SEC establishes rules for investment firms to qualify for cross-border transactions


SECURITIES and Exchange Commission (SEC) issued guidelines on Tuesday to enable qualiIfe investment Ifrms in the philippines at offer and invest in stocks through the ASEAN Collective Investment Schemes (CIS) framework.

“The rules apply to investment companies incorporated in the Philippines that intend to participate in the framework, as well as foreign IRCs from member jurisdictions that offer to sell units in the Philippines or other eligible CIS as permitted under the ASEAN CIS framework,” the corporate regulator said in a statement.

In May, the SEC signed a supplementary memorandum of understanding with its counterparts in Malaysia (Securities Commission Malaysia), Singapore (Monetary Authority of Singapore) and Thailand (SEC Thailand) to join the framework.

As one of the initiatives of the ASEAN Capital Markets Forum (ACMF), this enables fund managers in member jurisdictions to offinvestments such as trust funds or mutual funds to retail investors in other countries of the Association of Southeast Asian Nations (ASEAN).

According to SEC Memorandum Circular No. 9, Series of 2021, to participate in the framework, firms must comply with local guidelines and ACMF standards for CIS qualification.

“In cases where two sets of requirements diffuh on a particular provision, the more stringent requirement must be followed and prominently displayed as such in the fund’s prospectus,” the SEC said.

Philippine investment companies and their fund managers may offer shares to other members of the ASEAN CIS framework if they are incorporated in the Philippines and are authorized to issue shares to the public under the Companies Act. Investment (ICA) and the Securities Regulation Code (SRC).

Investment Ifrms offStocks and shares can still participate in the framework, however, only stocks can be offfor cross-border transactions.

The commission will assess whether the investment company is suitable to be an eligible UCI. The review process will be completed within 21 business days of submission of complete documents.

“The shares of eligible UCIs must be concurrentlyffin the Philippines and in member jurisdictions,” the SEC said in the circular.

Meanwhile, a foreign SIC can be offered in the Philippines if it is incorporated in a member jurisdiction and is authorized to offer actions to the public in its home jurisdiction. It should also be considered as an eligible UCI by its home regulator.

The foreign CIS must be recognized by the SEC and must obtain permission to be offered in the country.

“A local representative and distributor(s) in the Philippines must be appointed for each overseas IEC that is to be offmarketed, marketed and distributed in the Philippines,” the SEC said.

Guidelines for IEC foreign representative and distributors are also included. A single entity can take on both roles, provided it has the necessary requirements.

Foreign mutual funds will have to comply with the disclosure requirements of the SEC. Therefore, the local representative will act on behalf of the foreign CIS and its operator, assuming responsibilities such as filing and maintaining reports and documents.

“The applicable provisions of the SRC, the LIC and their implementing regulations with respect to civil and/or criminal liability apply in the event of a violation relating to the offforeign CIS in the Philippines,” the SEC said. — KCG Valmonte


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