SEC Sets Rules For Investment Firms To Qualify For Cross-Border Transactions


SECURITIES and Exchange Com(SEC) on Tuesday issued guidelines to allow qualiFied investment Firms in the Philippines to offer and invest in equities through the framework of collective investment undertakings (CIS) of ASEAN.

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

In May, the SEC signed an additional 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 from member jurisdictions to offer investments such as trust funds or mutual funds to retail investors in other countries of the Association of Southeast Asian Nations (ASEAN).

According to the SEC Memorandum Circular No. 9, Series of 2021, to participate in the framework, companies must comply with local guidelines and ACMF standards for qualifying mutual funds.

“In cases where two sets of requirements diffwith regard to a particular provision, the more stringent requirement must be followed and highlighted as such in the prospectus of the fund, ”the SEC said.

Philippine investment firms 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 Code (ICA) and the Securities Regulatory Code (SRC). .

Investment Firms offStocks and shares can still participate in the frame, 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 the qualified UCI must be simultaneously offin the Philippines and in member jurisdictions, ”the SEC said in the circular memorandum.

During this time, a foreign mutual fund may be offered in the Philippines if it is incorporated in a member jurisdiction and is authorized to offst actions to the public in its jurisdiction of origin. It should also be considered as an eligible UCI by its supervisory authority.

The foreign CIS must be recognized by the SEC and must obtain authorization to be proposed in the country.

“A local representative and one or more distributors in the Philippines must be appointed for each foreign SEI that must be offered, marketed and distributed in the Philippines, ”the SEC said.

Instructions for the CIS representative and overseas distributors are also included. A single entity can assume both roles, provided that it has the necessary requirements.

The foreign mutual fund 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 keeping reports and documents.

“The applicable provisions of the CRS, the ICA and their implementing rules and regulations on civil and / or criminal liability shall apply in the event of a violation relating to the offfrom the foreign CIS to the Philippines, ”the SEC said. – KCG Valmonte


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