicalorcurrentreportsorfinancialstatementsotherwiserequiredtobefiledundertheCorporationCode.

17.5.EveryissuerwhichhasaclassofequitysecuritiessatisfyinganyoftherequirementsinSubsection17.2shallfurnishtoeachholderofsuchequitysecurityanannualreportinsuchformandcontainingsuchinformationastheCommissionshallprescribe.

17.6.WithinsuchperiodastheCommissionmayprescribeprecedingtheannualmeetingoftheholdersofanyequitysecurityofaclassentitledtovoteatsuchmeeting,theissuershalltransmittosuchholdersanannualreportinconformitywithSubsection17.5.

SEC.18.ReportsbyFivepercentum(5%)HoldersofEquitySecurities.‐18.1.IneverycaseinwhichanissuersatisfiestherequirementsofSubsection17.2hereof,anypersonwhoacquiresdirectlyorindirectlythebeneficialownershipofmorethanfivepercentum(5%)ofsuchclassorinexcessofsuchlesserpercentumastheCommissionbyrulemayprescribe,shall,withinten(10)daysaftersuchacquisitionorsuchreasonabletimeasfixedbytheCommission,submittotheissuerofthesecurity,totheExchangewherethesecurityistraded,andtotheCommissionaswornstatementcontainingthefollowinginformationandsuchotherinformationastheCommissionmayrequireinthepublicinterestorfortheprotectionofinvestors:

(a)Thepersonalbackground,identity,residence,andcitizenshipof,andthenatureofsuchbeneficialownershipby,suchpersonandallotherpersonsbywhomoronwhosebehalfthepurchasesareeffected;intheeventthebeneficialownerisajuridicalperson,thelinesofbusinessofthebeneficialownershallalsobereported;

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(b)Ifthepurposeofthepurchasesorprospectivepurchasesistoacquirecontrolofthebusinessoftheissuerofthesecurities,anyplansorproposalswhichsuchpersonsmayhavethatwilleffectamajorchangeinitsbusinessorcorporatestructure;

(c)Thenumberofsharesofsuchsecuritywhicharebeneficiallyowned,andthenumberofsharesconcerningwhichthereisarighttoacquire,directlyorindirectly,by:(i)suchperson,and(ii)eachassociateofsuchperson,givingthebackground,identity,residence,andcitizenshipofeachsuchassociate;and

(d)Informationastoanycontracts,arrangements,orunderstandingwithanypersonwithrespecttoanysecuritiesoftheissuerincludingbutnotlimitedtotransfer,jointventures,loanoroptionarrangements,putsorcalls,guaranteesordivisionoflossesorprofits,orproxiesnamingthepersonswithwhomsuchcontracts,arrangements,orunderstandinghavebeenenteredinto,andgivingthedetailsthereof.

18.2.Ifanychangeoccursinthefactssetforthinthestatements,anamendmentshallbetransmittedtotheissuer,theExchangeandtheCommission.

18.3.TheCommission,maypermitanypersontofileinlieuofthestatementrequiredbySubsection17.1hereof,anoticestatingthenameofsuchperson,thesharesofanyequitysecuritiessubjecttoSubsection17.1whichareownedbyhim,thedateoftheiracquisitionandsuchotherinformationastheCommissionmayspecify,ifitappearstotheCommissionthatsuchsecuritieswereacquiredbysuchpersonintheordinarycourseofhisbusinessandwerenotacquiredforthepurposeofanddonothavetheeffectofchangingorinfluencingthecontroloftheissuernorinconnectionwithanytransactionhavingsuchpurposeoreffect.

CHAPTERVI

ProtectionofShareholderInterests

SEC.19.TenderOffers.–19.1.(a)Anypersonorgroupofpersonsactinginconcertwhointendstoacquireatleastfifteenpercent(15%)ofanyclassofanyequitysecurityofalistedcorporationorofanyclassofanyequitysecurityofacorporationwithassetsofatleastFiftyMillionPesos(P50,000,000.00)andhavingtwohundred

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(200)ormorestockholderswithatleastonehundred(100)shareseachorwhointendstoacquireatleastthirtypercent(30%)ofsuchequityoveraperiodoftwelve(12)monthsshallmakeatenderoffertostockholdersbyfilingwiththeCommissionadeclarationtothateffect;andfurnishtheissuer,astatementcontainingsuchoftheinformationrequiredinSection17ofthisCodeastheCommissionmayprescribe.Suchpersonorgroupofpersonsshallpublishallrequestsorinvitationsfortender,ormaterialsmakingatenderofferorrequestingorinvitinglettersofsuchasecurity.CopiesofanyadditionalmaterialsolicitingorrequestingsuchtenderofferssubsequenttotheinitialsolicitationorrequestshallcontainsuchinformationastheCommissionmayprescribe,andshallbefiledwiththeCommissionandsenttotheissuernotlaterthanthetimecopiesofsuchmaterialsarefirstpublishedorsentorgiventosecurityholders.

(b)AnysolicitationorrecommendationtotheholdersofsuchasecuritytoacceptorrejectatenderofferorrequestorinvitationfortendersshallbemadeinaccordancewithsuchrulesandregulationsastheCommissionmayprescribe.

(c)Securitiesdepositedpursuanttoatenderofferorrequestorinvitationfortendersmaybewithdrawnbyoronbehalfofthedepositoratanytimethroughouttheperiodthatthetenderofferremainsopenandifthesecuritiesdepositedhavenotbeenpreviouslyacceptedforpayment,andatanytimeaftersixty(60)daysfromthedateoftheoriginaltenderofferorrequestorinvitation,exceptastheCommissionmayotherwiseprescribe.

(d)Wherethesecuritiesofferedexceedthatwhichapersonorgroupofpersonsisboundorwillingtotakeupandpayfor,thesecuritiesthataresubjectofthetenderoffershallbetakenupasnearlyasmaybeprorata,disregardingfractions,accordingtothenumberofsecuritiesdepositedbyeachdepositor.Theprovisionsofthissubsectionshallalsoapplytosecuritiesdepositedwithinten(10)daysafternoticeofanincreaseintheconsiderationofferedtosecurityholders,asdescribedinparagraph(e)ofthissubsection,isfirstpublishedorsentorgiventosecurityholders.

(e)Whereanypersonvariesthetermsofatenderofferorrequestorinvitationfortendersbeforetheexpirationthereofbyincreasingtheconsiderationofferedtoholdersofsuchsecurities,suchpersonshallpaytheincreasedconsiderationtoeachsecurityholderwhosesecuritiesaretakenupandpaidforwhetherornotsuchsecuritieshavebeentakenupbysuchpersonbeforethevariationofthetenderofferorrequestorinvitation.

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19.2.Itshallbeunlawfulforanypersontomakeanyuntruestatementofamaterialfactoromittostateanymaterialfactnecessaryinordertomakethestatementsmade,inthelightofthecircumstancesunderwhichtheyaremade,notmisleading,ortoengageinanyfraudulent,deceptive,ormanipulativeactsorpractices,inconnectionwithanytenderofferorrequestorinvitationfortenders,oranysolicitationofsecurityholdersinoppositiontoorinfavorofanysuchoffer,request,orinvitation.TheCommissionshall,forthepurposesofthissubsection,defineandprescribemeansreasonablydesignedtoprevent,suchactsandpracticesasarefraudulent,deceptive,ormanipulative.

SEC.20.ProxySolicitations.–20.1.ProxiesmustbeissuedandproxysolicitationmustbemadeinaccordancewithrulesandregulationstobeissuedbytheCommission;

20.2.Proxiesmustbeinwriting,signedbythestockholderorhisdulyauthorizedrepresentativeandfiledbeforethescheduledmeetingwiththecorporatesecretary.

20.3.Unlessotherwiseprovidedintheproxy,itshallbevalidonlyforthemeetingforwhichitisintended.Noproxyshallbevalidandeffectiveforaperiodlongerthanfive(5)yearsatonetime.

20.4.Nobrokerordealershallgiveanyproxy,consentorauthorization,inrespectofanysecuritycarriedfortheaccountofacustomer,toapersonotherthanthecustomer,withouttheexpresswrittenauthorizationofsuchcustomer.

20.5.Abrokerordealerwhoholdsoracquirestheproxyforatleasttenpercentum(10%)orsuchpercentageastheCommissionmayprescribeoftheoutstandingshareoftheissuer,shallsubmitareportidentifyingthebeneficialownerwithinten(10)daysaftersuchacquisition,foritsownaccountorcustomer,totheissuerofthesecurity,totheExchangewherethesecurityistradedandtotheCommission.

SEC.21.FeesforTenderOffersandCertainProxySolicitations.‐AtthetimeoffilingwiththeCommissionofanystatementrequiredunderSection19foranytenderofferorSection72.2forissuerrepurchases,orSection20forproxyorconsent

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solicitation,theCommissionmayrequirethatthepersonmakingsuchfilingpayafeeofnotmorethanone‐tenth(1/10)ofonepercentum(1%)of:

21.1.TheproposedaggregatepurchasepriceinthecaseofatransactionunderSections20or72.2;or

21.2.Theproposedpaymentincash,andthevalueofanysecuritiesorpropertytobetransferredintheacquisition,mergerorconsolidation,orthecashandvalueofanysecuritiesproposedtobereceiveduponthesaleordispositionofsuchassetsinthecaseofasolicitationunderSection20.TheCommissionshallprescribebyrulediminishingfeesininverseproportiontothevalueoftheaggregatepriceoftheoffering.

SEC.22.InternalRecordKeepingandAccountingControls.‐EveryissuerwhichhasaclassofsecuritiesthatsatisfiestherequirementsofSubsection17.2shall:

22.1.Makeandkeepbooks,records,andaccountswhich,inreasonabledetailaccuratelyandfairlyreflectthetransactionsanddispositionsofassetsoftheissuer;

22.2.Deviseandmaintainasystemofinternalaccountingcontrolssufficienttoprovidereasonableassurancesthat:(a)Transactionsandaccesstoassetsarepursuanttomanagementauthorization;(b)FinancialstatementsarepreparedinconformitywithgenerallyacceptedaccountingprinciplesthatareadoptedbytheAccountingStandardsCouncilandtherulespromulgatedbytheCommissionwithregardtothepreparationoffinancialstatements;and(c)Recordedassetsarecomparedwithexistingassetsatreasonableintervalsanddifferencesarereconciled.

SEC.23.TransactionsofDirectors,OfficersandPrincipalStockholders.‐23.1.Everypersonwhoisdirectlyorindirectlythebeneficialownerofmorethantenpercentum(10%)ofanyclassofanyequitysecuritywhichsatisfiestherequirementsofSubsection17.2,orwhoisadirectororanofficeroftheissuerofsuchsecurity,shallfile,atthetimeeithersuchrequirementisfirstsatisfiedorwithintendaysafterhebecomessuchabeneficialowner,director,orofficer,astatementwiththeCommissionand,ifsuchsecurityislistedfortradingonanExchange,alsowiththeExchange,oftheamountofallequitysecuritiesofsuchissuerofwhichheisthebeneficialowner,andwithinten(10)daysafterthecloseofeachcalendarmonth

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thereafter,iftherehasbeenachangeinsuchownershipduringsuchmonth,shallfilewiththeCommission,andifsuchsecurityislistedfortradingonanExchange,shallalsofilewiththeExchange,astatementindicatinghisownershipatthecloseofthecalendarmonthandsuchchangesinhisownershipashaveoccurredduringsuchcalendarmonth.

23.2.Forthepurposeofpreventingtheunfairuseofinformationwhichmayhavebeenobtainedbysuchbeneficialowner,director,orofficerbyreasonofhisrelationshiptotheissuer,anyprofitrealizedbyhimfromanypurchaseandsale,oranysaleandpurchase,ofanyequitysecurityofsuchissuerwithinanyperiodoflessthansix(6)months,unlesssuchsecuritywasacquiredingoodfaithinconnectionwithadebtpreviouslycontracted,shallinuretoandberecoverablebytheissuer,irrespectiveofanyintentionofholdingthesecuritypurchasedorofnotrepurchasingthesecuritysoldforaperiodexceedingsix(6)months.SuittorecoversuchprofitmaybeinstitutedbeforetheRegionalTrialCourtbytheissuer,orbytheownerofanysecurityoftheissuerinthenameandinbehalfoftheissueriftheissuershallfailorrefusetobringsuchsuitwithinsixty(60)daysafterrequestorshallfaildiligentlytoprosecutethesamethereafter,butnosuchsuitshallbebroughtmorethantwo(2)yearsafterthedatesuchprofitwasrealized.Thissubsectionshallnotbeconstruedtocoveranytransactionwheresuchbeneficialownerwasnotsuchbothatthetimeofthepurchaseandsale,orthesaleandpurchase,ofthesecurityinvolved,oranytransactionortransactionswhichtheCommissionbyrulesandregulationsmayexemptasnotcomprehendedwithinthepurposeofthissubsection.

23.3.Itshallbeunlawfulforanysuchbeneficialowner,director,orofficer,directlyorindirectly,tosellanyequitysecurityofsuchissuerifthepersonsellingthesecurityorhisprincipal:(a)Doesnotownthesecuritysold;or(b)Ifowningthesecurity,doesnotdeliveritagainstsuchsalewithintwenty(20)daysthereafter,ordoesnotwithinfive(5)daysaftersuchsaledeposititinthemailsorotherusualchannelsoftransportation;butnopersonshallbedeemedtohaveviolatedthissubsectionifheprovesthatnotwithstandingtheexerciseofgoodfaithhewasunabletomakesuchdeliveryordepositwithinsuchtime,orthattodosowouldcauseundueinconvenienceorexpense.

23.4.TheprovisionsofSubsection23.2shallnotapplytoanypurchaseandsale,orsaleandpurchase,andtheprovisionsofSubsection23.3shallnotapplytoanysale,ofanequitysecuritynotthenorthereafterheldbyhiminaninvestmentaccount,byadealerintheordinarycourseofhisbusinessandincidenttotheestablishmentormaintenancebyhimofaprimaryorsecondarymarket,otherwisethanonanExchange,forsuchsecurity.TheCommissionmay,bysuchrulesandregulationsas

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itdeemsnecessaryorappropriateinthepublicinterest,defineandprescribetermsandconditionswithrespecttosecuritiesheldinaninvestmentaccountandtransactionsmadeintheordinarycourseofbusinessandincidenttotheestablishmentormaintenanceofaprimaryorsecondarymarket.

CHAPTERVII

ProhibitionsonFraud,ManipulationandInsiderTrading

SEC.24.ManipulationofSecurityPrices;DevicesandPractices.‐24.1Itshallbeunlawfulforanypersonactingforhimselforthroughadealerorbroker,directlyorindirectly:

(a)TocreateafalseormisleadingappearanceofactivetradinginanylistedsecuritytradedinanExchangeoranyothertradingmarket(hereafterreferredtopurposesofthisChapteras“Exchange”):

(i)Byeffectinganytransactioninsuchsecuritywhichinvolvesnochangeinthebeneficialownershipthereof;

(ii)Byenteringanorderorordersforthepurchaseorsaleofsuchsecuritywiththeknowledgethatasimultaneousorderorordersofsubstantiallythesamesize,timeandprice,forthesaleorpurchaseofanysuchsecurity,hasorwillbeenteredbyorforthesameordifferentparties;or

(iii)Byperformingsimilaractwherethereisnochangeinbeneficialownership.

(b)Toeffect,aloneorwithothers,aseriesoftransactionsinsecuritiesthat:

(i)Raisestheirpricetoinducethepurchaseofasecurity,whetherofthesameoradifferentclassofthesameissuerorofacontrolling,controlled,orcommonlycontrolledcompanybyothers;

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(ii)Depressestheirpricetoinducethesaleofasecurity,whetherofthesameoradifferentclass,ofthesameissuerorofacontrolling,controlled,orcommonlycontrolledcompanybyothers;or

(iii)Createsactivetradingtoinducesuchapurchaseorsalethroughmanipulativedevicessuchasmarkingtheclose,paintingthetape,squeezingthefloat,hypeanddump,boilerroomoperationsandsuchothersimilardevices.

(c)TocirculateordisseminateinformationthatthepriceofanysecuritylistedinanExchangewillorislikelytoriseorfallbecauseofmanipulativemarketoperationsofanyoneormorepersonsconductedforthepurposeofraisingordepressingthepriceofthesecurityforthepurposeofinducingthepurchaseorsaleofsuchsecurity.

(d)Tomakefalseormisleadingstatementwithrespecttoanymaterialfact,whichhekneworhadreasonablegroundtobelievewassofalseormisleading,forthepurposeofinducingthepurchaseorsaleofanysecuritylistedortradedinanExchange.

(e)Toeffect,eitheraloneorothers,anyseriesoftransactionsforthepurchaseand/orsaleofanysecuritytradedinanExchangeforthepurposeofpegging,fixingorstabilizingthepriceofsuchsecurity,unlessotherwiseallowedbythisCodeorbyrulesoftheCommission.

24.2.Nopersonshalluseoremploy,inconnectionwiththepurchaseorsaleofanysecurityanymanipulativeordeceptivedeviceorcontrivance.Neithershallanyshortsalebeeffectednoranystop‐lossorderbeexecutedinconnectionwiththepurchaseorsaleofanysecurityexceptinaccordancewithsuchrulesandregulationsastheCommissionmayprescribeasnecessaryorappropriateinthepublicinterestorfortheprotectionofinvestors.

24.3.Theforegoingprovisionsnotwithstanding,theCommission,havingdueregardtothepublicinterestandtheprotectionofinvestors,may,byrulesandregulations,allowcertainactsortransactionsthatmayotherwisebeprohibitedunderthisSection.

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SEC.25.RegulationofOptionTrading.–NomemberofanExchangeshall,directlyorindirectlyendorseorguaranteetheperformanceofanyput,call,straddle,optionorprivilegeinrelationtoanysecurityregisteredonasecuritiesexchange.

Theterms“put”,“call”,“straddle”,“option”,or“privilege”shallnotincludeanyregisteredwarrant,rightorconvertiblesecurity.

SEC.26.FraudulentTransactions.‐Itshallbeunlawfulforanyperson,directlyorindirectly,inconnectionwiththepurchaseorsaleofanysecuritiesto:

26.1.Employanydevice,scheme,orartificetodefraud;

26.2.Obtainmoneyorpropertybymeansofanyuntruestatementofamaterialfactofanyomissiontostateamaterialfactnecessaryinordertomakethestatementsmade,inthelightofthecircumstancesunderwhichtheyweremade,notmisleading;or

26.3.Engageinanyact,transaction,practiceorcourseofbusinesswhichoperatesorwouldoperateasafraudordeceituponanyperson.

SEC.27.Insider’sDutytoDiscloseWhenTrading.‐27.1.Itshallbeunlawfulforaninsidertosellorbuyasecurityoftheissuer,whileinpossessionofmaterialinformationwithrespecttotheissuerorthesecuritythatisnotgenerallyavailabletothepublic,unless:(a)Theinsiderprovesthattheinformationwasnotgainedfromsuchrelationship;or(b)Iftheotherpartysellingtoorbuyingfromtheinsider(orhisagent)isidentified,theinsiderproves:(i)thathedisclosedtheinformationtotheotherparty,or(ii)thathehadreasontobelievethattheotherpartyotherwiseisalsoinpossessionoftheinformation.ApurchaseorsaleofasecurityoftheissuermadebyaninsiderdefinedinSubsection3.8,orsuchinsider’sspouseorrelativesbyaffinityorconsanguinitywithintheseconddegree,legitimateorcommon‐law,shallbepresumedtohavebeeneffectedwhileinpossessionofmaterialnon‐publicinformationiftransactedaftersuchinformationcameintoexistencebutpriortodisseminationofsuchinformationtothepublicandthelapseofareasonabletimeforthemarkettoabsorbsuchinformation:Provided,however,Thatthispresumptionshallberebutteduponashowingbythepurchaserorsellerthathewasnotawareofthematerialnon‐publicinformationatthetimeofthepurchaseorsale.

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27.2.ForpurposesofthisSection,informationis“materialnon‐public”if:(a)Ithasnotbeengenerallydisclosedtothepublicandwouldlikelyaffectthemarketpriceofthesecurityafterbeingdisseminatedtothepublicandthelapseofareasonabletimeforthemarkettoabsorbtheinformation;or(b)wouldbeconsideredbyareasonablepersonimportantunderthecircumstancesindetermininghiscourseofactionwhethertobuy,sellorholdasecurity.

27.3.Itshallbeunlawfulforanyinsidertocommunicatematerialnon‐publicinformationabouttheissuerorthesecuritytoanypersonwho,byvirtueofthecommunication,becomesaninsiderasdefinedinSubsection3.8,wheretheinsidercommunicatingtheinformationknowsorhasreasontobelievethatsuchpersonwilllikelybuyorsellasecurityoftheissuerwhileinpossessionofsuchinformation.

27.4.(a)Itshallbeunlawfulwhereatenderofferhascommencedorisabouttocommencefor:

(i)Anyperson(otherthanthetenderofferor)whoisinpossessionofmaterialnon‐publicinformationrelatingtosuchtenderoffer,tobuyorsellthesecuritiesoftheissuerthataresoughtortobesoughtbysuchtenderofferifsuchpersonknowsorhasreasontobelievethattheinformationisnon‐publicandhasbeenacquireddirectlyorindirectlyfromthetenderofferor,thoseactingonitsbehalf,theissuerofthesecuritiessoughtortobesoughtbysuchtenderoffer,oranyinsiderofsuchissuer;and

(ii)Anytenderofferor,thoseactingonitsbehalf,theissuerofthesecuritiessoughtortobesoughtbysuchtenderoffer,andanyinsiderofsuchissuertocommunicatematerialnon‐publicinformationrelatingtothetenderoffertoanyotherpersonwheresuchcommunicationislikelytoresultinaviolationofSubsection27.4(a)(i).

(b)Forpurposesofthissubsectiontheterm“securitiesoftheissuersoughtortobesoughtbysuchtenderoffer”shallincludeanysecuritiesconvertibleorexchangeableintosuchsecuritiesoranyoptionsorrightsinanyoftheforegoingsecurities.

CHAPTERVIII

RegulationofSecuritiesMarketProfessionals

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SEC.28.RegistrationofBrokers,Dealers,SalesmenandAssociatedPersons.‐28.1.NopersonshallengageinthebusinessofbuyingorsellingsecuritiesinthePhilippinesasabrokerordealer,oractasasalesman,oranassociatedpersonofanybrokerordealerunlessregisteredassuchwiththeCommission.

28.2.Noregisteredbrokerordealershallemployanysalesmanoranyassociatedperson,andnoissuershallemployanysalesman,whoisnotregisteredassuchwiththeCommission.

28.3.TheCommission,byruleororder,mayconditionallyorunconditionallyexemptfromSubsections28.1and28.2anybroker,dealer,salesman,associatedpersonofanybrokerordealer,oranyclassoftheforegoing,asitdeemsconsistentwiththepublicinterestandtheprotectionofinvestors.

28.4.TheCommissionshallpromulgaterulesandregulationsprescribingthequalificationsforregistrationofeachcategoryofapplicant,whichshall,amongotherthings,requireasaconditionforregistrationthat:

(a)Ifanaturalperson,theapplicantsatisfactorilypassawrittenexaminationastohisproficiencyandknowledgeintheareaofactivityforwhichregistrationissought;

(b)Inthecaseofabrokerordealer,theapplicantsatisfyaminimumnetcapitalasprescribedbytheCommission,andprovideabondorothersecurityastheCommissionmayprescribetosecurecompliancewiththeprovisionsofthisCode;and

(c)IflocatedoutsideofthePhilippines,theapplicantfilesawrittenconsenttoserviceofprocessupontheCommissionpursuanttoSection65hereof.

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28.5.AbrokerordealermayapplyforregistrationbyfilingwiththeCommissionawrittenapplicationinsuchformandcontainingsuchinformationanddocumentsconcerningsuchbrokerordealerastheCommissionbyruleshallprescribe.

28.6.RegistrationofasalesmanorofanassociatedpersonofaregisteredbrokerordealermaybemadeuponwrittenapplicationfiledwiththeCommissionbysuchsalesmanorassociatedperson.Theapplicationshallbeseparatelysignedandcertifiedbytheregisteredbrokerordealertowhichsuchsalesmanorassociatedpersonistobecomeaffiliated,orbytheissuerinthecaseofasalesmanemployed,appointedorauthorizedsolelybysuchissuer.TheapplicationshallbeinsuchformandcontainsuchinformationanddocumentsconcerningthesalesmanorassociatedpersonastheCommissionbyruleshallprescribe.ForpurposesofthisSection,asalesmanshallnotincludeanyemployeeofanissuerwhosecompensationisnotdetermineddirectlyorindirectlyonsalesofsecuritiesoftheissuer.

28.7.ApplicationsfiledpursuanttoSubsections28.5and28.6shallbeaccompaniedbyaregistrationfeeinsuchreasonableamountprescribedbytheCommission.

28.8.Withinthirty(30)daysafterthefilingofanyapplicationunderthisSection,theCommissionshallbyorder:(a)GrantregistrationifitdeterminesthattherequirementsofthisSectionandthequalificationsforregistrationsetforthinitsrulesandregulationshavebeensatisfied;or(b)Denysaidregistration.

28.9.Thenamesandaddressesofallpersonsapprovedforregistrationasbrokers,dealers,associatedpersonsorsalesmenandallordersoftheCommissionwithrespecttheretoshallberecordedinaRegisterofSecuritiesMarketProfessionalskeptintheofficeoftheCommissionwhichshallbeopentopublicinspection.

28.10.EverypersonregisteredpursuanttothisSectionshallfilewiththeCommission,insuchformastheCommissionshallprescribe,informationnecessarytokeeptheapplicationforregistrationcurrentandaccurate,includinginthecaseofabrokerordealerchangesinsalesmen,associatedpersonsandownersthereof.

28.11.EverypersonregisteredpursuanttothisSectionshallpaytotheCommissionanannualfeeatsuchtimeandinsuchreasonableamountastheCommissionshallprescribe.UponnoticebytheCommissionthatsuchannualfeehasnotbeenpaidas

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required,theregistrationofsuchpersonshallbesuspendeduntilpaymenthasbeenmade.

28.12.Theregistrationofasalesmanorassociatedpersonshallbeautomaticallyterminateduponthecessationofhisaffiliationwithsaidregisteredbrokerordealer,orwithanissuerinthecaseofasalesmanemployed,appointedorauthorizedbysuchissuer.Promptlyfollowinganysuchcessationofaffiliation,theregisteredbrokerordealer,orissuer,asthecasemaybe,shallfilewiththeCommissionanoticeofseparationofsuchsalesmanorassociatedperson.

SEC.29.Revocation,RefusalorSuspensionofRegistrationofBrokers,Dealers,SalesmenandAssociatedPersons.–29.1.RegistrationunderSection28ofthisCodemayberefused,oranyregistrationgrantedthereundermayberevoked,suspended,orlimitationsplacedthereon,bytheCommissionif,afterduenoticeandhearing,theCommissiondeterminestheapplicantorregistrant:

(a)HaswillfullyviolatedanyprovisionofthisCode,anyrule,regulationorordermadehereunder,oranyotherlawadministeredbytheCommission,orinthecaseofaregisteredbroker,dealerorassociatedpersonhasfailedtosupervise,withaviewtopreventingsuchviolation,anotherpersonwhocommitssuchviolation;

(b)HaswillfullymadeorcausedtobemadeamateriallyfalseormisleadingstatementinanyapplicationforregistrationorreportfiledwiththeCommissionoraself‐regulatoryorganization,orhaswillfullyomittedtostateanymaterialfactthatisrequiredtobestatedtherein;

(c)HasfailedtosatisfythequalificationsorrequirementsforregistrationprescribedunderSection28andtherulesandregulationsoftheCommissionpromulgatedthereunder;

(d)Hasbeenconvicted,byacompetentjudicialoradministrativebodyofanoffenseinvolvingmoralturpitude,fraud,embezzlement,counterfeiting,theft,estafa,misappropriation,forgery,bribery,falseoath,orperjury,orofaviolationofsecurities,commodities,banking,realestateorinsurancelaws;

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(e)Isenjoinedorrestrainedbyacompetentjudicialoradministrativebodyfromengaginginsecurities,commodities,banking,realestateorinsuranceactivitiesorfromwillfullyviolatinglawsgoverningsuchactivities;

(f)Issubjecttoanorderofacompetentjudicialoradministrativebodyrefusing,revokingorsuspendinganyregistration,licenseorotherpermitunderthisCode,therulesandregulationspromulgatedthereunder,anyotherlawadministeredbytheCommission;

(g)Issubjecttoanorderofaself‐regulatoryorganizationsuspendingorexpellinghimfrommembershiporparticipationthereinorfromassociationwithamemberorparticipantthereof;

(h)Hasbeenfoundbyacompetentjudicialoradministrativebodytohavewillfullyviolatedanyprovisionsofsecurities,commodities,banking,realestateorinsurancelaws,orhaswillfullyaided,abetted,counseled,commanded,inducedorprocuredsuchviolation;or

(i)Hasbeenjudiciallydeclaredinsolvent.

Forpurposesofthissubsection,theterm“competentjudicialoradministrativebody”shallincludeaforeigncourtofcompetentjurisdictionandaforeignfinancialregulator.

29.2.(a)Incasesofchargesagainstasalesmanorassociatedperson,noticethereofshallalsobegiventhebroker,dealerorissueremployingsuchsalesmanorassociatedperson.

(b)Pendingthehearing,theCommissionshallhavethepowertoorderthesuspensionofsuchbroker’s,dealer’s,associatedperson’sorsalesman’sregistration:Provided,Thatsuchordershallstatethecauseforsuchsuspension.Untiltheentryofafinalorder,thesuspensionofsuchregistration,thoughbindinguponthepersonsnotifiedthereof,shallbedeemedconfidential,andshallnotbepublished,unlessitshallappearthattheorderofsuspensionhasbeenviolatedafternotice.

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29.3.TheorderoftheCommissionrefusing,revoking,suspendingorplacinglimitationsonaregistrationashereinaboveprovided,togetherwithitsfindings,shallbeenteredintheRegisterofSecuritiesMarketProfessionals.Thesuspensionorrevocationoftheregistrationofadealerorbrokershallalsoautomaticallysuspendtheregistrationofallsalesmenandassociatedpersonsaffiliatedwithsuchbrokerordealer.

29.4.Itshallbesufficientcauseforrefusal,revocationorsuspensionofabroker'sordealer’sregistration,ifanyassociatedpersonthereoforanyjuridicalentitycontrolledbysuchassociatedpersonhascommittedanyactoromissionorissubjecttoanydisabilityenumeratedinparagraphs(a)through(i)ofSubsection29.1hereof.

SEC.30.TransactionsandResponsibilityofBrokersandDealers.‐30.1.Nobrokerordealershalldealinorotherwisebuyorsell,foritsownaccountorfortheaccountofcustomers,securitieslistedonanExchangeissuedbyanycorporationwhereanystockholder,director,associatedpersonorsalesman,orauthorizedclerkofsaidbrokerordealerandalltherelativesoftheforegoingwithinthefourthcivildegreeofconsanguinityoraffinity,isatthetimeholdingofficeinsaidissuercorporationasadirector,president,vice‐president,manager,treasurer,comptroller,secretaryoranyofficeoftrustandresponsibility,orisacontrollingpersonoftheissuer.

30.2.NobrokerordealershalleffectanytransactioninsecuritiesorinduceorattempttoinducethepurchaseorsaleofanysecurityexceptincompliancewithsuchrulesandregulationsastheCommissionshallprescribetoensurefairandhonestdealingsinsecuritiesandprovidefinancialsafeguardsandotherstandardsfortheoperationofbrokersanddealers,includingtheestablishmentofminimumnetcapitalrequirements,theacceptanceofcustodyanduseofsecuritiesofcustomers,andthecarryinganduseofdepositsandcreditbalancesofcustomers.

SEC.31.DevelopmentofSecuritiesMarketProfessionals.‐TheCommission,injointundertakingwithselfregulatoryorganizations,organizationsandassociationsoffinanceprofessionalsaswellasprivateeducationalandresearchinstitutionsshallundertakeorfacilitate/organizecontinuingtraining,conferences/seminars,updatingprograms,researchanddevelopmentaswellastechnologytransferatthelatestandadvancedtrendsinissuanceandtradingofsecurities,derivatives,commoditytradesandotherfinancialinstruments,aswellassecuritiesmarketsofothercountries.

CHAPTERIX

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ExchangesandOtherSecuritiesTradingMarkets

SEC.32.ProhibitiononUseofUnregisteredExchange;RegulationofOver‐the‐CounterMarkets.–32.1.Nobroker,dealer,salesman,associatedpersonofabrokerordealer,orExchange,directlyorindirectly,shallmakeuseofanyfacilityofanExchangeinthePhilippinestoeffectanytransactioninasecurity,ortoreportsuchtransaction,unlesssuchExchangeisregisteredassuchunderSection33ofthisCode.

32.2.(a)Nobroker,dealer,salesmanorassociatedpersonofabrokerordealer,singlyorinconcertwithanyotherperson,shallmake,createoroperate,orenableanothertomake,createoroperate,anytradingmarket,otherwisethanonaregisteredExchange,forthebuyingandsellingofanysecurity,exceptinaccordancewithrulesandregulationstheCommissionmayprescribe.

(b)TheCommissionmaypromulgaterulesandregulationsgoverningtransactionsbybrokers,dealers,salesmenorassociatedpersonsofabrokerordealer,overanyfacilitiesofsuchtradingmarketandmayrequiresuchmarkettobeadministeredbyaself‐regulatoryorganizationdeterminedbytheCommissionascapableofinsuringtheprotectionofinvestorscomparabletothatprovidedinthecaseofaregisteredExchange.Suchself‐regulatoryorganizationmustprovideacentralizedmarketplacefortradingandmustsatisfyrequirementscomparabletothoseprescribedforregistrationofExchangesinSection33ofthisCode.

SEC.33.RegistrationofExchanges.‐33.1.AnyExchangemayberegisteredassuchwiththeCommissionunderthetermsandconditionshereinafterprovidedinthisSectionandSection40hereof,byfilinganapplicationforregistrationinsuchformandcontainingsuchinformationandsupportingdocumentsastheCommissionbyruleshallprescribe,includingthefollowing:

(a)AnundertakingtocomplyandenforcecompliancebyitsmemberswiththeprovisionsofthisCode,itsimplementingrulesorregulationsandtherulesoftheExchange;

(b)TheorganizationalchartsoftheExchange,rulesofprocedure,andalistofitsofficersandmembers;

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(c)CopiesoftherulesoftheExchange;and

(d)AnundertakingthatintheeventamemberfirmbecomesinsolventorwhentheExchangeshallhavefoundthatthefinancialconditionofitsmemberfirmhassodeterioratedthatitcannotreadilymeetthedemandsofitscustomersforthedeliveryofsecuritiesand/orpaymentofsalesproceeds,theExchangeshall,uponorderoftheCommission,takeovertheoperationoftheinsolventmemberfirmandimmediatelyproceedtosettlethememberfirm’sliabilitiestoitscustomers.

33.2.RegistrationofanExchangeshallbegranteduponcompliancewiththefollowingprovisions:

(a)Thattheapplicantisorganizedasastockcorporation:Provided,ThatanyregisteredExchangeexistingpriortotheeffectivityofthisCodeshallwithinone(1)yearreorganizeasastockcorporationpursuanttoademutualizationplanapprovedbytheCommission;

(b)Thattheapplicantisengagedsolelyinthebusinessofoperatinganexchange:Provided,however,ThattheCommissionmayadoptrules,regulationsorissueanorder,uponapplication,exemptinganExchangeorganizedasastockcorporationandownedandcontrolledbyanotherjuridicalpersonfromthisrestriction;

c)WheretheExchangeisorganizedasastockcorporation,thatnopersonmaybeneficiallyownorcontrol,directlyorindirectly,morethanfivepercent(5%)ofthevotingrightsoftheExchangeandnoindustryorbusinessgroupmaybeneficiallyownorcontrol,directlyorindirectly,morethantwentypercent(20%)ofthevotingrightsoftheExchange:Provided,however,ThattheCommissionmayadoptrules,regulationsorissueanorder,uponapplication,exemptinganapplicantfromthisprohibitionwhereitfindsthatsuchownershiporcontrolwillnotnegativelyimpactontheexchange’sabilitytoeffectivelyoperateinthepublicinterest;

(d)Theexpulsion,suspension,ordiscipliningofamemberandpersonsassociatedwithamemberforconductorproceedinginconsistentwithjustandequitableprinciplesoffairtrade,andforviolationsofprovisionsofthisCode,oranyotherAct

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administeredbytheCommission,therules,regulationsandordersthereunder,ortherulesoftheExchange;

(e)Afairprocedureforthediscipliningofmembersandpersonsassociatedwithmembers,thedenialofmembershiptoanypersonseekingtobeamember,thebarringofanypersonfromassociationwithamember,andtheprohibitionorlimitationofanypersonfromaccesstoservicesofferedbytheExchange;

(f)ThatthebrokersintheboardoftheExchangeshallcompriseofnotmorethanforty‐ninepercent(49%)ofsuchboardandshallproportionatelyrepresenttheExchangemembershipintermsofvolume/valueoftradeandpaidupcapital,andthatanynaturalpersonassociatedwithajuridicalentitythatisamembershallhimselfbedeemedtobeamemberforthispurpose:Provided,ThatanyregisteredExchangeexistingpriortotheeffectivityofthisCodeshallimmediatelycomplywiththisrequirement;

(g)FortheboardoftheExchangetoincludeinitscomposition(i)thepresidentoftheExchange,and(ii)nolessthanfiftyonepercent(51%)oftheremainingmembersoftheboardtobecomprisedofthree(3)independentdirectorsandpersonswhorepresenttheinterestsofissuers,investors,andothermarketparticipants,whoarenotassociatedwithanybrokerordealerormemberoftheExchangeforaperiodoftwo(2)yearspriortohis/herappointment.Noofficeroremployeeofamember,itssubsidiariesoraffiliatesorrelatedinterestsshallbecomeanindependentdirector:Provided,however,ThattheCommissionmaybyrule,regulation,ororderuponapplication,permittheexchangeorganizedasastockcorporationtouseadifferentgovernancestructure:Provided,further,ThattheCommissionissatisfiedthattheExchangeisactinginthepublicinterestandisabletoeffectivelyoperateasaself‐regulatoryorganizationunderthisCode:Provided,finally,ThatanyregisteredexchangeexistingpriortotheeffectivityofthisCodeshallimmediatelycomplywiththisrequirement.

(h)ThepresidentandothermanagementoftheExchangetoconsistonlyofpersonswhoarenotmembersandarenotassociatedinanycapacity,directlyorindirectlywithanybrokerordealerormemberorlistedcompanyoftheExchange:Provided,ThattheExchangemayonlyappoint,andapersonmayonlyserve,asanofficeroftheexchangeifsuchpersonhasnotbeenamemberoraffiliatedwithanybroker,dealer,ormemberoftheExchangeforaperiodofatleasttwo(2)yearspriortosuchappointment;

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(i)ThetransparencyoftransactionsontheExchange;

(j)Theequitableallocationofreasonabledues,fees,andotherchargesamongmembersandissuersandotherpersonsusinganyfacilityorsystemwhichtheExchangeoperatesorcontrols;

(k)Preventionoffraudulentandmanipulativeactsandpractices,promotionofjustandequitableprinciplesoftrade,and,ingeneral,protectionofinvestorsandthepublicinterest;and

(l)Thetransparent,promptandaccurateclearanceandsettlementoftransactionseffectedontheExchange.

33.3.IftheCommissionfindsthattheapplicantExchangeiscapableofcomplyingandenforcingcompliancebyitsmembers,andpersonsassociatedwithsuchmembers,withtheprovisionsofthisCode,itsrulesandregulations,andtherulesoftheExchange,andthattherulesoftheExchangearefair,justandadequate,theCommissionshallcausesuchExchangetoberegistered.If,afternoticedueandhearing,theCommissionfindsotherwise,theapplicationshallbedenied.

33.4.Withinninety(90)daysafterthefilingoftheapplicationtheCommissionmayissueanordereithergrantingordenyingregistrationasanExchange,unlesstheExchangeapplyingforregistrationshallwithdrawitsapplicationorshallconsenttotheCommission’sdeferringactiononitsapplicationforastatedlongerperiodafterthedateoffiling.ThefilingwiththeCommissionofanapplicationforregistrationbyanExchangeshallbedeemedtohavetakenplaceuponthereceiptthereof.AmendmentstoanapplicationmaybemadeuponsuchtermsastheCommissionmayprescribe.

33.5.UpontheregistrationofanExchange,itshallpayafeeinsuchamountandwithinsuchperiodastheCommissionmayfix.

33.6.UponappropriateapplicationinaccordancewiththerulesandregulationsoftheCommissionanduponsuchtermsastheCommissionmaydeemnecessaryfortheprotectionofinvestors,anExchangemaywithdrawitsregistrationorsuspenditsoperationsorresumethesame.

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SEC.34.SegregationandLimitationofFunctionsofMembers,BrokersandDealers.‐34.1.Itshallbeunlawfulforanymember‐brokerofanExchangetoeffectanytransactiononsuchExchangeforitsownaccount,theaccountofanassociatedperson,oranaccountwithrespecttowhichitoranassociatedpersonthereofexercisesinvestmentdiscretion:Provided,however,Thatthissectionshallnotmakeunlawful‐

(a)Anytransactionbyamember‐brokeractinginthecapacityofamarketmaker;

(b)Anytransactionreasonablynecessarytocarryonanodd‐lottransactions;

(c)Anytransactiontooffsetatransactionmadeinerror;and

(d)AnyothertransactionofasimilarnatureasmaybedefinedbytheCommission.

34.2.Inallinstanceswherethemember‐brokereffectsatransactiononanExchangeforitsownaccountortheaccountofanassociatedpersonoranaccountwithrespecttowhichitexercisesinvestmentdiscretion,itshalldisclosetosuchcustomeratorbeforethecompletionofthetransactionitisactingforitsownaccount:Provided,further,Thatthisfactshallbereflectedintheorderticketandtheconfirmationslip.

34.3.Anymember‐brokerwhoviolatestheprovisionsofthisSectionshallbesubjecttotheadministrativesanctionsprovidedinSection54ofthisCode.

SEC.35.AdditionalFeesofExchanges.‐InadditiontotheregistrationfeeprescribedinSection33ofthisCode,everyExchangeshallpaytotheCommission,onasemestralbasisonorbeforethetenthdayoftheendofeverysemesterofthecalendaryear,afeeinsuchanamountastheCommissionshallprescribe,butnotmorethanone‐hundredthofonepercentum(1%)oftheaggregateamountofthesalesofsecuritiestransactedonsuchExchangeduringtheprecedingcalendaryear,fortheprivilegeofdoingbusiness,duringtheprecedingcalendaryearoranypartthereof.

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SEC.36.PowerswithRespecttoExchangesandOtherTradingMarket.‐36.1.TheCommissionisauthorized,ifinitsopinionsuchactionisnecessaryorappropriatefortheprotectionofinvestorsandthepublicinterestsorequires,summarilytosuspendtradinginanylistedsecurityonanyExchangeorothertradingmarketforaperiodnotexceedingthirty(30)daysor,withtheapprovalofthePresidentofthePhilippines,summarilytosuspendalltradingonanysecuritiesExchangeorothertradingmarketforaperiodofmorethanthirty(30)butnotexceedingninety(90)days:Provided,however,ThattheCommission,promptlyfollowingtheissuanceoftheorderofsuspension,shallnotifytheaffectedissuerofthereasonsforsuchsuspensionandprovidesuchissuerwithanopportunityforhearingtodeterminewhetherthesuspensionshouldbelifted.

36.2.WherevertwoormoreExchangesorothertradingmarketsexist,theCommissionmayrequireandenforceuniformityoftradingregulationsinand/orbetweenoramongsaidExchangesorothertradingmarkets.

36.3.InadditiontotheexistingPhilippineStockExchange,theCommissionshallhavetheauthoritytodeterminethenumber,sizeandlocationofstockExchanges,othertradingmarketsandcommodityExchangesandothersimilarorganizationsinthelightofnationalorregionalrequirementsforsuchactivitieswiththeviewtopromote,enhance,protect,conserveorrationalizeinvestment.

36.4.TheCommission,havingdueregardtothepublicinterest,theprotectionofinvestors,thesafeguardingofsecuritiesandfunds,andmaintenanceoffaircompetitionamongbrokers,dealers,clearingagencies,andtransferagents,shallpromulgaterulesandregulationsforthepromptandaccurateclearanceandsettlementofsecuritiestransactions.

36.5.(a)TheCommissionmayestablishorfacilitatetheestablishmentoftrustfundswhichshallbecontributedbyExchanges,brokers,dealers,underwriters,transferagents,salesmenandotherpersonstransactinginsecurities,astheCommissionmayrequire,forthepurposeofcompensatinginvestorsfortheextraordinarylossesordamagetheymaysufferduetobusinessfailureorfraudormismanagementofthepersonswithwhomtheytransact,undersuchrulesandregulationsastheCommissionmayfromtimetotimeprescribeorapproveinthepublicinterest.

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(b)TheCommissionmay,havingdueregardtothepublicinterestortheprotectionofinvestors,regulate,supervise,examine,suspendorotherwisediscontinuesuchandothersimilarfundsundersuchrulesandregulationswhichtheCommissionmaypromulgate,andwhichmayincludetakingcustodyandmanagementofthefunditselfaswellasinvestmentsinanddisbursementsfromthefundsundersuchformsofcontrolandsupervisionbytheCommissionasitmayfromtimetotimerequire.TheauthoritygrantedtotheCommissionunderthissubsectionshallalsoapplytoallfundsestablishedfortheprotectionofinvestors,whetherestablishedbytheCommissionorotherwise.

SEC.37.RegistrationofInnovativeandOtherTradingMarkets.‐TheCommission,havingdueregardfornationaleconomicdevelopment,shallencouragecompetitivenessinthemarketbypromulgatingwithinsix(6)monthsupontheenactmentofthisCode,rulesfortheregistrationandlicensingofinnovativeandothertradingmarketsorExchangescovering,butnotlimitedto,theissuanceandtradingofinnovativesecurities,securitiesofsmall,medium,growthandventureenterprises,andtechnology‐basedventurespursuanttoSection33ofthisCode.

SEC.38.IndependentDirectors.‐AnycorporationwithaclassofequitysecuritieslistedfortradingonanExchangeorwithassetsinexcessofFiftymillionpesos(P50,000,000.00)andhavingtwohundred(200)ormoreholders,atleastoftwohundred(200)ofwhichareholdingatleastonehundred(100)sharesofaclassofitsequitysecuritiesorwhichhassoldaclassofequitysecuritiestothepublicpursuanttoaneffectiveregistrationstatementincompliancewithSection12hereofshallhaveatleasttwo(2)independentdirectorsorsuchindependentdirectorsshallconstituteatleasttwentypercent(20%)ofthemembersofsuchboard,whicheveristhelesser.Forthispurpose,an“independentdirector”shallmeanapersonotherthananofficeroremployeeofthecorporation,itsparentorsubsidiaries,oranyotherindividualhavingarelationshipwiththecorporation,whichwouldinterferewiththeexerciseofindependentjudgmentincarryingouttheresponsibilitiesofadirector.

CHAPTERX

Registration,Responsibilitiesand

OversightofSelf‐RegulatoryOrganizations

SEC.39.AssociationsofSecuritiesBrokers,andDealers,andOtherSecuritiesRelatedOrganizations.‐39.1.TheCommissionshallhavethepowertoregisterasa

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self‐regulatoryorganization,orotherwisegrantlicenses,andtoregulate,supervise,examine,suspendorotherwisediscontinue,asaconditionfortheoperationoforganizationswhoseoperationsarerelatedtoorconnectedwiththesecuritiesmarketsuchasbutnotlimitedtoassociationsofbrokersanddealers,transferagents,custodians,fiscalandpayingagents,computerservices,newsdisseminatingservices,proxysolicitors,statisticalagencies,securitiesratingagencies,andsecuritiesinformationprocessorswhichareengagedinthebusinessof:(a)Collecting,processing,orpreparingfordistributionorpublication,orassisting,participatingin,orcoordinatingthedistributionorpublicationof,informationwithrespecttotransactionsinorquotationsforanysecurity;or(b)Distributingorpublishing,whetherbymeansofatickertape,acommunicationsnetwork,aterminaldisplaydevice,orotherwise,onacurrentandcontinuingbasis,informationwithrespecttosuchtransactionsorquotations.TheCommissionmayprescriberulesandregulationswhicharenecessaryorappropriateinthepublicinterestorfortheprotectionofinvestorstogovernself‐regulatoryorganizationsandotherorganizationslicensedorregulatedpursuanttotheauthoritygrantedinSubsection39.1includingtherequirementofcooperationwithinandamong,andelectronicintegrationoftherecordsof,allparticipantsinthesecuritiesmarkettoensuretransparencyandfacilitateexchangeofinformation.

39.2.AnassociationofbrokersanddealersmayberegisteredasasecuritiesassociationpursuanttoSubsection39.3byfilingwiththeCommissionanapplicationforregistrationinsuchformastheCommission,byrule,mayprescribecontainingtherulesoftheassociationandsuchotherinformationanddocumentsastheCommission,byrule,mayprescribeasnecessaryorappropriateinthepublicinterestorfortheprotectionofinvestors.

39.3.AnassociationofbrokersanddealersshallnotberegisteredasasecuritiesassociationunlesstheCommissiondeterminesthat:

(a)TheassociationissoorganizedandhasthecapacitytobeabletocarryoutthepurposesofthisCodeandtocomplywith,andtoenforcecompliancebyitsmembersandpersonsassociatedwithitsmembers,withtheprovisionsofthisCode,therulesandregulationsthereunder,andtherulesoftheassociation.

(b)Therulesoftheassociation,notwithstandinganythingintheCorporationCodetothecontrary,providethat:

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(i)Anyregisteredbrokerordealermaybecomeamemberoftheassociation;

(ii)ThereexistafairrepresentationofitsmemberstoserveontheBoardofDirectorsoftheassociationandintheadministrationofitsaffairs,andthatanynaturalpersonassociatedwithajuridicalentitythatisamembershallhimselfbedeemedtobeamemberforthispurpose;

(iii)TheBoardofDirectorsoftheassociationincludesinitscomposition:(a)Thepresidentoftheassociationand(b)Personswhorepresenttheinterestsofissuersandpublicinvestorsandarenotassociatedwithanybrokerordealerormemberoftheassociation;thatthepresidentandothermanagementoftheassociationnotbeamemberorassociatedwithanybroker,dealerormemberoftheassociation;

(iv)Fortheequitableallocationofreasonabledues,fees,andotherchargesamongmembersandissuersandotherpersonsusinganyfacilityorsystemwhichtheassociationoperatesorcontrols;

(v)Forthepreventionoffraudulentandmanipulativeactsandpractices,thepromotionofjustandequitableprinciplesoftrade,and,ingeneral,theprotectionofinvestorsandthepublicinterest;

(vi)ThatitsmembersandpersonsassociatedwithitsmembersshallbeappropriatelydisciplinedforviolationofanyprovisionofthisCode,therulesorregulationsthereunder,ortherulesoftheassociation;

(vii)Thatafairprocedureforthediscipliningofmembersandpersonsassociatedwithmembers,thedenialofmembershiptoanypersonseekingmembershiptherein,thebarringofanypersonfrombecomingassociatedwithamemberthereof,andtheprohibitionorlimitationbytheassociationofanypersonwithrespecttoaccesstoservicesofferedbytheassociationoramemberthereof.

39.4.(a)Aregisteredsecuritiesassociationshalldenymembershiptoanypersonwhoisnotaregisteredbrokerordealer.

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(b)Aregisteredsecuritiesassociationmaydenymembershipto,orconditionthemembershipof,aregisteredbrokerordealerifsuchbrokerordealer:

(i)Doesnotmeetthestandardsoffinancialresponsibility,operationalcapability,training,experience,orcompetencethatareprescribedbytherulesoftheassociation;or

(ii)Hasengaged,andthereisareasonablelikelihooditwillagainengage,inactsorpracticesinconsistentwithjustandequitableprinciplesoffairtrade.

(c)Aregisteredsecuritiesassociationmaydenymembershiptoaregisteredbrokerordealernotengagedinatypeofbusinessinwhichtherulesoftheassociationrequirememberstobeengaged:Provided,however,Thatnoregisteredsecuritiesassociationmaydenymembershiptoaregisteredbrokerordealerbyreasonoftheamountofbusinessdonebythebrokerordealer.

Aregisteredsecuritiesassociationmayexamineandverifythequalificationsofanapplicanttobecomeamemberinaccordancewithproceduresestablishedbytherulesoftheassociation.

(d)Aregisteredsecuritiesassociationmaybarasalesmanorpersonassociatedwithabrokerordealerfrombeingemployedbyamemberorsetconditionsfortheemploymentofasalesmanorassociatedifsuchperson:

(i)Doesnotmeetthestandardsoftraining,experience,orcompetencethatareprescribedbytherulesoftheassociation;or

(ii)Hasengaged,andthereisareasonablelikelihoodhewillagainengage,inactsorpracticesinconsistentwithjustandequitableprinciplesoffairtrade.

Aregisteredsecuritiesassociationmayexamineandverifythequalificationsofanapplicanttobecomeasalesmanorassociatedpersonemployedbyamemberinaccordancewithproceduresestablishedbytherulesoftheassociation.Aregisteredassociationalsomayrequireasalesmanorassociatedpersonemployedbya

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membertoberegisteredwiththeassociationinaccordancewithproceduresprescribedintherulesoftheassociation.

39.5.Inanyproceedingbyaregisteredsecuritiesassociationtodeterminewhetherapersonshallbedeniedmembership,orbarredfromassociationwithamember,theassociationshallprovidenoticetothepersonunderreviewofthespecificgroundsbeingconsideredfordenial,affordhimanopportunitytodefendagainsttheallegations,andkeeparecordoftheproceedings.Adeterminationbytheassociationtodenymembershipshallbesupportedbyastatementsettingforththespecificgroundsonwhichthedenialisbased.

SEC.40.PowerswithRespecttoSelf‐RegulatoryOrganizations.‐40.1.UponthefilingofanapplicationforregistrationasanExchangeunderSection33,aregisteredsecuritiesassociationunderSection39,aregisteredclearingagencyunderSection42,orotherself‐regulatoryorganizationunderthisSection,theCommissionshallhaveninety(90)dayswithinwhichtoeithergrantregistrationorinstituteaproceedingtodeterminewhetherregistrationshouldbedenied.Intheeventproceedingsareinstituted,theCommissionshallhavetwohundredseventy(270)dayswithinwhichtoconcludesuchproceedingsatwhichtimeitshall,byorder,grantordenysuchregistration.

40.2.Everyself‐regulatoryorganizationshallcomplywiththeprovisionsofthisCode,therulesandregulationsthereunder,anditsownrules,andenforcecompliancetherewith,notwithstandinganyprovisionoftheCorporationCodetothecontrary,byitsmembers,personsassociatedwithitsmembersoritsparticipants.

40.3.(a)Eachself‐regulatoryorganizationshallsubmittotheCommissionforpriorapprovalanyproposedruleoramendmentthereto,togetherwithaconcisestatementofthereasonandeffectoftheproposedamendment.

(b)Withinsixty(60)daysaftersubmissionofaproposedamendment,theCommissionshall,byorder,approvetheproposedamendment.Otherwise,thesamemaybemadeeffectivebytheself‐regulatoryorganization.

(c)Intheeventofanemergencyrequiringactionfortheprotectionofinvestors,themaintenanceoffairandorderlymarkets,orthesafeguardingofsecuritiesand

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funds,aself‐regulatoryorganizationmayputaproposedamendmentintoeffectsummarily:Provided,however,ThatacopyofthesameshallbeimmediatelysubmittedtotheCommission.

40.4.TheCommissionisfurtherauthorized,ifaftermakingappropriaterequestinwritingtoaself‐regulatoryorganizationthatsuchorganizationeffectonitsownbehalfspecifiedchangesinitsrulesandpracticesand,afterduenoticeandhearingitdeterminesthatsuchchangeshavenotbeeneffected,andthatsuchchangesarenecessary,byruleorregulationorbyorder,mayalter,abrogateorsupplementtherulesofsuchself‐regulatoryorganizationinsofarasnecessaryorappropriatetoeffectsuchchangesinrespectofsuchmattersas:

(a)Safeguardsinrespectofthefinancialresponsibilityofmembersandadequateprovisionagainsttheevasionoffinancialresponsibilitythroughtheuseofcorporateformsorspecialpartnerships;

(b)Thesupervisionoftradingpractices;

(c)Thelistingorstrikingfromlistingofanysecurity;

(d)Hoursoftrading;

(e)Themanner,method,andplaceofsolicitingbusiness;

(f)Fictitiousaccounts;

(g)Thetimeandmethodofmakingsettlements,payments,anddeliveries,andofclosingaccounts;

(h)Thetransparencyofsecuritiestransactionsandprices;

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(i)Thefixingofreasonableratesoffees,interest,listingandothercharges,butnotratesofcommission;

(j)Minimumunitsoftrading;

(k)Odd‐lotpurchasesandsales;

(l)Minimumdepositsonmarginaccounts;and

(m)Thesupervision,auditinganddiscipliningofmembersorparticipants.

40.5.TheCommission,afterduenoticeandhearing,isauthorized,inthepublicinterestandtoprotectinvestors:

(a)Tosuspendforaperiodnotexceedingtwelve(12)monthsortorevoketheregistrationofaself‐regulatoryorganization,ortocensureorimposelimitationsontheactivities,functions,andoperationsofsuchself‐regulatoryorganization,iftheCommissionfindsthatsuchaself‐regulatoryorganizationhaswillfullyviolatedorisunabletocomplywithanyprovisionofthisCodeoroftherulesandregulationsthereunder,oritsownrules,orhasfailedtoenforcecompliancetherewithbyamemberof,personassociatedwithamember,oraparticipantinsuchself‐regulatoryorganization;

(b)Toexpelfromaself‐regulatoryorganizationanymemberthereoforanyparticipantthereinwhoissubjecttoanorderoftheCommissionunderSection29ofthisCodeorisfoundtohavewillfullyviolatedanyprovisionofthisCodeorsuspendforaperiodnotexceedingtwelve(12)monthsforviolationofanyprovisionofthisCodeoranyotherlawsadministeredbytheCommission,ortherulesandregulationsthereunder,oreffected,directlyorindirectly,anytransactionforanypersonwho,suchmemberorparticipanthadreasontobelieve,wasviolatinginrespectofsuchtransactionanyofsuchprovisions;and

(c)Toremovefromofficeorcensureanyofficerordirectorofaself‐regulatoryorganizationifitfindsthatsuchofficerordirectorhasviolatedanyprovisionofthis

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Code,anyotherlawadministeredbytheCommission,therulesorregulationsthereunder,ortherulesofsuchself‐regulatoryorganization,abusedhisauthority,orwithoutreasonablejustificationorexcusehasfailedtoenforcecompliancewithanyofsuchprovisions.

40.6.(a)Aself‐regulatoryorganizationisauthorizedtodisciplineamemberoforparticipantinsuchself‐regulatoryorganization,oranypersonassociatedwithamember,includingthesuspensionorexpulsionofsuchmemberorparticipant,andthesuspensionorbarfrombeingassociatedwithamember,ifsuchpersonhasengagedinactsorpracticesinconsistentwithjustandequitableprinciplesoffairtradeorinwillfulviolationofanyprovisionoftheCode,anyotherlawadministeredbytheCommission,therulesorregulationsthereunder,ortherulesoftheself‐regulatoryorganization.Inanydisciplinaryproceedingbyaself‐regulatoryorganization(otherthanasummaryproceedingpursuanttoparagraph(b)ofthissubsection)theself‐regulatoryorganizationshallbringspecificcharges,providenoticetothepersoncharged,affordthepersonchargedwithanopportunitytodefendagainstthecharges,andkeeparecordoftheproceedings.Adeterminationtoimposeadisciplinarysanctionshallbesupportedbyawrittenstatementoftheoffense,asummaryoftheevidencepresentedandastatementofthesanctionimposed.

(b)Aself‐regulatoryorganizationmaysummarily:(i)Suspendamember,participantorpersonassociatedwithamemberwhohasbeenorisexpelledorsuspendedfromanyotherself‐regulatoryorganization;or(ii)Suspendamemberwhotheself‐regulatoryorganizationfindstobeinsuchfinancialoroperatingdifficultythatthememberorparticipantcannotbepermittedtocontinuetodobusinessasamemberwithsafetytoinvestors,creditors,othermembers,participantsortheself‐regulatoryorganization:Provided,Thattheself‐regulatoryorganizationimmediatelynotifiestheCommissionoftheactiontaken.Anypersonaggrievedbyasummaryactionpursuanttothisparagraphshallbepromptlyaffordedanopportunityforahearingbytheassociationinaccordancewiththeprovisionsofparagraph(a)ofthissubsection.TheCommission,byorder,maystayasummaryactiononitsownmotionoruponapplicationbyanypersonaggrievedthereby,iftheCommissiondeterminessummarilyorafterduenoticeandhearing(whichhearingmayconsistsolelyofthesubmissionofaffidavitsorpresentationoforalarguments)thatastayisconsistentwiththepublicinterestandtheprotectionofinvestors.

40.7.Aself‐regulatoryorganizationshallpromptlynotifytheCommissionofanydisciplinarysanctiononanymemberthereoforparticipanttherein,anydenialofmembershiporparticipationinsuchorganization,ortheimpositionofany

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disciplinarysanctiononapersonassociatedwithamemberorabarofsuchpersonfrombecomingsoassociated.Withinthirty(30)daysaftersuchnotice,anyaggrievedpersonmayappealtotheCommissionfrom,ortheCommissiononitsownmotionwithinsuchperiod,mayinstitutereviewof,thedecisionoftheself‐regulatoryorganization,attheconclusionofwhich,afterduenoticeandhearing(whichmayconsistsolelyofreviewoftherecordbeforetheself‐regulatoryorganization),theCommissionshallaffirm,modifyorsetasidethesanction.InsuchproceedingtheCommissionshalldeterminewhethertheaggrievedpersonhasengagedoromittedtoengageintheactsandpracticesasfoundbytheself‐regulatoryorganization,whethersuchactsandpracticesconstitutewillfulviolationsofthisCode,anyotherlawadministeredbytheCommission,therulesorregulationsthereunder,ortherulesoftheself‐regulatoryorganizationasspecifiedbysuchorganization,whethersuchprovisionswereappliedinamannerconsistentwiththepurposesofthisCode,andwhether,withdueregardforthepublicinterestandtheprotectionofinvestorsthesanctionisexcessiveoroppressive.

40.8.ThepowersoftheCommissionunderthissectionshallapplytoorganizedexchangesandregisteredclearingagencies.

CHAPTERXI

AcquisitionandTransferofSecuritiesand

SettlementofTransactionsinSecurities

SEC.41.ProhibitiononUseofUnregisteredClearingAgency.‐Itshallbeunlawfulforanybroker,dealer,salesman,associatedpersonofabrokerordealer,orclearingagency,directlyorindirectly,tomakeuseofanyfacilityofaclearingagencyinthePhilippinestomakedeliveriesinconnectionwithtransactionsinsecuritiesortoreducethenumberofsettlementsofsecuritiestransactionsortoallocatesecuritiessettlementresponsibilitiesortoprovideforthecentralhandlingofsecuritiessothattransfers,loansandpledgesandsimilartransactionscanbemadebybookkeepingentryorotherwisetofacilitatethesettlementofsecuritiestransactionswithoutphysicaldeliveryofsecuritiescertificates,unlesssuchclearingagencyisregisteredassuchunderSection42ofthisCodeorisexemptedfromsuchregistrationuponapplicationbytheclearingagencybecause,intheopinionoftheCommission,byreasonofthelimitedvolumeoftransactionswhicharesettledusingtheclearingagency,itisnotpracticableandnotnecessaryorappropriateinthepublicinterestorfortheprotectionofinvestorstorequiresuchregistration.

SEC.42.RegistrationofClearingAgencies.–42.1.AnyclearingagencymayberegisteredassuchwiththeCommissionunderthetermsandconditionshereinafterprovidedinthisSection,byfilinganapplicationforregistrationinsuchformand

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containingsuchinformationandsupportingdocumentsastheCommissionbyruleshallprescribe,includingthefollowing:

(a)AnundertakingtocomplyandenforcecompliancebyitsparticipantswiththeprovisionsofthisCode,andanyamendmentthereto,andtheimplementingrulesorregulationsmadeortobemadethereunder,andtheclearingagency’srules;

(b)TheorganizationalchartsoftheExchange,itsrulesofprocedure,andalistofitsofficersandparticipants;

(c)Copiesoftheclearingagency’srules.

42.2.Noregistrationofaclearingagencyshallbegrantedunlesstherulesoftheclearingagencyincludeprovisionfor:

(a)Theexpulsion,suspension,ordiscipliningofaparticipantforviolationsofthisCode,oranyotherActadministeredbytheCommission,therules,regulations,andordersthereunder,ortheclearingagency’srules;

(b)Afairprocedureforthediscipliningofparticipants,thedenialofparticipationrightstoanypersonseekingtobeaparticipant,andtheprohibitionorlimitationofanypersonfromaccesstoservicesofferedbytheclearingagency;

(c)Theequitableallocationofreasonabledues,fees,andotherchargesamongparticipants;

(d)Preventionoffraudulentandmanipulativeactsandpractices,promotionofjustandequitableprinciplesoftrade,and,ingeneral,protectionofinvestorsandthepublicinterest;and

(e)Thetransparent,promptandaccurateclearanceandsettlementoftransactionsinsecuritieshandledbytheclearingagency.

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(f)Theestablishmentandoversightofafundtoguaranteethepromptandaccurateclearanceandsettlementoftransactionsexecutedonanexchange,includingarequirementthatmemberseachcontributeanamountbasedontheirvolumeandarelevantpercentageofthedailyexposureofthefour(4)largesttradingbrokerswhichadequatelyreflectstradingrisksundertakenorpursuanttoanotherformulasetforthinCommissionrulesorregulationsororder,uponapplication:Provided,however,Thataclearingagencyengagedinthebusinessofasecuritiesdepositoryshallbeexemptfromthisrequirement.

42.3.InthecaseofanapplicationfiledpursuanttothisSection,theCommissionshallgrantregistrationifitfindsthattherequirementsofthisCodeandtherulesandregulationsthereunderwithrespecttotheapplicanthavebeensatisfied,andshalldenyregistrationifitdoesnotmakesuchfinding.

42.4.UponappropriateapplicationinaccordancewiththerulesandregulationsoftheCommissionanduponsuchtermsastheCommissionmaydeemnecessaryfortheprotectionofinvestors,aclearingagencymaywithdrawitsregistrationorsuspenditsoperationorresumethesame.

42.5.Section32ofthisCodeshallapplytoeveryregisteredclearingagency.

SEC.43.UncertificatedSecurities.‐NotwithstandingSection63oftheCorporationCodeofthePhilippines:

43.1.AcorporationwhosesecuritiesareregisteredpursuanttothisCodeorlistedonasecuritiesExchangemay:

(a)IfsoresolvedbyitsBoardofDirectorsandagreedbyashareholder,investororsecuritiesintermediary,issuesharesto,orrecordthetransferofsomeorallofitssharesintothenameofsaidshareholders,investorsor,securitiesintermediaryintheformofuncertificatedsecurities.Theuseofuncertificatedsecuritiesinthesecircumstancesshallbewithoutprejudicetotherightsofthesecuritiesintermediarysubsequentlytorequirethecorporationtoissueacertificateinrespectofanysharesrecordedinitsname;and

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(b)Ifsoprovidedinitsarticlesofincorporationandby‐laws,issueallofthesharesofaparticularclassintheformofuncertificatedsecuritiesandsubjecttoaconditionthatinvestorsmaynotrequirethecorporationtoissueacertificateinrespectofanysharesrecordedintheirname.

43.2.TheCommissionbyrulemayallowothercorporationstoprovideintheirarticlesofincorporationandby‐lawsfortheuseofuncertificatedsecurities.

43.3.Transfersofsecurities,includinganuncertificatedsecurities,maybevalidlymadeandconsummatedbyappropriatebook‐entriesinthesecuritiesaccountsmaintainedbysecuritiesintermediaries,orinthestockandtransferbookheldbythecorporationorthestocktransferagentandsuchbookkeepingentriesshallbebindingonthepartiestothetransfer.Atransferunderthissubsectionhastheeffectofthedeliveryofasecurityinbearerformordulyindorsedinblankrepresentingthequantityoramountofsecurityorrighttransferred,includingtheunrestrictednegotiabilityofthatsecuritybyreasonofsuchdelivery.However,transferofuncertificatedsharesshallonlybevalid,sofarasthecorporationisconcerned,whenatransferisrecordedinthebooksofthecorporationsoastoshowthenamesofthepartiestothetransferandthenumberofsharestransferred.

However,nothinginthisCodeshallprecludecompliancebybankingandotherinstitutionsunderthesupervisionoftheBangkoSentralngPilipinasandtheirstockholderswiththeapplicableceilingsonshareholdingsprescribedunderpertinentbankinglawsandregulations.

SEC.44.EvidentiaryValueofClearingAgencyRecord.‐Theofficialrecordsandbookentriesofaclearingagencyshallconstitutethebestevidenceofsuchtransactionsbetweenclearingagencyanditsparticipantsandmembers,withoutprejudicetotherightofparticipants’ormembers’clientstoprovetheirrights,titleandentitlementwithrespecttothebook‐entrysecurityholdingsoftheparticipantsormembersheldonbehalfoftheclients.However,thecorporationshallnotbeboundbytheforegoingtransactionsunlessthecorporatesecretaryisdulynotifiedinsuchmannerastheCommissionmayprovide.

SEC.45.PledgingaSecurityorInterestTherein.‐Inadditiontoothermethodsrecognizedbylaw,apledgeof,orreleaseofapledgeof,asecurity,includinganuncertificatedsecurity,isproperlyconstitutedandtheinstrumentprovingtherightpledgedshallbeconsidereddeliveredtothecreditorunderArticles2093and2095

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oftheCivilCodeifasecuritiesintermediaryindicatesbybook‐entrythatsuchsecurityhasbeencreditedtoaspeciallydesignatedpledgeaccountinfavorofthepledgee.Apledgeunderthissubsectionhastheeffectofthedeliveryofasecurityinbearerformordulyindorsedinblankrepresentingthequantityoramountofsuchsecurityorrightpledged.Inthecaseofaregisteredclearingagency,theproceduresbywhich,andtheexacttimeatwhich,suchbook‐entriesarecreatedshallbegovernedbytheregisteredclearingagency’srules.However,thecorporationshallnotbeboundbytheforegoingtransactionsunlessthecorporatesecretaryisdulynotifiedinsuchmannerastheCommissionmayprovide.

SEC.46.Issuer’sResponsibilityforWrongfulTransfertoRegisteredClearingAgency.‐Theregistrationofatransferofasecurityintothenameofandbyaregisteredclearingagencyoritsnomineeshallbefinalandconclusiveunlesstheclearingagencyhadnoticeofanadverseclaimbeforetheregistrationwasmade.Theaboveprovisionshallbewithoutprejudicetoanyrightswhichtheclaimantmayhaveagainsttheissuerforwrongfulregistrationinsuchcircumstances.

SEC.47.PoweroftheCommissionWithRespecttoSecuritiesOwnership.‐TheCommissionisauthorized,havingdueregardtothepublicinterestandtheprotectionofinvestors,topromulgaterulesandregulationswhich:

47.1.Validatethetransferofsecuritiesbybook‐entriesratherthanthedeliveryofphysicalcertificates;

47.2.Establishwhenapersonacquiresasecurityoraninterestthereinandwhendeliveryofasecuritytoapurchaseroccurs;

47.3.Establishwhichrecordsconstitutethebestevidenceofaperson’sinterestsinasecurityandtheeffectofanyerrorsinelectronicrecordsofownership;

47.4.Codifytherightsofinvestorswhochoosetoholdtheirsecuritiesindirectlythrougharegisteredclearingagencyand/orothersecuritiesintermediaries;

47.5.Codifythedutiesofsecuritiesintermediaries(includingclearingagencies)whoholdsecuritiesonbehalfofinvestors;and

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47.6.Givefirstprioritytoanyclaimsofaregisteredclearingagencyagainstaparticipantarisingfromafailurebytheparticipanttomeetitsobligationsundertheclearingagency’srulesinrespectoftheclearingandsettlementoftransactionsinsecurities,inadissolutionoftheparticipant,andanysuchrulesandregulationsshallbindtheissuersofthesecurities,investorsinthesecurities,anythirdpartieswithinterestsinthesecurities,andthecreditorsofaparticipantofaregisteredclearingagency.

CHAPTERXII

MarginandCredit

SEC.48.MarginRequirements.‐48.1.Forthepurposeofpreventingtheexcessiveuseofcreditforthepurchaseorcarryingofsecurities,theCommission,inaccordancewiththecreditandmonetarypoliciesthatmaybepromulgatedfromtimetotimebytheMonetaryBoardoftheBangkoSentralngPilipinas,shallprescriberulesandregulationswithrespecttotheamountofcreditthatmaybeextendedonanysecurity.Fortheextensionofcredit,suchrulesandregulationsshallbebaseduponthefollowingstandard:

Anamountnotgreaterthanwhicheveristhehigherof‐

(a)Sixty‐fivepercentum(65%)ofthecurrentmarketpriceofthesecurity;or

(b)Onehundredpercentum(100%)ofthelowestmarketpriceofthesecurityduringtheprecedingthirty‐six(36)calendarmonths,butnotmorethanseventy‐fivepercentum(75%)ofthecurrentmarketprice.

However,theMonetaryBoardmayincreaseordecreasetheabovepercentages,inordertoachievetheobjectivesoftheGovernmentwithdueregardforpromotionoftheeconomyandpreventionoftheuseofexcessivecredit.

Suchrulesandregulationsmaymakeappropriateprovisionwithrespecttothecarryingofundermarginedaccountsforlimitedperiodsandunderspecified

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conditions;thewithdrawaloffundsorsecurities;thetransferofaccountsfromonelendertoanother;specialordifferentmarginrequirementsfordelayeddeliveries,shortsales,arbitragetransactions,andsecuritiestowhichletter(b)ofthesecondparagraphofthissubsectiondoesnotapply;thebasesandthemethodstobeusedincalculatingloans,andmarginsandmarketprices;andsimilaradministrativeadjustmentsanddetails.

48.2.NomemberofanExchangeorbrokerordealershall,directlyorindirectly,extendormaintaincreditorarrangefortheextensionormaintenanceofcredittoorforanycustomer:

(a)OnanysecurityunlesssuchcreditisextendedandmaintainedinaccordancewiththerulesandregulationswhichtheCommissionshallprescribeunderthisSectionincludingrulessettingcreditinrelationtonetcapitalofsuchmember,brokerordealer;

(b)Withoutcollateraloronanycollateralotherthansecurities,except(i)tomaintainacreditinitiallyextendedinconformitywiththerulesandregulationsoftheCommission;and(ii)incaseswheretheextensionormaintenanceofcreditisnotforthepurposeofpurchasingorcarryingsecuritiesorofevadingorcircumventingtheprovisionsofparagraph(a)ofthissubsection.

48.3.AnypersonnotsubjecttoSubsection48.2hereofshallextendormaintaincreditorarrangefortheextensionormaintenanceofcreditforthepurposeofpurchasingorcarryinganysecurity,onlyinaccordancewithsuchrulesandregulationsastheCommissionshallprescribetopreventtheexcessiveuseofcreditforthepurchasingorcarryingofortradinginsecuritiesincircumventionoftheotherprovisionsofthisSection.Suchrulesandregulationsmayimposeuponallloansmadeforthepurposeofpurchasingorcarryingsecuritieslimitationssimilartothoseimposeduponmembers,brokers,ordealersbySubsection48.2andtherulesandregulationsthereunder.Thissubsectionandtherulesandregulationsthereundershallnotapply:(a)Toacreditextensionmadebyapersonnotintheordinarycourseofbusiness;(b)ToaloantoadealertoaidinthefinancingofthedistributionofsecuritiestocustomersnotthroughthemediumofanExchange;or(c)TosuchothercreditextensionastheCommissionshallexemptfromtheoperationofthissubsectionandtherulesandregulationsthereunderuponspecifiedtermsandconditionsorforstatedperiod.

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SEC.49.RestrictionsonBorrowingsbyMembers,Brokers,andDealers.‐Itshallbeunlawfulforanyregisteredbrokerordealer,ormemberofanExchange,directlyorindirectly:

49.1.Topermitintheordinarycourseofbusinessasabrokerordealerhisaggregateindebtednessincludingcustomers’creditbalances,toexceedsuchpercentageofthenetcapital(exclusiveoffixedassetsandvalueofExchangemembership)employedinthebusiness,butnotexceedinginanycasetwothousandpercentum(2,000%),astheCommissionmaybyrulesandregulationsprescribeasnecessaryorappropriateinthepublicinterestorfortheprotectionofinvestors.

49.2.Topledge,mortgage,orotherwiseencumberorarrangeforthepledge,mortgageorencumbranceofanysecuritycarriedfortheaccountofanycustomerundercircumstances:(a)Thatwillpermitthecomminglingofhissecurities,withouthiswrittenconsent,withthesecuritiesofanycustomer;(b)Thatwillpermitsuchsecuritiestobecommingledwiththesecuritiesofanypersonotherthanabonafidecustomer;or(c)Thatwillpermitsuchsecuritiestobepledged,mortgagedorencumbered,orsubjectedtoanylienorclaimofthepledgee,forasuminexcessoftheaggregateindebtednessofsuchcustomersinrespectofsuchsecurities.However,theCommission,havingdueregardtotheprotectionofinvestors,may,byrulesandregulations,allowcertaintransactionsthatmayotherwisebeprohibitedunderthissubsection.

49.3.TolendorarrangeforthelendingofanysecuritycarriedfortheaccountofanycustomerwithoutthewrittenconsentofsuchcustomerorincontraventionofsuchrulesandregulationsastheCommissionshallprescribe.

SEC.50.EnforcementofMarginRequirementsandRestrictionsonBorrowing.‐TopreventindirectviolationsofthemarginrequirementsunderSection48,thebrokerordealershallrequirethecustomerinnon‐margintransactionstopaythepriceofthesecuritypurchasedforhisaccountwithinsuchperiodastheCommissionmayprescribe,whichshallinnocaseexceedtheprescribedsettlementdate.Otherwise,thebrokershallsellthesecuritypurchasedstartingonthenexttradingdaybutnotbeyondten(10)tradingdaysfollowingthelastdayforthecustomertopaysuchpurchaseprice,unlesssuchsalecannotbeeffectedwithinsaidperiodforjustifiablereasons.Thesaleshallbewithoutprejudicetotherightofthebrokerordealertorecoveranydeficiencyfromthecustomer.TopreventindirectviolationoftherestrictionsonborrowingsunderSection49,thebrokershall,unlessotherwisedirectedbythecustomer,paythenetsalespriceofthesecuritiessoldforacustomerwithinthesameperiodasaboveprescribedbytheCommission:Provided,

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Thatthecustomershallberequiredtodelivertheinstrumentsevidencingthesecuritiesasaconditionforsuchpaymentupondemandbythebroker.

CHAPTERXIII

GeneralProvisions

SEC.51.LiabilitiesofControllingPersons,AiderandAbettorandOtherSecondaryLiability.–51.1.Everypersonwho,byorthroughstockownership,agency,orotherwise,orinconnectionwithanagreementorunderstandingwithoneormoreotherpersons,controlsanypersonliableunderthisCodeortherulesorregulationsoftheCommissionthereunder,shallalsobeliablejointlyandseverallywithandtothesameextentassuchcontrolledpersonstoanypersontowhomsuchcontrolledpersonisliable,unlessthecontrollingpersonprovesthat,despitetheexerciseofduediligenceonhispart,hehasnoknowledgeoftheexistenceofthefactsbyreasonofwhichtheliabilityofthecontrolledpersonisallegedtoexist.

51.2.Itshallbeunlawfulforanyperson,directlyorindirectly,todoanyactorthingwhichitwouldbeunlawfulforsuchpersontodoundertheprovisionsofthisCodeoranyruleorregulationthereunder.

51.3.Itshallbeunlawfulforanydirectororofficerof,oranyownerofanysecuritiesissuedby,anyissuerrequiredtofileanydocument,reportorotherinformationunderthisCodeoranyruleorregulationoftheCommissionthereunder,withoutjustcause,tohinder,delayorobstructthemakingorfilingofanysuchdocument,report,orinformation.

51.4.Itshallbeunlawfulforanypersontoaid,abet,counsel,command,induceorprocureanyviolationofthisCode,oranyrule,regulationororderoftheCommissionthereunder.

51.5.EverypersonwhosubstantiallyassiststheactoromissionofanypersonprimarilyliableunderSections57,58,59and60ofthisCode,withknowledgeorinrecklessdisregardthatsuchactoromissioniswrongful,shallbejointlyandseverallyliableasanaiderandabettorfordamagesresultingfromtheconductofthepersonprimarilyliable:Provided,however,Thatanaiderandabettorshallbe

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liableonlytotheextentofhisrelativecontributionincausingsuchdamagesincomparisontothatofthepersonprimarilyliable,ortheextenttowhichtheaiderandabettorwasunjustlyenrichedthereby,whicheverisgreater.

SEC.52.AccountsandRecords,Reports,ExaminationofExchanges,Members,andOthers.‐52.1.EveryregisteredExchange,brokerordealer,transferagent,clearingagency,securitiesassociation,andotherself‐regulatoryorganization,andeveryotherpersonrequiredtoregisterunderthisCode,shallmake,keepandpreserveforsuchperiods,records,furnishsuchcopiesthereof,andmakesuchreports,astheCommissionbyitsrulesandregulationsmayprescribe.Suchaccounts,correspondence,memoranda,papers,books,andotherrecordsshallbesubjectatanytimetosuchreasonableperiodic,specialorotherexaminationsbyrepresentativesoftheCommissionastheCommissionmaydeemnecessaryorappropriateinthepublicinterestorfortheprotectionofinvestors.

52.2.Anybroker,dealerorotherpersonextendingcredit,whoissubjecttotherulesandregulationsprescribedbytheCommissionpursuanttothisCode,shallmakesuchreportstotheCommissionasmaybenecessaryorappropriatetoenableittoperformthefunctionsconferreduponitbythisCode.

52.3.ForpurposesofthisSection,theterm“records”referstoaccounts,correspondence,memoranda,tapes,discs,papers,booksandotherdocumentsortranscribedinformationofanytype,whetherwrittenorelectronicincharacter.

SEC.53.Investigations,InjunctionsandProsecutionofOffenses.‐53.1.TheCommissionmay,initsdiscretion,makesuchinvestigationsasitdeemsnecessarytodeterminewhetheranypersonhasviolatedorisabouttoviolateanyprovisionofthisCode,anyrule,regulationororderthereunder,oranyruleofanExchange,registeredsecuritiesassociation,clearingagency,otherself‐regulatoryorganization,andmayrequireorpermitanypersontofilewithitastatementinwriting,underoathorotherwise,astheCommissionshalldetermine,astoallfactsandcircumstancesconcerningthemattertobeinvestigated.TheCommissionmaypublishinformationconcerninganysuchviolations,andtoinvestigateanyfact,condition,practiceormatterwhichitmaydeemnecessaryorpropertoaidintheenforcementoftheprovisionsofthisCode,intheprescribingofrulesandregulationsthereunder,orinsecuringinformationtoserveasabasisforrecommendingfurtherlegislationconcerningthematterstowhichthisCoderelates:Provided,however,Thatanypersonrequestedorsubpoenaedtoproducedocumentsortestifyinanyinvestigationshallsimultaneouslybenotifiedinwritingofthepurposeofsuchinvestigation:Provided,further,Thatallcriminalcomplaints

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forviolationsofthisCode,andtheimplementingrulesandregulationsenforcedoradministeredbytheCommissionshallbereferredtotheDepartmentofJusticeforpreliminaryinvestigationandprosecutionbeforethepropercourt:Provided,furthermore,Thatininstanceswherethelawallowsindependentcivilorcriminalproceedingsofviolationsarisingfromthesameact,theCommissionshalltakeappropriateactiontoimplementthesame:Provided,finally,Thattheinvestigation,prosecution,andtrialofsuchcasesshallbegivenpriority.

53.2.Forthepurposeofanysuchinvestigation,oranyotherproceedingunderthisCode,theCommissionoranyofficerdesignatedbyitisempoweredtoadministeroathsandaffirmations,subpoenawitnesses,compelattendance,takeevidence,requiretheproductionofanybook,paper,correspondence,memorandum,orotherrecordwhichtheCommissiondeemsrelevantormaterialtotheinquiry,andtoperformsuchotheractsnecessaryintheconductofsuchinvestigationorproceedings.

53.3.WheneveritshallappeartotheCommissionthatanypersonhasengagedorisabouttoengageinanyactorpracticeconstitutingaviolationofanyprovisionofthisCode,anyrule,regulationororderthereunder,oranyruleofanExchange,registeredsecuritiesassociation,clearingagencyorotherself‐regulatoryorganization,itmayissueanordertosuchpersontodesistfromcommittingsuchactorpractice:Provided,however,ThattheCommissionshallnotchargeanypersonwithviolationoftherulesofanExchangeorotherselfregulatoryorganizationunlessitappearstotheCommissionthatsuchExchangeorotherself‐regulatoryorganizationisunableorunwillingtotakeactionagainstsuchperson.Afterfindingthatsuchpersonhasengagedinanysuchactorpracticeandthatthereisareasonablelikelihoodofcontinuing,furtherorfutureviolationsbysuchperson,theCommissionmayissueex‐parteaceaseanddesistorderforamaximumperiodoften(10)days,enjoiningtheviolationandcompellingcompliancewithsuchprovision.TheCommissionmaytransmitsuchevidenceasmaybeavailableconcerninganyviolationofanyprovisionofthisCode,oranyrule,regulationororderthereunder,totheDepartmentofJustice,whichmayinstitutetheappropriatecriminalproceedingsunderthisCode.

53.4.Anypersonwho,withinhispowerbutwithoutcause,failsorrefusestocomplywithanylawfulorder,decisionorsubpoenaissuedbytheCommissionunderSubsection53.2orSubsection53.3orSection64ofthisCode,shallafterduenoticeandhearing,beguiltyofcontemptoftheCommission.SuchpersonshallbefinedinsuchreasonableamountastheCommissionmaydetermine,orwhensuchfailureorrefusalisaclearandopendefianceoftheCommission’sorder,decisionor

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subpoena,shallbedetainedunderanarrestorderissuedbytheCommission,untilsuchorder,decisionorsubpoenaiscompliedwith.

SEC.54.AdministrativeSanctions.‐54.1.If,afterduenoticeandhearing,theCommissionfindsthat:(a)ThereisaviolationofthisCode,itsrules,oritsorders;(b)Anyregisteredbrokerordealer,associatedpersonthereofhasfailedreasonablytosupervise,withaviewtopreventingviolations,anotherpersonsubjecttosupervisionwhocommitsanysuchviolation;(c)Anyregistrantorotherpersonhas,inaregistrationstatementorinotherreports,applications,accounts,recordsordocumentsrequiredbylaworrulestobefiledwiththeCommission,madeanyuntruestatementofamaterialfact,oromittedtostateanymaterialfactrequiredtobestatedthereinornecessarytomakethestatementsthereinnotmisleading;or,inthecaseofanunderwriter,hasfailedtoconductaninquirywithreasonablediligencetoinsurethataregistrationstatementisaccurateandcompleteinallmaterialrespects;or(d)Anypersonhasrefusedtopermitanylawfulexaminationsintoitsaffairs,itshall,initsdiscretion,andsubjectonlytothelimitationshereinafterprescribed,imposeanyorallofthefollowingsanctionsasmaybeappropriateinlightofthefactsandcircumstances:

(i)Suspension,orrevocationofanyregistrationfortheofferingofsecurities;

(ii)AfineofnolessthanTenthousandpesos(P10,000.00)normorethanOnemillionpesos(P1,000,000.00)plusnotmorethanTwothousandpesos(P2,000.00)foreachdayofcontinuingviolation;

(iii)InthecaseofaviolationofSections19.2,20,24,26and27,disqualificationfrombeinganofficer,memberoftheBoardofDirectors,orpersonperformingsimilarfunctions,ofanissuerrequiredtofilereportsunderSection17ofthisCodeoranyotheract,ruleorregulationadministeredbytheCommission;

(iv)InthecaseofaviolationofSection34,afineofnomorethanthree(3)timestheprofitgainedorlossavoidedasaresultofthepurchase,saleorcommunicationproscribedbysuchSection;and

(v)OtherpenaltieswithinthepoweroftheCommissiontoimpose.

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54.2.Theimpositionoftheforegoingadministrativesanctionsshallbewithoutprejudicetothefilingofcriminalchargesagainsttheindividualsresponsiblefortheviolation.

54.3.TheCommissionshallhavethepowertoissuewritsofexecutiontoenforcetheprovisionsofthisSectionandtoenforcepaymentofthefeesandotherduescollectibleunderthisCode.

SEC.55.SettlementOffers.–55.1.Atanytime,duringaninvestigationorproceedingunderthisCode,partiesbeinginvestigatedand/orchargedmayproposeinwritinganofferofsettlementwiththeCommission.

55.2.Uponreceiptofsuchofferofsettlement,theCommissionmayconsidertheofferbasedontiming,thenatureoftheinvestigationorproceeding,andthepublicinterest.

55.3.TheCommissionmayonlyagreetoasettlementofferbasedonitsfindingsthatsuchsettlementisinthepublicinterest.Anyagreementtosettleshallhavenolegaleffectuntilpubliclydisclosed.Suchdecisionmaybemadewithoutadeterminationofguiltonthepartofthepersonmakingtheoffer.

55.4.TheCommissionshalladoptrulesandproceduresgoverningthefiling,review,withdrawal,formofrejectionandacceptanceofsuchoffers.

SEC.56.CivilLiabilitiesonAccountofFalseRegistrationStatement.‐56.1.Anypersonacquiringasecurity,theregistrationstatementofwhichoranypartthereofcontainsonitseffectivityanuntruestatementofamaterialfactoromitstostateamaterialfactrequiredtobestatedthereinornecessarytomakesuchstatementsnotmisleading,andwhosuffersdamage,maysueandrecoverdamagesfromthefollowingenumeratedpersons,unlessitisprovedthatatthetimeofsuchacquisitionheknewofsuchuntruestatementoromission:

(a)Theissuerandeverypersonwhosignedtheregistrationstatement;

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(b)Everypersonwhowasadirectorof,oranyotherpersonperformingsimilarfunctions,orapartnerin,theissueratthetimeofthefilingoftheregistrationstatementoranypart,supplementoramendmentthereofwithrespecttowhichhisliabilityisasserted;

(c)Everypersonwhoisnamedintheregistrationstatementasbeingorabouttobecomeadirectorof,orapersonperformingsimilarfunctions,orapartnerin,theissuerandwhosewrittenconsenttheretoisfiledwiththeregistrationstatement;

(d)Everyauditororauditingfirmnamedashavingcertifiedanyfinancialstatementsusedinconnectionwiththeregistrationstatementorprospectus.

(e)Everypersonwho,withhiswrittenconsent,whichshallbefiledwiththeregistrationstatement,hasbeennamedashavingpreparedorcertifiedanypartoftheregistrationstatement,orashavingpreparedorcertifiedanyreportorvaluationwhichisusedinconnectionwiththeregistrationstatement,withrespecttothestatement,report,orvaluation,whichpurportstohavebeenpreparedorcertifiedbyhim.

(f)Everysellingshareholderwhocontributedtoandcertifiedastotheaccuracyofaportionoftheregistrationstatement,withrespecttothatportionoftheregistrationstatementwhichpurportstohavebeencontributedbyhim.

(g)Everyunderwriterwithrespecttosuchsecurity.

56.2.Ifthepersonwhoacquiredthesecuritydidsoaftertheissuerhasmadegenerallyavailabletoitssecurityholdersanincomestatementcoveringaperiodofatleasttwelvemonthsbeginningfromtheeffectivedateoftheregistrationstatement,thentherightofrecoveryunderthissubsectionshallbeconditionedonproofthatsuchpersonacquiredthesecurityrelyinguponsuchuntruestatementintheregistrationstatementorrelyingupontheregistrationstatementandnotknowingofsuchincomestatement,butsuchreliancemaybeestablishedwithoutproofofthereadingoftheregistrationstatementbysuchperson.

SEC.57.CivilLiabilitiesArisinginConnectionWithProspectus,CommunicationsandReports.‐57.1.Anypersonwho:

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(a)OfferstosellorsellsasecurityinviolationofChapterIII;or

(b)Offerstosellorsellsasecurity,whetherornotexemptedbytheprovisionsofthisCode,bytheuseofanymeansorinstrumentsoftransportationorcommunication,bymeansofaprospectusorotherwrittenororalcommunication,whichincludesanuntruestatementofamaterialfactoromitstostateamaterialfactnecessaryinordertomakethestatements,inthelightofthecircumstancesunderwhichtheyweremade,notmisleading(thepurchasernotknowingofsuchuntruthoromission),andwhoshallfailintheburdenofproofthathedidnotknow,andintheexerciseofreasonablecarecouldnothaveknown,ofsuchuntruthoromission,shallbeliabletothepersonpurchasingsuchsecurityfromhim,whomaysuetorecovertheconsiderationpaidforsuchsecuritywithinterestthereon,lesstheamountofanyincomereceivedthereon,uponthetenderofsuchsecurity,orfordamagesifhenolongerownsthesecurity.

57.2.Anypersonwhoshallmakeorcausetobemadeanystatementinanyreport,ordocumentfiledpursuanttothisCodeoranyruleorregulationthereunder,whichstatementwasatthetimeandinthelightofthecircumstancesunderwhichitwasmadefalseormisleadingwithrespecttoanymaterialfact,shallbeliabletoanypersonwho,notknowingthatsuchstatementwasfalseormisleading,andrelyinguponsuchstatementsshallhavepurchasedorsoldasecurityatapricewhichwasaffectedbysuchstatement,fordamagescausedbysuchreliance,unlessthepersonsuedshallprovethatheactedingoodfaithandhadnoknowledgethatsuchstatementwasfalseormisleading.

SEC.58.CivilLiabilityForFraudinConnectionWithSecuritiesTransactions.‐AnypersonwhoengagesinanyactortransactioninviolationofSections19.2,20or26,oranyruleorregulationoftheCommissionthereunder,shallbeliabletoanyotherpersonwhopurchasesorsellsanysecurity,grantsorrefusestograntanyproxy,consentorauthorization,oracceptsordeclinesaninvitationfortenderofasecurity,asthecasemaybe,forthedamagessustainedbysuchotherpersonasaresultofsuchactortransaction.

SEC.59.CivilLiabilityForManipulationofSecurityPrices.‐AnypersonwhowillfullyparticipatesinanyactortransactioninviolationofSection24shallbeliabletoanypersonwhoshallpurchaseorsellanysecurityatapricewhichwasaffectedbysuchactortransaction,andthepersonsoinjuredmaysuetorecoverthedamagessustainedasaresultofsuchactortransaction.

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SEC.60.CivilLiabilityWithRespecttoCommodityFuturesContractsandPre‐needPlans.‐60.1.AnypersonwhoengagesinanyactortransactioninwillfulviolationofanyruleorregulationpromulgatedbytheCommissionunderSection11or16,whichtheCommissiondenominatesatthetimeofissuanceasintendedtoprohibitfraudintheofferandsaleofpre‐needplansortoprohibitfraud,manipulation,fictitioustransactions,unduespeculation,orotherunfairorabusivepracticeswithrespecttocommodityfuturecontracts,shallbeliabletoanyotherpersonsustainingdamageasaresultofsuchactortransaction.

60.2.Astoeachsuchruleorregulationsodenominated,theCommissionbyruleshallprescribetheelementsofproofrequiredforrecoveryandanylimitationsontheamountofdamagesthatmaybeimposed.

SEC.61.CivilLiabilityonAccountofInsiderTrading.‐61.1.AnyinsiderwhoviolatesSubsection27.1andanypersoninthecaseofatenderofferwhoviolatesSubsection27.4(a)(i),oranyruleorregulationthereunder,bypurchasingorsellingasecuritywhileinpossessionofmaterialinformationnotgenerallyavailabletothepublic,shallbeliableinasuitbroughtbyanyinvestorwho,contemporaneouslywiththepurchaseorsaleofsecuritiesthatisthesubjectoftheviolation,purchasedorsoldsecuritiesofthesameclassunlesssuchinsider,orsuchpersoninthecaseofatenderoffer,provesthatsuchinvestorknewtheinformationorwouldhavepurchasedorsoldatthesamepriceregardlessofdisclosureoftheinformationtohim.

61.2.AninsiderwhoviolatesSubsection27.3oranypersoninthecaseofatenderofferwhoviolatesSubsection27.4(a),oranyruleorregulationthereunder,bycommunicatingmaterialnon‐publicinformation,shallbejointlyandseverallyliableunderSubsection61.1with,andtothesameextentas,theinsider,orpersoninthecaseofatenderoffer,towhomthecommunicationwasdirectedandwhoisliableunderSubsection61.1byreasonofhispurchaseorsaleofasecurity.

SEC.62.LimitationofActions.‐62.1.NoactionshallbemaintainedtoenforceanyliabilitycreatedunderSection56or57ofthisCodeunlessbroughtwithintwo(2)yearsafterthediscoveryoftheuntruestatementortheomission,or,iftheactionistoenforcealiabilitycreatedunderSubsection57.1(a),unlessbroughtwithintwo(2)yearsaftertheviolationuponwhichitisbased.InnoeventshallanysuchactionbebroughttoenforcealiabilitycreatedunderSection56orSubsection57.1(a)

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morethanfive(5)yearsafterthesecuritywasbonafideofferedtothepublic,orunderSubsection57.1(b)morethanfive(5)yearsafterthesale.

62.2.NoactionshallbemaintainedtoenforceanyliabilitycreatedunderanyotherprovisionofthisCodeunlessbroughtwithintwo(2)yearsafterthediscoveryofthefactsconstitutingthecauseofactionandwithinfive(5)yearsaftersuchcauseofactionaccrued.

SEC.63.AmountofDamagestobeAwarded.‐63.1.AllsuitstorecoverdamagespursuanttoSections56,57,58,59,60and61shallbebroughtbeforetheRegionalTrialCourt,whichshallhaveexclusivejurisdictiontohearanddecidesuchsuits.TheCourtisherebyauthorizedtoawarddamagesinanamountnotexceedingtripletheamountofthetransactionplusactualdamages.

Exemplarydamagesmayalsobeawardedincasesofbadfaith,fraud,malevolenceorwantonnessintheviolationofthisCodeortherulesandregulationspromulgatedthereunder.

TheCourtisalsoauthorizedtoawardattorney’sfeesnotexceedingthirtypercentum(30%)oftheaward.

63.2.ThepersonsspecifiedinSections56,57,58,59,60and61hereofshallbejointlyandseverallyliableforthepaymentofdamages.However,anypersonwhobecomesliableforthepaymentofsuchdamagesmayrecovercontributionfromanyotherpersonwho,ifsuedseparately,wouldhavebeenliabletomakethesamepayment,unlesstheformerwasguiltyoffraudulentrepresentationandthelatterwasnot.

63.3.Notwithstandinganyprovisionoflawtothecontrary,allpersons,includingtheissuer,heldliableundertheprovisionsofSections56,57,58,59,60and61shallcontributeequallytothetotalliabilityadjudgedherein.Innocaseshalltheprincipalstockholders,directorsandotherofficersoftheissuerorpersonsoccupyingsimilarpositionstherein,recovertheircontributiontotheliabilityfromtheissuer.However,therightoftheissuertorecoverfromtheguiltypartiestheamountithascontributedunderthisSectionshallnotbeprejudiced.

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SEC.64.CeaseandDesistOrder.–64.1.TheCommission,afterproperinvestigationorverification,motuproprio,oruponverifiedcomplaintbyanyaggrievedparty,mayissueaceaseanddesistorderwithoutthenecessityofapriorhearingifinitsjudgmenttheactorpractice,unlessrestrained,willoperateasafraudoninvestorsorisotherwiselikelytocausegraveorirreparableinjuryorprejudicetotheinvestingpublic.

64.2.UntiltheCommissionissuesaceaseanddesistorder,thefactthataninvestigationhasbeeninitiatedorthatacomplainthasbeenfiled,includingthecontentsofthecomplaint,shallbeconfidential.Uponissuanceofaceaseanddesistorder,theCommissionshallmakepublicsuchorderandacopythereofshallbeimmediatelyfurnishedtoeachpersonsubjecttotheorder.

64.3.Anypersonagainstwhomaceaseanddesistorderwasissuedmay,withinfive(5)daysfromreceiptoftheorder,fileaformalrequestforaliftingthereof.SaidrequestshallbesetforhearingbytheCommissionnotlaterthanfifteen(15)daysfromitsfilingandtheresolutionthereofshallbemadenotlaterthanten(10)daysfromtheterminationofthehearing.IftheCommissionfailstoresolvetherequestwithinthetimehereinprescribed,theceaseanddesistordershallautomaticallybelifted.

SEC.65.SubstitutedServiceUpontheCommission.‐ServiceofsummonsorotherprocessshallbemadeupontheCommissioninactionsorlegalproceedingsagainstanissueroranypersonliableunderthisCodewhoisnotdomiciledinthePhilippines.UponreceiptbytheCommissionofsuchsummons,theCommissionshallwithinten(10)daysthereafter,transmitbyregisteredmailacopyofsuchsummonsandthecomplaintorotherlegalprocesstosuchissuerorpersonathislastknownaddressorprincipaloffice.ThesendingthereofbytheCommission,theexpensesforwhichshallbeadvancedbythepartyatwhoseinstanceitismade,shallcompletesuchservice.

SEC.66.RevelationofInformationFiledwiththeCommission.–66.1.AllinformationfiledwiththeCommissionincompliancewiththerequirementsofthisCodeshallbemadeavailabletoanymemberofthegeneralpublic,uponrequest,inthepremisesandduringregularofficehoursoftheCommission,exceptassetforthinthisSection.

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66.2.NothinginthisCodeshallbeconstruedtorequire,ortoauthorizetheCommissiontorequire,therevealingoftradesecretsorprocessesinanyapplication,report,ordocumentfiledwiththeCommission.

66.3.Anypersonfilinganysuchapplication,reportordocumentmaymakewrittenobjectiontothepublicdisclosureofinformationcontainedtherein,statingthegroundsforsuchobjection,andtheCommissionmayhearobjectionsasitdeemsnecessary.TheCommissionmay,insuchcases,makeavailabletothepublictheinformationcontainedinanysuchapplication,report,ordocumentonlywhenadisclosureofsuchinformationisrequiredinthepublicinterestorfortheprotectionofinvestors;andcopiesofinformationsomadeavailablemaybefurnishedtoanypersonhavingalegitimateinterestthereinatsuchreasonablechargeandundersuchreasonablelimitationsastheCommissionmayprescribe.

66.4.Itshallbeunlawfulforanymember,officer,oremployeeoftheCommissiontodisclosetoanypersonotherthanamember,officeroremployeeoftheCommissionortouseforpersonalbenefit,anyinformationcontainedinanyapplication,report,ordocumentfiledwiththeCommissionwhichisnotmadeavailabletothepublicpursuanttoSubsection66.3.

66.5.NotwithstandinganythinginSubsection66.4tothecontrary,onrequestfromaforeignenforcementauthorityofanycountrywhoselawsgrantreciprocalassistanceashereinprovided,theCommissionmayprovideassistanceinaccordancewiththissubsection,includingthedisclosureofanyinformationfiledwithortransmittedtotheCommission,iftherequestingauthoritystatesthatitisconductinganinvestigationwhichitdeemsnecessarytodeterminewhetheranypersonhasviolated,isviolating,orisabouttoviolateanylawsrelatingtosecuritiesorcommoditiesmattersthattherequestingauthorityadministersorenforces.SuchassistancemaybeprovidedwithoutregardtowhetherthefactsstatedintherequestwouldalsoconstituteaviolationoflawofthePhilippines.

SEC.67.EffectofActionofCommissionandUnlawfulRepresentationswithRespectThereto.‐67.1.NoactionorfailuretoactbytheCommissionintheadministrationofthisCodeshallbeconstruedtomeanthattheCommissionhasinanywaypasseduponthemeritsoforgivenapprovaltoanysecurityoranytransactionortransactionstherein,norshallsuchactionorfailuretoactwithregardtoanystatementorreportfiledwithorexaminedbytheCommissionpursuanttothisCodeortherulesandregulationsthereundertobedeemedafindingbytheCommissionthatsuchstatementsorreportistrueandaccurateonitsfaceorthatitisnotfalseormisleading.Itshallbeunlawfultomake,orcausetobemade,toanyprospective

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purchaserorsellerofasecurityanyrepresentationthatanysuchactionorfailuretoactbytheCommissionistobesoconstruedorhassucheffect.

67.2.NothingcontainedinSubsection67.1shall,however,beconstruedasanexemptionfromliabilityofanemployeeorofficeroftheCommissionforanynonfeasance,misfeasanceormalfeasanceinthedischargeofhisofficialduties.

SEC.68.SpecialAccountingRules.–TheCommissionshallhavetheauthoritytomake,amend,andrescindsuchaccountingrulesandregulationsasmaybenecessarytocarryouttheprovisionsofthisCode,includingrulesandregulationsgoverningregistrationstatementsandprospectusesforvariousclassesofsecuritiesandissuers,anddefiningaccounting,technicalandtradetermsusedinthisCode.Amongotherthings,theCommissionmayprescribetheformorformsinwhichrequiredinformationshallbesetforth,theitemsordetailstobeshowninthebalancesheetandincomestatement,andthemethodstobefollowedinthepreparationofaccounts,appraisalorvaluationofassetsandliabilities,determinationofdepreciationanddepletion,differentiationofrecurringandnon‐recurringincome,differentiationofinvestmentandoperatingincome,andinthepreparation,wheretheCommissiondeemsitnecessaryordesirable,ofconsolidatedbalancesheetsorincomeaccountsofanypersondirectlyorindirectlycontrollingorcontrolledbytheissuer,oranypersonunderdirectorindirectcommoncontrolwith,theissuer.

SEC.69.EffectonExistingLaw.‐TherightsandremediesprovidedbythisCodeshallbeinadditiontoanyandallotherrightsandremediesthatmaynowexist.However,exceptasprovidedinSections56and63hereof,nopersonpermittedtomaintainasuitfordamagesundertheprovisionsofthisCodeshallrecover,throughsatisfactionofjudgmentinoneormoreactions,atotalamountinexcessofhisactualdamagesonaccountoftheactcomplainedof:Provided,Thatexemplarydamagesmaybeawardedincasesofbadfaith,fraud,malevolenceorwantonnessintheviolationofthisCodeortherulesandregulationspromulgatedthereunder.

SEC.70.JudicialReviewofCommissionOrders.‐AnypersonaggrievedbyanorderoftheCommissionmayappealtheordertotheCourtofAppealsbypetitionforreviewinaccordancewiththepertinentprovisionsoftheRulesofCourt.

SEC.71.ValidityofContracts.‐71.1.Anycondition,stipulation,provisionbindinganypersontowaivecompliancewithanyprovisionofthisCodeorofanyruleor

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regulationthereunder,orofanyruleofanExchangerequiredthereby,aswellasthewaiveritself,shallbevoid.

71.2.EverycontractmadeinviolationofanyprovisionofthisCodeorofanyruleorregulationthereunder,andeverycontract,includinganycontractforlistingasecurityonanExchangeheretoforeorhereaftermade,theperformanceofwhichinvolvestheviolationof,orthecontinuanceofanyrelationshiporpracticeinviolationof,anyprovisionofthisCode,oranyruleorregulationthereunder,shallbevoid:

(a)Asregardstherightsofanypersonwho,inviolationofanysuchprovision,ruleorregulation,shallhavemadeorengagedintheperformanceofanysuchcontract;and

(b)Asregardstherightsofanypersonwho,notbeingapartytosuchcontract,shallhaveacquiredanyrightthereunderwithactualknowledgeofthefactsbyreasonofwhichthemakingorperformanceofsuchcontractwasinviolationofanysuchprovision,ruleorregulation.

71.3.NothinginthisCodeshallbeconstrued:

(a)ToaffectthevalidityofanyloanorextensionofcreditmadeorofanyliencreatedpriororsubsequenttotheeffectivityofthisCode,unlessatthetimeofthemakingofsuchloanorextensionofcreditorthecreatingofsuchlien,thepersonmakingsuchloanorextensionofcreditoracquiringsuchlienshallhaveactualknowledgeofthefactsbyreasonofwhichthemakingofsuchloanorextensionofcreditortheacquisitionofsuchlienisaviolationoftheprovisionsofthisCodeoranyrulesorregulationsthereunder;or

(b)Toaffordadefensetothecollectionofanydebt,obligationortheenforcementofanylienbyanypersonwhoshallhaveacquiredsuchdebt,obligationorlieningoodfaith,forvalueandwithoutactualknowledgeoftheviolationofanyprovisionofthisCodeoranyruleorregulationthereunderaffectingthelegalityofsuchdebt,obligationorlien.

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SEC.72.RulesandRegulations;Effectivity.‐72.1.ThisCodeshallbeself‐executory.ToeffecttheprovisionsandpurposesofthisCode,theCommissionmayissue,amend,andrescindsuchrulesandregulationsandordersnecessaryorappropriate,includingrulesandregulationsdefiningaccounting,technical,andtradetermsusedinthisCode,andprescribingtheformorformsinwhichinformationrequiredinregistrationstatements,applications,andreportstotheCommissionshallbesetforth.Forpurposesofitsrulesorregulations,theCommissionmayclassifypersons,securities,andothermatterswithinitsjurisdiction,prescribedifferentrequirementsfordifferentclassesofpersons,securities,ormatters,andbyruleororder,conditionallyorunconditionallyexemptanyperson,security,ortransaction,orclassorclassesofpersons,securitiesortransactions,fromanyorallprovisionsofthisCode.

FailureonthepartoftheCommissiontoissuerulesandregulationsshallnotinanymanneraffecttheself‐executorynatureofthisCode.

72.2.TheCommissionshallpromulgaterulesandregulationsprovidingforreporting,disclosureandthepreventionoffraudulent,deceptiveormanipulativepracticesinconnectionwiththepurchasebyanissuer,bytenderofferorotherwise,ofandequitysecurityofaclassissuedbyitthatsatisfiestherequirementsofSubsection17.2.Suchrulesandregulationsmayrequiresuchissuertoprovideholdersofequitysecuritiesofsuchdateswithsuchinformationrelatingtothereasonsforsuchpurchase,thesourceoffunds,thenumberofsharestobepurchased,thepricetobepaidforsuchsecurities,themethodofpurchaseandsuchadditionalinformationastheCommissiondeemsnecessaryorappropriateinthepublicinterestorfortheprotectionofinvestors,orwhichtheCommissiondeemstobematerialtoadeterminationbyholderswhethersuchsecurityshouldbesold.

72.3.ForthepurposeofSubsection72.2,apurchasebyorfortheissueroranypersoncontrolling,controlledby,orundercommoncontrolwiththeissuer,orapurchasesubjecttothecontroloftheissueroranysuchperson,shallbedeemedtobeapurchasedbytheissuer.TheCommissionshallhavethepowertomakerulesandregulationsimplementingthissubsection,includingexemptiverulesandregulationscoveringsituationsinwhichtheCommissiondeemsitunnecessaryorinappropriatethatapurchaseofthetypedescribedinthissubsectionshallbedeemedtobeapurchasebytheissuerforthepurposeofsomeoralloftheprovisionsofSubsection72.2.

72.4.TherulesandregulationspromulgatedbytheCommissionshallbepublishedintwo(2)newspapersofgeneralcirculationinthePhilippines,andunless

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otherwiseprescribedbytheCommission,thesameshallbeeffectivefifteen(15)daysafterthedateofthelastpublication.

SEC.73.Penalties.‐AnypersonwhoviolatesanyoftheprovisionsofthisCode,ortherulesandregulationspromulgatedbytheCommissionunderauthoritythereof,oranypersonwho,inaregistrationstatementfiledunderthisCode,makesanyuntruestatementofamaterialfactoromitstostateanymaterialfactrequiredtobestatedthereinornecessarytomakethestatementsthereinnotmisleading,shall,uponconviction,sufferafineofnotlessthanFiftythousandpesos(P50,000.00)normorethanFivemillionpesos(P5,000,000.00)orimprisonmentofnotlessthanseven(7)yearsnormorethantwenty‐one(21)years,orbothinthediscretionofthecourt.Iftheoffenderisacorporation,partnershiporassociationorotherjuridicalentity,thepenaltymayinthediscretionofthecourtbeimposeduponsuchjuridicalentityandupontheofficerorofficersofthecorporation,partnership,associationorentityresponsiblefortheviolation,andifsuchofficerisanalien,heshallinadditiontothepenaltiesprescribed,bedeportedwithoutfurtherproceedingsafterserviceofsentence.

SEC.74.TransitoryProvisions.‐TheCommission,asorganizedunderexistinglaws,shallcontinuetoexistandexerciseitspowers,functionsanddutiesundersuchlawsandthisCode:Provided,Thatuntilotherwisemandatedbyasubsequentlaw,theCommissionshallcontinuetoregulateandsupervisecommodityfuturescontractsasprovidedinSection11andpre‐needplansandthepre‐needindustryasprovidedinSection16ofthisCode.

AllfurtherrequirementshereinshallbecompliedwithuponapprovalofthisCode:Provided,however,ThatcompliancemaybedeferredforsuchreasonabletimeastheCommissionmaydeterminebutnottoexceedone(1)yearfromapprovalofthisCode:Provided,further,ThatsecuritieswhicharebeingofferedatthetimeofeffectivityofthisCodepursuanttoaneffectiveregistrationandpermit,maycontinuetobeofferedandsoldinaccordancewiththeprovisionsoftheRevisedSecuritiesActineffectimmediatelypriortoapprovalofthisCode.

Allunexpendedfundsforthecalendaryear,properties,equipmentandrecordsoftheSecuritiesandExchangeCommissionareherebyretainedbytheCommissionasreorganizedunderthisCodeandtheamountofTwohundredmillion(P200,000,000.00)orsuchamountnecessarytocarryoutthereorganizationprovidedinthisCodeisherebyappropriated.

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AllemployeesoftheCommissionwhovoluntarilyretireorareseparatedfromtheservicewiththeCommissionandwhoseretirementorseparationhasbeenapprovedbytheCommission,shallbepaidretirementorseparationbenefitsandotherentitlementsgrantedunderexistinglaws.

SEC.75.PartialUseOfIncome.‐TocarryoutthepurposesofthisCode,theCommissionisherebyauthorized,inadditiontoitsannualbudget,toretainandutilizeanamountequaltoonehundredmillionpesos(P100,000,000.00)fromitsincome.

Theuseofsuchadditionalamountshallbesubjecttotheauditingrequirements,standardsandproceduresunderexistinglaws.

SEC.76.RepealingClause.‐TheRevisedSecuritiesAct(BatasPambansaBlg.178),asamended,initsentirety,andSections2,4and8ofPresidentialDecree902‐Aasamended,areherebyrepealed.Allotherlaws,orders,rulesandregulations,orpartsthereof,inconsistentwithanyprovisionofthisCodeareherebyrepealedormodifiedaccordingly.

SEC.77.SeparabilityClause.‐IfanyportionorprovisionofthisCodeisdeclaredunconstitutionalorinvalid,theotherportionsorprovisionshereof,whicharenotaffectedtherebyshallcontinueinfullforceandeffect.

SEC.78.Effectivity.‐ThisCodeshalltakeeffectfifteen(15)daysafteritspublicationintheOfficialGazetteorintwo(2)newspapersofgeneralcirculation.

Approved:July19,2000

JOSEPHE.ESTRADA

PresidentofthePhilippines