JK&C LIBRARYSEC Memorandum Circular No. 02, s. 2003
Overview
SEC Memorandum Circular No. 2, Series of 2003, establishes a revised scale of fines intended to further rationalize the penalties imposed by the Securities and Exchange Commission and to ensure strict compliance with the Securities Regulation Code (SRC), its Implementing Rules and Regulations, the Investment Company Act (ICA), and their respective implementing rules and regulations. The Commission approved the revised scale of fines during its meeting on February 11, 2003.
The circular provides different penalties depending on the violation and whether it is a first, second, third, or fourth offense. The fines cover various violations involving securities registration, disclosure and reportorial requirements, directors and officers, independent directors, investment companies, and other requirements under the SRC and ICA.
The imposition of the fines is without prejudice to other administrative sanctions or the filing of criminal charges against the persons responsible for the violation. The circular provides that it shall take effect fifteen (15) days from publication in a newspaper of general circulation in the Philippines.
Full Text
Overview
SEC Memorandum Circular No. 2, Series of 2003, establishes a revised scale of fines intended to further rationalize the penalties imposed by the Securities and Exchange Commission and to ensure strict compliance with the Securities Regulation Code (SRC), its Implementing Rules and Regulations, the Investment Company Act (ICA), and their respective implementing rules and regulations. The Commission approved the revised scale of fines during its meeting on February 11, 2003. The circular provides different penalties depending on the violation and whether it is a first, second, third, or fourth offense. The fines cover various violations involving securities registration, disclosure and reportorial requirements, directors and officers, independent directors, investment companies, and other requirements under the SRC and ICA. The imposition of the fines is without prejudice to other administrative sanctions or the filing of criminal charges against the persons responsible for the violation. The circular provides that it shall take effect fifteen (15) days from publication in a newspaper of general circulation in the Philippines.
Short Title / Subject
Revised Scale of Fines
Full Text
SEC MEMORANDUM CIRCULAR NO. 2
Series of 2003
REVISED SCALE OF FINES
| Provisions | Violations | First Offense | Second Offense | Third Offense | Fourth Offense |
|---|---|---|---|---|---|
| Sections 8 and 12 | OFFERING OF SECURITIES TO THE PUBLIC WITHOUT PRIOR REGISTRATION OR PERMIT | P10,000 per transaction or 1/10 of 1% of the aggregate issuance, whichever is higher. | P20,000 per transaction or 2/10 of 1% of the aggregate issuance, whichever is higher. | P60,000 per transaction or 6/10 of 1% of the aggregate issuance, whichever is higher. | P240,000 per transaction or 24/10 of 1% of the aggregate issuance, whichever is higher. |
| Section 10 | LATE FILING OF NOTICE OF EXEMPTION PURSUANT TO SRC RULE 10.1(K) (In case of listed companies only) | 50,000 | 100,000 | 300,000 | 600,000 and suspension of registration |
| Section 10 | NON-COMPLIANCE WITH DISCLOSURE REQUIREMENTS UNDER SRC RULE 10.1 | 10,000 | 20,000 | 60,000 | 120,000 and suspension of registration |
| Section 14 | FAILURE TO AMEND REGISTRATION STATEMENT IN ACCORDANCE WITH SRC RULE 14 | 50,000 or 0.5/10 of 1% of the aggregate amount of securities sold under the new terms, whichever is higher. | 100,000 or 1/10 of 1% of the aggregate amount of securities sold under the new terms, whichever is higher. | 300,000 or 3/10 of 1% of the aggregate amount of securities sold under the new terms, whichever is higher. | 600,000 or 6/10 of 1% of the aggregate amount of securities sold under the new terms, whichever is higher, and suspension of registration |
| Section 17.1 | LATE OR INCOMPLETE FILING OF CURRENT REPORT (SEC FORM 17-C) | P50,000 or 0.5/10 of 1% of Consolidated Net Income / Revenue, whichever is higher. | P100,000 or 1/10 of 1% of Consolidated Net Income / Revenue, whichever is higher. | P300,000 or 3/10 of 1% of Consolidated Net Income / Revenue, whichever is higher. | P600,000 or 6/10 of 1% of Consolidated Net Income / Revenue, whichever is higher, and suspension of registration |
| Section 17.1 | LATE OR INCOMPLETE FILING OF QUARTERLY REPORT (SEC FORM 17-Q) | 75,000 or 1/10 of 1% of Consolidated Net Income / Revenue, whichever is higher. | 150,000 or 2/10 of 1% of Consolidated Net Income / Revenue, whichever is higher. | 450,000 or 6/10 of 1% of Consolidated Net Income / Revenue, whichever is higher. | 900,000 or 9/10 of 1% of Consolidated Net Income / Revenue, whichever is higher, and suspension of registration |
| Section 17.1 | LATE OR INCOMPLETE FILING OF ANNUAL REPORT (SEC FORM 17-A) | 100,000 or 1/10 of 1% of Consolidated Net Income / Revenue, whichever is higher. | 200,000 or 2/10 of 1% of Consolidated Net Income / Revenue, whichever is higher. | 600,000 or 6/10 of 1% of Consolidated Net Income / Revenue, whichever is higher. | 1,200,000 or 12/10 of 1% of Consolidated Net Income / Revenue, whichever is higher, and suspension of registration |
| Section 18 | LATE OR INCOMPLETE FILING OF REPORTS BY 5% OR MORE HOLDERS OF EQUITY SECURITIES (SEC FORM 18-A OR 18-AS) | 50,000 or 0.5/10 of 1% of the maximum aggregate purchase price of acquired securities, whichever is higher. | 100,000 or 1/10 of 1% of the maximum aggregate purchase price of acquired securities, whichever is higher. | 300,000 or 3/10 of 1% of the maximum aggregate purchase price of acquired securities, whichever is higher. | 900,000 or 9/10 of 1% of Consolidated Net Income / Revenue, whichever is higher, and suspension of registration |
| Section 19.1 | LATE OR INCOMPLETE FILING OF TENDER OFFER REPORT (SEC FORM 19-1) OR FAILURE TO COMPLY WITH ANY REQUIREMENT OF SRC RULE 19-1 | 100,000 or 1/10 of 1% of the maximum aggregate purchase price of acquired securities, whichever is higher. | 200,000 or 2/10 of 1% of the maximum aggregate purchase price of acquired securities, whichever is higher. | 600,000 or 6/10 of 1% of the maximum aggregate purchase price of acquired securities, whichever is higher. | 1,200,000 or 12/10 of 1% of Consolidated Net Income / Revenue, whichever is higher, and suspension of registration |
| Section 20 (in relation with 17.1(b)) | LATE OR INCOMPLETE FILING OF INFORMATION STATEMENT (SEC FORM 20-IS) OR FAILURE TO COMPLY WITH ANY REQUIREMENT OF SRC RULE 20 | 100,000 or 1/10 of 1% of Consolidated Net Income / Revenue, whichever is higher. | 200,000 or 2/10 of 1% of Consolidated Net Income / Revenue, whichever is higher. | 600,000 or 6/10 of 1% of Consolidated Net Income / Revenue, whichever is higher. | 1,200,000 or 12/10 of 1% of Consolidated Net Income / Revenue, whichever is higher, and suspension of registration |
| Section 22 | FAILURE TO OBSERVE MINIMUM INTERNAL CONTROLS AND RECORD KEEPING SYSTEM | P100,000 or 1/10 of 1% of Consolidated Net Income / Revenue, whichever is higher. | P200,000 or 2/10 of 1% of Consolidated Net Income / Revenue, whichever is higher. | P600,000 or 6/10 of 1% of Consolidated Net Income / Revenue, whichever is higher. | P1,200,000 or 12/10 of 1% of Consolidated Net Income / Revenue, whichever is higher, and suspension of registration |
| Section 23 | LATE OR INCOMPLETE FILING OF STATEMENT OF BENEFICIAL OWNERSHIP (SEC FORM 23-A OR B) | 50,000 or 0.5/10 of 1% of the maximum aggregate purchase price of acquired securities, whichever is higher. | 100,000 or 1/10 of 1% of the maximum aggregate purchase price of acquired securities, whichever is higher. | 300,000 or 3/10 of 1% of the maximum aggregate purchase price of acquired securities, whichever is higher. | 900,000 or 9/10 of 1% of the maximum aggregate purchase price of acquired securities, whichever is higher. |
| Section 23 | DIRECTORS / OFFICERS — Qualifying or not more than (100) shares | 10,000 | 20,000 | 60,000 | 180,000 |
| Section 23 | DIRECTORS / OFFICERS — More than 100 shares but less than 5% of the outstanding equity security | 20,000 | 40,000 | 120,000 | 360,000 |
| Section 23 | DIRECTORS / OFFICERS — More than 5% but less than 10% | 35,000 | 70,000 | 210,000 | 630,000 |
| Section 38 | FAILURE TO ELECT INDEPENDENT DIRECTOR(S) OR ELECTION OF AN UNQUALIFIED INDEPENDENT DIRECTOR | 100,000 or 1/10 of 1% of Consolidated Net Income / Revenue, whichever is higher. | 200,000 or 2/10 of 1% of Consolidated Net Income / Revenue, whichever is higher. | 600,000 or 6/10 of 1% of Consolidated Net Income / Revenue, whichever is higher. | 1,200,000 or 12/10 of 1% of Consolidated Net Income / Revenue, whichever is higher, and suspension of registration |
| Section 54 | MISREPRESENTATION, MISLEADING STATEMENTS, OMISSION OF A MATERIAL FACT IN ANY FILINGS REQUIRED TO BE SUBMITTED (This is in addition to the penalty on the principal report, if any.) | 100,000 or 1/10 of 1% of Consolidated Net Income / Revenue, whichever is higher. | 200,000 or 2/10 of 1% of Consolidated Net Income / Revenue, whichever is higher. | 600,000 or 6/10 of 1% of Consolidated Net Income / Revenue, whichever is higher. | 1,200,000 or 12/10 of 1% of Consolidated Net Income / Revenue, whichever is higher, and suspension of registration |
| ICA — Sections 7 and 24 | VIOLATION OF REGISTRATION REQUIREMENTS | P10,000 per violation or 1/10 of 1% of the aggregate issuance, whichever is higher. | P20,000 per violation or 2/10 of 1% of the aggregate issuance, whichever is higher. | P60,000 per violation or 6/10 of 1% of the aggregate issuance, whichever is higher. | P240,000 per violation or 24/10 of 1% of the aggregate issuance, whichever is higher. |
| Section 8 | ELECTION OF CERTAIN INELIGIBLE AFFILIATED PERSONS AND UNDERWRITERS | 50,000 or 0.5/10 of 1% of Consolidated Net Income / Revenue, whichever is higher. | 100,000 or 1/10 of 1% of Consolidated Net Income / Revenue, whichever is higher. | 300,000 or 3/10 of 1% of Consolidated Net Income / Revenue, whichever is higher. | 600,000 or 6/10 of 1% of Consolidated Net Income / Revenue, whichever is higher, and suspension of registration |
| Section 9 | UNAUTHORIZED AFFILIATIONS OF DIRECTORS, OFFICERS AND EMPLOYEES | 50,000 | 100,000 | 300,000 | 900,000 |
| Section 10 | PROHIBITED OFFERS TO EXCHANGE SECURITIES | 10,000 per transaction or 1/10 of 1% of the aggregate issuance, whichever is higher. | 20,000 per transaction or 2/10 of 1% of the aggregate issuance, whichever is higher. | 60,000 per transaction or 6/10 of 1% of the aggregate issuance, whichever is higher. | 240,000 per transaction or 24/10 of 1% of the aggregate issuance, whichever is higher, and suspension of registration |
| Section 11 | UNAUTHORIZED OR ILLEGAL ACTIVITIES OF INVESTMENT COMPANIES | 50,000 or 0.5/10 of 1% of Consolidated Net Income / Revenue, whichever is higher. | 100,000 or 1/10 of 1% of Consolidated Net Income / Revenue, whichever is higher. | 300,000 or 3/10 of 1% of Consolidated Net Income / Revenue, whichever is higher. | 600,000 or 6/10 of 1% of Consolidated Net Income / Revenue, whichever is higher, and suspension of registration |
| Section 12 | UNAUTHORIZED CHANGES IN INVESTMENT POLICY (Imposable on responsible directors and officers) | 50,000 | 100,000 | 300,000 | 900,000 |
| Section 14 | UNAUTHORIZED CONTRACTS OF ADVISERS AND UNDERWRITERS (Imposable on responsible directors and officers) | 50,000 | 100,000 | 300,000 | 900,000 and five (5) years disqualification as an investment adviser even with a written contract. |
| Sections 22 and 23; ICA Rule 35-1(e) | VIOLATION OF REQUIREMENTS ON DISTRIBUTION, REDEMPTION, AND REPURCHASE OF SECURITIES | 50,000 or 0.5/10 of 1% of Consolidated Net Income / Revenue, whichever is higher. | 100,000 or 1/10 of 1% of Consolidated Net Income / Revenue, whichever is higher. | 300,000 or 3/10 of 1% of Consolidated Net Income / Revenue, whichever is higher. | 600,000 or 6/10 of 1% of Consolidated Net Income / Revenue, whichever is higher and suspension of registration |
| Section 26 | EXCESSIVE PERIODIC PAYMENT PLAN | 50,000 or 0.5/10 of 1% of Consolidated Net Income / Revenue, whichever is higher. | 100,000 or 1/10 of 1% of Consolidated Net Income / Revenue, whichever is higher. | 300,000 or 3/10 of 1% of Consolidated Net Income / Revenue, whichever is higher. | 600,000 or 6/10 of 1% of Consolidated Net Income / Revenue, whichever is higher and suspension of registration |
| Sections 25, 27 & 30; ICA Rule 35-1(e)(3) | FAILURE TO SUBMIT REQUIRED REPORTS UNDER THESE SECTIONS AND/OR TO PUBLISH DAILY PRICES | P50,000 or 0.5/10 of 1% of Consolidated Net Income / Revenue, whichever is higher. | P100,000 or 1/10 of 1% of Consolidated Net Income / Revenue, whichever is higher. | P300,000 or 3/10 of 1% of Consolidated Net Income / Revenue, whichever is higher | P600,000 or 6/10 of 1% of Consolidated Net Income / Revenue, whichever is higher and suspension of registration |
| Section 32 | MIS-REPRESENTATIONS | 100,000 or 1/10 of 1% of Consolidated Net Income / Revenue, whichever is higher. | 200,000 or 2/10 of 1% of Consolidated Net Income / Revenue, whichever is higher. | 600,000 or 6/10 of 1% of Consolidated Net Income / Revenue, whichever is higher. | 1,200,000 or 12/10 of 1% of Consolidated Net Income / Revenue, whichever is higher and suspension of registration |
| ICA Rule 35-1(d) | VIOLATION OF RECITED INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS | 100,000 or 1/10 of 1% of Consolidated Net Income / Revenue, whichever is higher. | 200,000 or 2/10 of 1% of Consolidated Net Income / Revenue, whichever is higher. | 600,000 or 6/10 of 1% of Consolidated Net Income / Revenue, whichever is higher. | 1,200,000 or 12/10 of 1% of Consolidated Net Income / Revenue, whichever is higher and suspension of registration |
| ICA Rule 35-1(c)(2) | NON-DEPOSIT OF SALES PROCEEDS TO A CUSTODIAN BANK | 10,000 per transaction or 1/10 of 1% of the aggregate issuance, whichever is higher. | 20,000 per transaction or 2/10 of 1% of the aggregate issuance, whichever is higher. | 60,000 per transaction or 6/10 of 1% of the aggregate issuance, whichever is higher. | 240,000 per transaction or 24/10 of 1% of the aggregate issuance, whichever is higher, and suspension of registration |
| ICA Rule 35-1(c)(3) | REDEMPTION OF ORIGINAL CAPITAL FOR LESS THAN 12 MONTHS | 50,000 or 0.5/10 of 1% of Consolidated Net Income / Revenue, whichever is higher. | 100,000 or 1/10 of 1% of Consolidated Net Income / Revenue, whichever is higher. | 300,000 or 3/10 of 1% of Consolidated Net Income / Revenue, whichever is higher. | P600,000 or 6/10 of 1% of Consolidated Net Income / Revenue, whichever is higher and suspension of registration |
| ICA Rule 35-1(i)(2) | LATE FILING OF MONTHLY SALES/REDEMPTION REPORT | 50,000 or 0.5/10 of 1% of Consolidated Net Income / Revenue, whichever is higher. | 100,000 or 1/10 of 1% of Consolidated Net Income / Revenue, whichever is higher. | 300,000 or 3/10 of 1% of Consolidated Net Income / Revenue, whichever is higher. | P600,000 or 6/10 of 1% of Consolidated Net Income / Revenue, whichever is higher and suspension of registration |
| ICA Rule 35-1(e)(3) | FAILURE TO EFFECT REDEMPTION REQUEST WITHIN 7 BANKING DAYS | 50,000 per transaction or 0.5/10 of 1% of Consolidated Net Income / Revenue, whichever is higher. | 100,000 per transaction or 1/10 of 1% of Consolidated Net Income / Revenue, whichever is higher. | 300,000 per transaction or 3/10 of 1% of Consolidated Net Income / Revenue, whichever is higher. | P600,000 or 6/10 of 1% of Consolidated Net Income / Revenue, whichever is higher and suspension of registration |
The imposition of the foregoing penalties shall be without prejudice to other administrative sanctions or to the filing of criminal charges against the person/s responsible for the violation.
This Circular shall take effect fifteen (15) days from publication in a newspaper of general circulation in the Philippines.
Signed on behalf of the Commission on February 19, 2003, Mandaluyong City, Philippines.
(Original Signed)
LILIA R. BAUTISTA
Chairperson
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Source
Official URL: https://www.sec.gov.ph/mc-2003/sec-memorandum-circular-no-02-12/#gsc.tab=0
Citation
Securities and Exchange Commission (SEC), Memorandum Circular, SEC Memorandum Circular No. 02, s. 2003, SEC Memorandum Circular No. 02, s. 2003, 2003-02-19
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Citation
Securities and Exchange Commission (SEC), Memorandum Circular, SEC Memorandum Circular No. 02, s. 2003, SEC Memorandum Circular No. 02, s. 2003, 2003-02-19