Securities Regulation Code

Question 1

Which of the following is not an objective of Securities Regulation Code a.k.a. R.A. No. 8799?

a. To establish a socially conscious, free market that regulates itself
b. To encourage the widest participation of ownership in enterprises
c. To enhance the democratization of wealth
d. To promote monopoly and oligopoly

Answer 1

d. To promote monopoly and oligopoly

Question 2

Which of the following is not an objective of Securities Regulation Code a.k.a. R.A. No. 8799?

a. To promote the development of the capital market
b. To protect investors
c. To ensure full and fair disclosure about securities
d. To encourage insider trading and other fraudulent or manipulative devices and practices which create distortions in the free market

Answer 2

d. To encourage insider trading and other fraudulent or manipulative devices and practices which create distortions in the free market

Question 3

These are shares, participation, or interests in a corporation or in a commercial enterprise or profit-making venture and evidenced by a certificate, contract, instruments, whether written or electronic in character

Answer 3

Securities

Question 4

Securities includes
a. Shares of stocks, bonds, debentures, notes evidences of indebtedness, asset-back securities
b. Investment contracts, certificates of interest or participation in profit sharing agreement, certificates of
deposit for a future subscription
c. Fractional undivided interests in oil, gas or other mineral rights

Answer 4

All of the above

Question 5

It refers to a contract, transaction, or scheme whereby a person invests his money in common enterprise and is led to expect profits primarily from the efforts of others

Answer 5

Investment contract

Question 6

It refers to the originator, maker, obligor or creator of the security

Answer 6

Issuer

Question 7

It means any person who buys and sells securities for his/her own account in the ordinary course of business

Answer 7

Dealer

Question 8

It refers to a person engaged in the business of buying and selling securities for the account of others

Answer 8

Broker

Question 9

It means any person who acts as intermediary in making deliveries upon payment to effect settlement in securities transactions

Answer 9

Clearing agency

Question 10

It refers to an organized market place or facility that brings together buyers and sellers and executes trade of securities and/or commodities

Answer 10

Exchange

Such as PSE

Question 11

It means
(a) the issuer;
(b) a director or officer (or any person performing similar functions) of,
(c) or a person controlling the issuer; gives or gave him access to material information about the issuer or the security that is not generally available to the public;
(d) a government employee, director or officer of an exchange,
clearing agency and/or self-regulatory organization who has access to material information about an issuer or a security that is not generally liable to the public; or
(e) a person who learns such information by a communication from any forgoing

Answer 11

Insider

Question 12

These are contracts which provide for the performance of future services of or the payment of future monetary considerations at the time of actual need, for which plan holders pay in cash or installment at stated prices, with or without interest or insurance coverage and includes life, pension, education, interment,
and other plans which the Commission may from time to time approve

Answer 12

Pre-need plans

Question 13

It refers to a person who, acting alone or with others, takes initiative in founding and organizing the business or enterprise of the issuer and receives consideration therefor

Answer 13

Promoter

Question 14

It refers to the document made by or on behalf of an issuer, underwriter or dealer to sell or offer securities for sale to the public through registration statement filed with the Commission

Answer 14

Prospectus

Question 15

It refers to the application for the registration of securities required to be filed with the Commission

Answer 15

Registration statement

Question 16

It refers to a person who guarantees on a firm commitment and/or declared best effort basis the distribution and sale of securities of any kind by another company

Answer 16

Underwriter

Question 17

Which government agency is entrusted with the administration of the Securities Regulation Code?

Answer 17

Securities and Exchange Commission

Question 18

Statement I: Securities shall not be sold or offered for sale or distribution within the Philippines, without a registration statement duly filed with and approved by the Commission

Statement II: The Commission may audit the financial statements, assets and other information of firm applying for registration of its securities whenever it deems the same necessary to insure full disclosure or to protect the interest of the investors and the public in general

Answer 18

Both are true

Question 19

The requirement of registration shall not as a general rule apply to any of the following classes of securities

a. Any security issued or guaranteed by the Government of the Philippines, or by any political subdivision or agency thereof, or by any person controlled or supervised by, and acting as an instrumentality of said Government

b. Any security issued or guaranteed by the government of any country with which the Philippines maintains diplomatic relations, or by any state, province or political subdivision thereof on the basis of reciprocity, provided that the Commission may require compliance with the form and content for disclosures the Commission may prescribe

c. Certificates issued by a receiver or by a trustee in bankruptcy duly approved by the proper adjudicatory body

Answer 19

All of the above

Question 20

The requirement of registration shall not apply to the sale of any security in any of the following transactions

a. At any judicial sale, or sale by an executor, administrator, guardian or receiver, or trustee in insolvency or bankruptcy

b. By or for the account of a pledge holder, or mortgagee or any of a pledge lien holder selling or offering for sale or delivery in the ordinary course of business and not for the purpose of avoiding the provision of the Securities Regulation Code, to liquidate a bonafide debt, a security pledged in good faith as
security for such debt

c. An isolated transaction in which any security is sold, offered for sale, subscription or delivery by the owner therefore, or by his representative for the owner’s account, such sale or offer for sale, subscription
or delivery not being made in the course of repeated and successive transaction of a like character by
such owner, or on his account by such representative and such owner or representative not being the underwriter of such security

Answer 20

All of the above

Question 21

The Commission may reject a registration statement and refuse registration of the security, or revoke the effectivity of a registration statement and the registration of the security if it finds that the issuer

a. Has been judicially declared insolvent

b. Has violated any of the provision of the Securities Regulation Code

c. Has been or is engaged or is about to engage in fraudulent transactions

Answer 21

All of the above

Question 22

22. The reportorial requirements shall apply to the following

a. An issuer which has sold a class of its securities pursuant to a registration: Provided however, that the obligation of such issuer to file reports shall be suspended for any fiscal year after the year such registration became effective if such issuer, as of the first day of any such fiscal year, has less than 100 holder of such class securities or such other number as the Commission shall prescribe and it notifies the Commission of such

b. An issuer with a class of securities listed for trading on an Exchange

c. An issuer with asset of at least P50,000,000 or such other amount as the Commission shall prescribe, and having 200 or more holder each holding at least 100 share of a class of its equity securities: Provided, however, that the obligation of such issuer to file report shall terminate 90 days after notification to the Commission by the issuer that the number of its holders holding at least 100 share reduced to less than 100

Answer 22

All of the above

Question 23

It shall be unlawful for any person, in connection with the purchase and sale of any security to

a. Employ any device, scheme, or artifice to defraud

b. Obtain money or property by means of any untrue statement of a material fact or any omission to state a material fact necessary in order to make the statements made not misleading

c. Engage in any act, transaction, practice, or course of business which operates or would operate as a fraud or deceit upon any person

Answer 23

All of the above

Question 24

It involves the trading of securities based on knowledge of material information not disclosed to the public at the time

Answer 24

Insider trading

Question 25

Statement I: The Securities Regulation Code treats investment contracts as “securities” that have to be registered with the Securities and Exchange Commission (SEC) before they can be distributed and sold

Statement II: Securities shall not be sold or offered for sale or distribution to the public within the Philippines, without a registration statement duly filed with and approved by the SEC

Answer 25

Both are true