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FINAL SEC PHASE 1 > Module 3 > Flashcards

Module 3 Flashcards

1
Q

Tradeable financial assets which are purchased in order to be held for investment.

A

Securities

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2
Q

Securities

A
  • Shares of stock, bonds, government securities and commercial papers
  • Investment Contracts, Certificates of Interest / Participations in a profit
    sharing agreement
  • Proprietary or nonproprietary membership certificates
  • Fractional undivided interests in oil, gas, or other mineral rights
  • Certificates of assignments, participations, trust, or similar instruments
  • Derivatives
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3
Q

Objectives of Securities Regulation

A
  • Protect the investors
  • Ensure that the markets are fair, efficient and transparent
  • Reduce systemic risk
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4
Q

The Pyramid of Regulation

A
  1. SEC
  2. SROs
  3. Individual Firms
  4. Customers
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5
Q

Publicly-Listed Company vs Public Company

A

Publicly-Listed Company
A class of equity securities listed on an Exchange

Public Company
With assets in excess of Php 50M
and has 200 or more shareholders
holding at least 100 shares

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6
Q

Exchange and OTC Market

A

Exchange
An organized marketplace or facility that brings together buyers and sellers, and executes trades of securities and/or commodities

OTC Market
Markets that are less formal between various parties that takes place outside of an Exchange.

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7
Q

Exempt Securities

Securities that can be sold without a ____________________.

  1. Any evidence of ___________ issued by a financial institution that has been licensed by the BSP
  2. ____________ arising from a bona-fide sale of _____________.
  3. Securities issued or guaranteed by _________________________.
  4. Certificates issued by a _________ or by a _________ in bankruptcy
A

Registration Statement (RS)

  1. indebtedness
  2. Bills of exchange; goods and services
  3. multilateral financial entities
  4. receiver; trustee
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7
Q

Exempt Securities:
For Commercial Papers

  • Issued to not more than ___________________
  • Payable to a __________
  • Neither __________________ and held on to maturity
  • Not exceeding _________
A
  • 19 non institutional lenders
  • specific person
  • negotiable nor assignable
  • Php 150M
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8
Q

Registration Statement

No securities shall be sold or offered for sale within the Philippines unless _________________________.

All outstanding shares of the following corporation shall be
registered:
1. Corporations that will conduct _______________.
2. Corporations that will apply for ____________________.
3. Sale shall commence within _______________ from the effective date

A

duly registered with the Commission

  1. Initial Public Offerings
  2. listing on an Exchange
  3. 10 business days
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9
Q

Shelf-Registration or Continuous Offering

Not exceeding _______ from the effective date of registration
statement. The following requirements after the initial tranche is needed:

  1. Disclose to the commission at least _____________ prior
    to the offering or sale of securities
  2. Filing ____
  3. Sale shall commence within _______________ from the effective date
A

three years

  1. five (5) business days
  2. Fees
  3. 10 business days
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10
Q

Exempt Transactions

  • Any sale because of _________ or __________.
  • Liquidating a _________ in good faith
  • The sale of securities by an issuer to ____________ during _________________
  • The distribution by a corporation/issuer of securities to its shareholders out of surplus, or sale where no ___________ or __________ is paid
  • ________________ on any registered Exchange or trading market
  • ____________ to the qualified buyers
A
  • insolvency or bankruptcy
  • bona fide debt
  • fewer than 20 people; any 12-month period
  • commission or remuneration
  • Broker’s transaction
  • Sale of securities
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11
Q

Any securities issued or guaranteed by the Government of the Philippines are considered __________________

A

Exempt Securities

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12
Q

An entity that provides a facility for the following activities:

  • Acts as intermediary in making deliveries / payments of securities
  • Reduce the number of settlements of securities transactions
  • Provide the means for the
    central handling of securities
A

Clearing Agency

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13
Q

Any person who performs on behalf of an Issuer or by itself:

  • Countersigns certificate of
    securities
  • Monitors, registers, exchanges,
    and records securities
  • Records the ownership
A

Transfer Agent

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14
Q

Manipulative Practices

A
  1. Painting the Tape
  2. Marking the Close
  3. Improper Matched Orders
  4. Hype and Dump
  5. Wash Sales
  6. Squeezing the Float
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15
Q

Engaging in a series of transactions to give the impression of activity or price movement.

A

Painting the Tape

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16
Q

Buying and selling securities at the close of the market to alter the closing price.

A

Marking the Close

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17
Q

Buy and sell orders are entered at the same time with same price and quantity by different but colluding parties.

A

Improper Matched Orders

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18
Q

Engaging in buying activity at increasingly higher prices then selling securities in the market at the higher prices.

A

Hype and Dump

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19
Q

Engaging in transactions in which there is no change of beneficial ownership.

A

Wash Sales

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20
Q

Controlling the demand side and exploiting market congestion in a way to create artificial prices.

A

Squeezing the Float

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21
Q

Buying or selling of a security by someone who has access to material nonpublic information.

A

Insider Trading

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22
Q

An Insider means:

A
  • The Issuer
  • A Director or Officer (or any person performing similar functions)
  • Any person who has access to material information about an issuer or a security that is not generally available to the public
  • A person who learns such information by a communication from any forgoing insiders
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22
Q

SRC 29

A

Protection of Customer Accounts

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23
Q

SRC 29

“When such Broker Dealer is a member of an Exchange (Exchange Trading Participant), the Exchange shall ______________________ to take over any outstanding contracts relating to securities and notify the Exchange in writing of such transfer and the affected customers that have said contracts transferred.”

“Where such Broker Dealer is not a Member of Exchange (Exchange Trading Participant), the Commission shall notify the affected customers of such suspension or revocation and require that they _________________________.”

A

immediately arrange for another Member or Exchange Trading participant

transfer their account to another Broker Dealer

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24
Q

It is the act of borrowing money from a broker to purchase stock and is considered extremely risky

A

Margin and Credit

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25
Q

Margin and Credit

  • Broker Dealer cannot extend credit in amount that exceeds ____ of the ____________ of the security.
  • No new or additional credit be extended if equity is less than _______
  • No less than ______________ of the current market value of all securities in the account.
A
  • 50%; current market value
  • Php 50K.
  • 25% (long) or 30% (short)
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26
Q

A belief or set of beliefs held and taught by a group

A

Doctrines

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26
Q

Margin Turnaround Time (TAT)

  • When there is an insufficiency of margin, a call for additional shall be issued within ___________.
  • A call for _____________ shall be satisfied within _______.
    *The required payment date for a call for initial margin may be
    extended by _____ upon ___________.
A
  • 5 business days
  • maintenance margin; 24 hours
  • 7 days; written application
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27
Q

are margin transactions in which an investor sells borrowed securities in anticipation of a price decline and is required to return an equal number at some point in the future.

A

Short sales

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28
Q

A corporation may not be made to answer for acts and liabilities of its stockholders or those of legal entities to which it may be connected or vice versa.

A

Doctrine of Legal Entity of the Separate Personality of the Corporation

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28
Q

Beyond the powers. The doctrine in the law of corporations that holds that if a corporation enters into a contract that is beyond the scope of its corporate powers, the contract is illegal.

A

Doctrine of Ultra Vires

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29
Q

Doctrines

A
  1. Doctrine of Ultra Vires
  2. Doctrine of Intra Vires
  3. Doctrine of Legal Entity of the Separate Personality of the Corporation
  4. Doctrine of Piercing the Veil of Corporate Entity
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30
Q

The doctrine used whenever a court finds that the corporate fiction is being used to defeat public convenience, justify wrong / fraud / crime, or to confuse legitimate issues, or that a corporation is the mere alter ego or business conduit of a person.

A

Doctrine of Piercing the Veil of Corporate Entity

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30
Q

Within the powers. It is within the scope of its powers or authority. The opposite of ultra vires.

A

Doctrine of Intra Vires

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31
Q

Administrative Agency

________________ and ___________
appointed by the President with a term of _________.

Chairperson should be at least _________.
Commissioners at least ___________.

A

1 CHAIRPERSON; 4 COMMISSIONERS; 7 years each

40 years old.
35 years old

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32
Q

Sanctions

A

A fine of no less than Php 10K nor more than Php 1M plus not more than Php 2K for each day.

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33
Q

is one where a corporation absorbs the other and remains in existence while others are dissolved.

A

Merger

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34
Q

is one where a new corporation is created and consolidating corporations are extinguished.

A

Consolidation

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35
Q

The public company is defined as
I. Sold a class of its own equity securities
II. A class of equity securities listed on an Exchange
III. With assets in excess of Php 50M and has 200 or more shareholders holding at least 100 shares

a) I
b) II
c) III
d) All of the above

A

c) III

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36
Q

____ of the outstanding capital stock
of votes needed in Merger and Consolidation

A

2/3

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36
Q

Clearing agency is

a) An entity that provides a facility for acting as intermediary in making deliveries / payments of securities
b) Any person who performs on behalf of an Issuer or by itself monitors securities
c) An organized market place the brings together buyers and sellers
d) A less formal market that takes place outside of an Exchange.

A

a) An entity that provides a facility for acting as intermediary in making deliveries / payments of securities

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37
Q

Painting the tape is defined as

a) Buying and selling securities at the close of the market to alter the closing price
b) Buy and sell orders are entered at the same time with same price by different but
colluding parties
c) Engaging in a series of transactions to give the impression of activity or price movement
d) Engaging in transactions where there is no change of beneficial ownership.

A

c) Engaging in a series of transactions to give the impression of activity or price movement

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38
Q

Engaging in buying activity at increasingly higher prices then selling securities in the market
at the higher prices.

a) Hype and Dump
b) Wash Sales
c) Squeezing the Float
d) Marking the Close

A

a) Hype and Dump

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39
Q

A doctrine that says that a corporation is a mere alter ego or business conduit of a person

A) Doctrine of Ultra Vires
B) Intra Vires Act
C) Doctrine of Legal Entity of the Separate Personality of the Corporation
D) Doctrine of Piercing the Veil of Corporate Entity

A

D) Doctrine of Piercing the Veil of Corporate Entity

40
Q

Capital Market Institutions (SEC)

A

p. 266 SL deck

41
Q

MSRD Regulated/ Monitored Entities

A

p. 267 SL deck

42
Q

SRC Rules on Registration of Market Institutions and Professionals

The following provides for the requirements in the registration of institutions and market professionals and the terms and conditions for registration and for continuing registration.

  • Registration of Broker Dealer
  • Registration of Salesman and Associated Persons of Broker
    Dealers
  • Registration of Transfer Agents and Clearing and Settlement
  • Approval of Registration of Self-Regulatory Organization [SRO]
  • Registration of Clearing Agencies and Securities Depositories
A
  • (SRC Rule 28.1.1)
  • (SRC Rule 28.1.5)
  • (SRC Rule 36.4)
  • (SRC Rule 40.1)
  • (SRC Rule 42)
42
Q

SRC Rules on Business Conduct

A
  • Ethical Standards Rule (SRC Rule 30.2.1)
  • Rule on Advertisements and Communications with the
    Public (SRC Rule 24.1 (d). 1)
  • Prompt Execution Rule (SRC Rule 30.2.1.2.2.1)
  • Best Execution Rule (SRC Rule 30.2.13)
  • Customer Account Information Rule (SRC Rule 52.1.6)
  • Suitability Rule (SRC Rule 30.2.4)
  • Client Agreement Rule (SRC Rule 30.2.3)
  • Confirmation of Customer Orders Rule (SRC Rule 30.2.2)
  • Customer Account Statement Rule (SRC Rule 52.1.8)
  • Customer First Policy (SRC Rule 30.2.1.2.6.1)
  • Books and Records Rule (SRC Rule 52.1.1)
  • Monthly Securities Count Rule (SRC Rule 52.1.10)
  • Customer Complaint Rule (SRC Rule 52.1.9)
  • Rule on Commissions and Charges for Services Performed by a
    Broker Dealer (SRC Rule 30.2.5)
43
Q

In the conduct of business, the registered person shall
observe high standards of commercial honor and just and
equitable principles of trade.

A

Ethical Standards Rule (SRC Rule 30.2.1)

44
Q

All communications by registered persons with the public
shall be based on principles of fair dealing and good faith
and should provide a sound basis for facts; no material
fact shall be omitted; no exaggerated, unwarranted or
misleading statements or claims.

A

Rule on Advertisements and Communications with the
Public (SRC Rule 24.1 (d). 1)

45
Q

Best Execution Rule (SRC Rule 30.2.13)
Registered person shall:

A
  • Take reasonable steps to promptly execute client orders in conformity with the instruction of the client
  • Always execute on the best available terms
  • Ensure transactions are executed promptly and fairly allocated to the accounts of the clients
  • Act diligently and ensure that advice and recommendations are based on thorough analysis and
    takes into account available alternatives.
46
Q
  • Minimum information needed in account opening for individuals, corporate and institutional
    customers
  • Special rules for trust accounts, more than one party is named in the account, and numbered accounts
  • Reference must also be made to the account opening information requirements of AMLA, as amended.
A

Customer Account Information Rule (SRC Rule 52.1.6)

46
Q

Customer Account Information Form (CAIF)

A
  1. Customer’s Name, Address, Telephone Number
  2. Date & Place of birth
  3. Nationality
  4. Signature of salesmen introducing the account signature of partner, officer or manager who accepts the account
  5. Specimen signature
  6. Whether customer is an institutional customer
  7. Option whether confirmation of customer orders would be via courier or electronically
  8. If the customer is a corporation, partnership or any legal entity, the names of any person authorize to
    transact business on behalf of the entity
47
Q

Registered person shall have reasonable grounds for believing that the recommendation is suitable for customer upon the basis of the facts disclosed by such
customer as to his security holdings and his financial situation and needs

A

Suitability Rule (SRC Rule 30.2.4)

48
Q
  • Registered person shall ensure that a client agreement is entered into before any service is provided
  • The client agreement shall be in a language understood by the client and the contents explained to
    the client
A

Client Agreement Rule (SRC Rule 30.2.3)

49
Q

The broker dealer shall send the customer a written confirmation as promptly as possible during office hours on the day of the transactions but not later than the
next business day after transaction.

A

Confirmation of Customer Orders Rule (SRC Rule 30.2.2)

50
Q

Send at least once a month containing a description of any securities positions, money balances, or account activity for trades during the period.

A

Customer Account Statement Rule (SRC Rule 52.1.8)

51
Q

Client orders shall be handled fairly and in the order in which they are received and shall have priority over orders for the account of the registered person.

A

Customer First Policy (SRC Rule 30.2.1.2.6.1)

52
Q
  • Make, keep current and maintain in the principal office
  • Preserve for a period of not less than 5 years in an easily accessible place
A

Books and Records Rule (SRC Rule 52.1.1)

53
Q
  • Count shall be at least once a month
  • Physically examine and count all securities held and compare the results with its records
  • Account for and verify the discrepancies noted
A

Monthly Securities Count Rule (SRC Rule 52.1.10)

54
Q

Maintain and preserve separate files of all complaints from customers received and the action by the broker dealer

A

Customer Complaint Rule (SRC Rule 52.1.9)

55
Q

Unlawful activities of any person acting for himself or through broker or dealer, directly and indirectly. Examples of prohibited conduct: painting the tape, marking the close, improper matched orders, hype and dump

A

Manipulative Practices (SRC Rule 24.1.1)

56
Q
  • Schedule of minimum commission rates, no discounts and/or rebates shall be permitted
  • Various fees in effecting transaction shall be disclosed and explained to before effecting transaction and client has agreed to fees
A

Rule on Commissions and Charges for Services Performed by a
Broker Dealer (SRC Rule 30.2.5)

57
Q

Rules on Prohibitions on Fraud,
Manipulation and Insider Trading

A
  • Manipulative Practices (SRC Rule 24.1.1)
  • Fraudulent Transactions (SRC Rule 26)
  • Insider Trading (SRC Rule 27)
58
Q
  • Employment of device, scheme, or artifice to defraud
  • Obtain money or property by means of any untrue statement
    of a material fact or any omission
A

Fraudulent Transactions (SRC Rule 26)

59
Q

Unlawful for an insider to sell or buy a security of the issuer, while in the possession of material information with respect to the issuer or the security that is not generally available to the public

A

Insider Trading (SRC Rule 27)

60
Q

Enforcement of SRC Violations
and Sanctions

A
  • Investigations, Injunctions and Prosecutions of Offenses (SRC Rule 53)
  • Administrative Sanctions (SRC Rule 54)
  • Civil Liability for Manipulation of Security Prices (SRC Rule 59)
  • Civil Liability on Account of Insider Trading (SRC Rule 61)
61
Q

The Commission may investigate as it deems necessary to determine whether any person has violated, or is about to violate any provision of the SRC, its rule, regulation or
order, or the rule of the Exchange, etc.

A

Investigations, Injunctions and Prosecutions of Offenses (SRC Rule 53)

62
Q

After due notice and hearing, when there is violation the Commission may suspend, or revoke any registration, impose a fine of no less than P10,000 nor more than P1,000,000 plus not more than P2000 for each day of continuing violation

A

Administrative Sanctions (SRC Rule 54)

63
Q

Sources of Company Funding

A
  1. Internal Sources
  2. External Sources
64
Q

External Sources

A
  • Bank Loan
  • Financial Market
65
Q

Bank Loan

A
  • Single Borrower’s Limit
  • Basel III
66
Q

Credit exposure limit of banks to a single borrower shall at no time exceed 25% of the net worth of the bank

A

Bank Loan: Single Borrower’s Limit

67
Q

aims to improve the ability of banks to absorb shocks arising from financial and economic stress

A

bank Loan: Basel III

68
Q

Bank Tier 1 Capital vs. Bank Tier 2 Capital

A

Bank Tier 1 Capital - bank’s core capital (measures bank’s financial health and is used when a bank must absorb losses w/o ceasing business operations.
Bank Tier 2 Capital - bank’s supplementary capital

69
Q

Market wherein people trade financial securities, commodities, and other fungible items of value at prices that reflect supply and demand

A

Financial Market

70
Q

Types of Financial Market

A
  1. Money Market
  2. Capital Market
71
Q

Money Market

A
  • Short term funds (less than 1 year)
  • Examples
     Treasury bills
     Commercial papers
     Repo instrument
  • Return on investment
     Less
  • Risk Factor
     Low
72
Q

Capital Market

A
  • Long term securities (more than 1 year)
  • Examples
     Bonds
     Stocks
  • Return on investment
     Comparatively high
  • Risk Factor
     Comparatively high
73
Q

Role of Capital Market

A
  • Capital Raising
  • Channel savings and investment between suppliers of capital
  • Economic growth and development
  • Proper regulation of funds
  • Create liquidity
74
Q

Major Suppliers of Funds in the Capital Market

A
  • Banks
  • Corporations
  • Insurance Companies
  • Pension Funds
  • Mutual Funds
75
Q

Major Borrowers in the Capital Market

A
  • Government
  • Corporations
76
Q

Two Types of Capital Markets

A
  1. Primary
  2. Secondary
77
Q
  • Stocks, bonds and other securities are issued for the first time
  • Money raised is generally used for business operations such as modernizing the plant, setting up new business units, etc.
78
Q
  • Original investors sell their existing stocks or bonds
  • Takes place in the stock or bond exchange
  • Issuer does not make money from the sale
79
Q

Capital Market in the Philippines

A
  • Issuers (Registered Securities, Exempt Securities)
  • Exchanges
    a. Philippine Stock Exchange
  • Equity instruments (Common Stocks, Preferred Stocks, Warrants, ETF)
  • 261 listed companies
    b. Philippine Dealing and Exchange Corp.
    – Debt instruments (Corporate and Government securities)
  • Securities Intermediaries
  • Broker Dealers (147)
  • GSED (47)
  • Underwriter (12)
  • Mutual Fund Distributor (11)
  • Regulator: Securities and Exchange Commission
80
Q

Sale of Securities

  • Private Placement – Sale to _______
  • Public Offer – Sale to ________
A
  • 19 or less
  • more than 19
81
Q

Public offer is done through:

A
  • Publication in a newspaper, magazine or printed reading material which is distributed in the Philippines
  • Presentation in a public or commercial place;
  • Advertisement of announcement on radio, TV, telephone, electronic communications, information
    communication technology or any other forms of communication
  • Distribution and/or making available flyers, brochures or any offering material in a public or commercial place or to prospective purchasers through the postal system, information communication technology and other means of
    information distribution
82
Q

Types of Offering

A
  1. Primary
  2. Secondary
83
Q

Primary vs. Secondary Offering

A

Primary
* Initial Public Offering
* Follow-on Offering

Secondary – sale of previously owned securities

84
Q
  • Sale of securities subject of a RS Shall commence within ________ from the date of the effectivity of the RS ____________ and shall continue until the _________ or until the sale is terminated by the Issuer.
  • If not commenced within 10 business days, RS shall be ______________ thereon forfeited.
A
  • 10 business days; date of the effectivity of the RS; end of the offering period
  • cancelled and all fees
85
Q

What LAW regulates the offer/sale of securities in the Philippines?

86
Q
  • Parameters or standards are set
  • May be interpreted as an
    endorsement
A

Merit System

87
Q
  • Full disclosure of information required
  • Bases for intelligent investment
    decision
A

SRC Requirement for Registration

88
Q

Rule 8.3.1. A notice, circular, advertisement, letter or other forms of communication do not constitute an offer for sale that violates Sec. 8 of the Code if it is published or transmitted to any person:

i.) AFTER the RS has been FILED; and
ii.) Contains the following information:

A
  1. Name of the Issuer
  2. Full title of the Security and Amount being offered
  3. Brief indication of the general type of business of the Issuer
  4. Price of the Security
  5. If debt Securities with fixed interest provision, the yield
  6. Name and address of the sender of the communication and the fact that he is participating, or expects to participate, in the distribution of the security
  7. Names of the underwriters
  8. Approximate date when the proposed sale to the public is to commence
  9. Whether the security is being offered through rights issued to existing security holders, and, if so, the class of securities the holders of which will be entitled to subscribe, the subscription ratio, the actual or
    proposed record date, the date upon which the rights were issued or are expected to be issued, the actual or anticipated date upon which they will expire, and the approximate subscription price, or any of the foregoing;
  10. With respect to any class of debt securities, any class of convertible debt securities or any class of preferred stock, the security rating or ratings assigned to the class of securities by any credit rating agency recognized or accredited by the Commission and the name of such rating agencies which assigned such rating.
  11. For preliminary prospectus, the following statement in bold face:
  12. Statement whether the security is being offered in onnection with a distribution by the Issuer or a security holder, or both, and whether the issue represents new financing or refinancing, or both;
  13. Name/s and address/es of the person/s from whom a prospectus that meets the requirements of Sec.12 may be obtained.
89
Q

All securities required to be registered under Subsection 8.1 shall be registered through the filing by the issuer in the main office of the Commission, a sworn registration statement with respect to such securities, in such form and containing such information and documents as the Commission shall prescribe. The registration statement shall include any prospectus required or permitted to be delivered under Subsections 8.2, 8.3 and 8.4.

A

SECTION 12. Procedure for Registration of Securities

90
Q

What is Registration?

A
  • Act of filing a RS and Prospectus
  • Required prior to any public offer of securities
  • Precedes listing at the Philippine Stock Exchange (PSE)
  • SRC requires full disclosure of information of material information to provide investors bases for an intelligent investment decision
  • Covers both financial and non-financial disclosures
91
Q

Registration Procedure

A

pg. 319 SL deck

92
Q

Securities which are intended to be issued in tranches at more than one instance after the RS has been rendered effective by the Commission, may be registered for an offering to be made on a continuous or delayed basis in the future, for a period not exceeding three (3) years from date of the RS
under which they are being offered or sold

A

Shelf Registration

93
Q

underwriter agrees to PURCHASE THE ENTIRE ISSUE AND ABSORB ANY SECURITIES THAT ARE NOT
SOLD

A

Firm Commitment

94
Q

Underwriting Requirements

A
  1. Underwriting Agreement entered into by IH and underwriters of Securities with respect to public distribution of securities including the fee to be charged in connection therewith, shall be subject to the approval of the Commission
  2. Due Diligence - all underwriters of securities shall exercise such thorough due diligence investigations of all matters relating to the issuer and the issue whether in initial or additional offering to the public to ensure that investors receive complete and accurate material information prior to purchasing share/s in the offering
95
Q

Investment banker agrees to
act as an agent for an issuer but state that ANY SHARES NOT
SOLD WILL BE RETUNED TO THE ISSUER

A

Best Effort Underwriting

96
Q

Section 8 Initial Public Offering (IPO) Distribution Process

  • ___________ of the IPO shall be available to __________ under the Book-building Exercise
  • ____ of the entire IPO which shall be of the entire IPO, which
    shall be offered only after the effectivity of the registration
    statement and during the formal offering period. A local small
    investor is defined as a share subscriber who is willing to
    subscribe to a minimum board lot or whose subscription does
    not exceed P20,000.
  • ____ may be distributed by the underwriters directly to their
    clients/general public, to include institutional investors and
    high net worth individuals
A
  • 30% of the amount; Qualified Institutional Buyers
  • 10%
  • 60%
97
Q

Book-Building

A
  • Issuance of a Pre-effective Letter
  • Determination of Offer Price
  • Preparation of Final Prospectus
98
Q

History of Business Conduct Rules
• In 1990, the Technical Committee of IOSCO published the “International Conduct of Business Principles containing 7 rules of conduct or set of principles of ethical conduct for all of its member countries.
• These rules have formed the core of business principles drawn up in emerging markets

The Ethical Standards Rule under the 2015 SRC Rules sets forth strict
provisions on high standards of dealing and business conduct
guided by the IOSCO standard.

A

Honesty and fairness; Diligence;
Capabilities; Information about client; Information for clients;
Conflicts of Interest; Compliance

99
Q

Signatories to the RS

A

✔️ Principal Executive Officer
✔️ Principal Operating Officer
✔️ Principal Financial Officer
✔️ Comptroller
✔️ Principal Accounting Officer
✔️ Corporate Secretary

100
Q

Signatories to the RS

A

✔️ Principal Executive Officer
✔️ Principal Operating Officer
✔️ Principal Financial Officer
✔️ Comptroller
✔️ Principal Accounting Officer
✔️ Corporate Secretary

101
Q

Contents of RS

A

✔️ Risk Factors
✔️ Risk Disclosure Statement
• General Risk Warning
• Prudence Required
• Professional Advice
✔️ Use of Proceeds
✔️ Determination of the offer price
✔️ Dilution
✔️ Selling security holders
✔️ Plan of distribution
- Underwriters’ compensation
- Underwriters’ rep. to the board
- Designated shares and allocations
- Brokers/dealers’ compensation
- Finders
✔️ Interest of named experts and independent counsel

102
Q

Information on the Registrant

A

✔️ Business
- Business Development
- Business of the Issuer
- Major risks involved in each business of the company and subsidiaries;
- procedure on how to identify, assess and manage such risks
✔️ Properties
✔️ Material Pending Legal Proceedings
✔️ Management Discussion & Analysis and Plan of Operation
✔️ Changes in and disagreements w/ accountant on accounting and financial disclosures
✔️ External audit fees
✔️ Directors and Executive Officers
✔️ Significant Employee/s
✔️ Family Relationships
✔️ Involvement in certain legal proceedings
✔️ Executive compensation
✔️ Security Ownership of certain record and beneficial owners
✔️ Security ownership of management
✔️ Certain relationships and related transactions

103
Q

Financial Statements

A

✔️ Audited Financial Statements
✔️ Comparative periods
✔️ Interim Audited Financial Statements (for IPOs)
✔️ Statement of Management’s Responsibility
✔️ Accredited External Auditors (category “A”)

104
Q

Registration Procedure

A

see photos

FINAL SEC PHASE 1 (9 decks)

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