ArticlesSEC and PSE Updates February 2023

SEC UPDATES

 

1. Subject: Guidelines on Arbitration of Intra-Corporate Dispute for Corporations
   SEC MC. No. 8, S. 2022
   Date Issued: 19 December 2022
   Link: https://www.sec.gov.ph/mc-2022/mc-no-08-s-of-2022/#gsc.tab=0

   The SEC issued this Memorandum Circular providing guidelines to the arbitration of intra-corporate disputes for Philippine corporations.

   An Arbitration Agreement (“Agreement”) may either be included in the articles of incorporation (“AOI”) or by-laws of a domestic corporation or may be stipulated in a separate agreement.

   The Agreement must contain the following: (1) the number of arbitrators (e.g., one or three); (2) the designated independent third party who shall appoint the arbitrator or arbitrators; (3) the procedure for the appoint of the arbitrator or arbitrators; and (4) the period within which the arbitrator or arbitrators should be appointed by the designated independent third party. Absence of any of the foregoing shall render the Agreement unenforceable, and arbitration shall proceed under the Alternative Dispute Resolution (ADR) Act and its implementing rules and regulations if the seat or place of arbitration is in the Philippines, or under the relevant arbitration law if the seat or place of arbitration is outside the Philippines.

   When an intra-corporate dispute is filed with a Regional Trial Court (“court”) and the court, before the termination of the pre-trial conference, determines that an Agreement is written in the corporation’s AOI, by-laws, or in a separate agreement, shall act in accordance with such rules of procedure the Supreme Court (“SC”) may promulgate to implement in Section 181 of the Revised Corporation Code (“RCC”).

   Final arbitral award under Sec. 181 of the RCC shall be considered as a commercial arbitration award and shall be executed in accordance with the rules of procedure promulgated by the SC to implement Sec. 181 of the RCC.

2. Subject: 2023 Filing of Annual Financial Statement and General Information Sheet SEC MC. No. 9, S. 2022
   Date Issued: 06 December 2022
   Link: https://www.sec.gov.ph/mc-2022/mc-no-09-s-of-2022/#gsc.tab=0

   The SEC issued this Memorandum Circular providing guidelines for the filing of annual reports with the SEC.

   The SEC reminds corporations whose fiscal year ended on 31 December 2022 to file their Audited Financial Statements (“AFS”) through the SEC Electronic Filing and Submission Tool (eFAST) in accordance with the schedule provided by the Circular.

   The Circular also mandates corporations to file their General Information Sheets (GIS) through the eFAST within 30 calendar days from the date of actual annual stockholders’ and members’ meeting, for stock and non-stock corporations, respectively, and from the anniversary date of the issuance of their respective SEC licenses, in cases of foreign corporations.

   All corporations, both stock and nonstock, are required to file all other reports and reportorial requirements through the eFAST, which may be accessed at https://cifss-ost.sec.gov.ph/ .

3. Subject: Amendments to SEC Memorandum Circular No. 15, s. 2019 (The 2019 Revision of the GIS) Increasing the Penalties and Imposing Additional Non-Financial Penalties and Providing Further Guidelines for Submission
   SEC MC. No. 10, S. 2022
   Date Issued: 06 December 2022
   Link: https://www.sec.gov.ph/mc-aml/sec-mc-no-10-series-of-2022/#gsc.tab=0

   The SEC increased the imposable penalties for failure to disclose or making a false declaration on any information pertaining to the beneficial ownership of a Corporation.

   Aside from imposing penalties on the Corporation, the SEC may impose penalties on its directors/trustees and/or officers if, after due notice and hearing, the SEC determines that they failed to exercise the due diligence required in ensuring compliance with the requirement to disclose beneficial ownership information.

   The SEC may also impose the penalty of suspension or revocation of the certificate of incorporation of the reporting corporation along with other penalties that are within its power to impose.

4. Subject: Rules on Sustainable and Responsible Investment Funds
   SEC MC. N0. 11, S. 2022
   Date Issued: 20 December 2022
   Link: https://www.sec.gov.ph/mc-2022/sec-mc-no-11-series-of-2022rules-on-sustainable-and-responsible-investment-funds/#gsc.tab=0

   This Circular contains guidelines on the requisite disclosures and reporting of investment companies classified as Sustainable and Responsible Investment (SRI) Funds and their Fund Managers. The Prospectus or Sub-Fund Supplement (in case of an umbrella fund) and Product Highlight Sheet of an SRI Fund must contain the following information:

   1. Name of Fund;
   2. Notification to the public on the qualification as SRI Fund;
   3. Key ESG Investment(s) or focus;
   4. ESG Criteria and Investment Selection Process;
   5. Asset Allocation;
   6. Reference Benchmarks and Indices;
   7. Sustainable Investment Strategy;
   8. Sustainable Investment Strategy-related risks;
   9. Steps to ensure that the SRI Fund’s overall impact is aligned with other ESG factors;
   10. Assessment methodologies to measure and monitor attainment of sustainable investment objective;
   11. Stewardship Policies;
   12. Policies and procedures on breach of ESG Investment Threshold or Inconsistency with the sustainable investment objective; and
   13. Any other information relating to the other initiatives or activities of the SRI Fund to promote adherence to internationally recognized sustainability standards and practices for any additional information considered necessary by the SRI Funds and its Fund Manager.

   Investment companies must also provide the following information in the annual reports of an SRI Fund:

   1. Confirmation of compliance with SRI Rules;
   2. Description on how the SRI Fund has attained its sustainable investment objective during the reporting period;
   3. Description of the basis of assessment; and
   4. Comparison of periodic assessment.

PSE UPDATES

 

1. Subject: Revised Rules on Backdoor Listing
   CN No. 2022-0024
   Date Issued: 26 May 2022
   Link: https://documents.pse.com.ph/CircularOPSPDF/CN-2022-0024.pdf

   The PSE released its Revised Rules on Backdoor Listing which shall took effect immediately pursuant to SRC Rule 40.3.2.

   Backdoor listing is deemed to occur if the following elements are present:

   1. The listed company, directly or indirectly, acquires the shares or assets of an unlisted company or person or group of persons or vice versa; and
   2. Such transaction or series of transactions results or will result in:
      1. change in control or de facto control of the list company; and/or
      2. A substantial change in the business of the listed company

   Shares acquired pursuant to the transaction giving rise to backdoor listing shall be locked up from closing or completion of the transaction until six (6) months after the conduct of the public offering.

   Shares held by stockholders owing at least ten percent (10%) of the total issued and outstanding shares shall be locked up for one (1) year from closing or completion of the transaction giving rise to backdoor listing.

2. Subject: Revised Rules on Backdoor Listing
   CN No. 2022-0026
   Date Issued: 22 June 2022
   Link: https://documents.pse.com.ph/CircularOPSPDF/CN-2022-0026.pdf

   The Circular further amends the Revised Rules on Backdoor Listing as follows:

   Sec. 12. Non-applicability of Backdoor Listing – Backdoor listing shall not be allowed as a mode of compliance with any law or rule requiring a company to conduct a public offering or to list in the Exchange unless such law or regulation says otherwise. Subject to the above exception, companies mandated by law or regulation to list in the Exchange or offer their shares to the public may do so by conducting an initial public offering or a listing by way of introduction.