Governing The Establishment, Operation And Regulation Of Investment Houses
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Governing The Establishment, Operation And Regulation Of Investment Houses
Presidential Decree No. 129
February 15, 1973
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PRESIDENTIAL DECREE No. 129Governing the Establishment, Operation and Regulation of Investment Houses
- Definitions (Section 3):
• Underwriting is guaranteeing the distribution and sale of securities issued by another corporation.
• Securities are written evidences of ownership, interest, participation or indebtedness.
- Coverage and Exclusions (Section 2):
• Any enterprise engaged in underwriting securities is considered an Investment House and subject to this law. (Section 2)
• Does not preclude other enterprises from merely buying and selling short-term securities.
- Organization and Registration (Section 4):
• Investment Houses must be organized as stock corporations. (Section 4)
• SEC registration requires meeting requirements like capital, organization, integrity of organizers, no conflict with public interest, etc. in consultation with Monetary Board.
• Existing Investment Houses must file information sheet within 6 months.
- Citizenship Requirements (Section 5):
• Majority of voting stock must be owned by Filipino citizens.
• Majority of Board members must be Filipino citizens.
- Prohibitions (Section 6):
• Directors/officers cannot concurrently be directors/officers of banks, except as authorized by Monetary Board. (Section 6)
• Investment Houses cannot engage in banking operations.
- Powers (Section 7):
• Underwrite securities, participate in syndicates, act as financial consultant/adviser/broker/portfolio manager, promote ventures, conduct research, acquire property, design employee benefit plans, and other related activities. (Section 7)
- Minimum Capital (Section 8):
• Minimum paid-in capital is 20 million pesos.
- Credit Policies (Section 9):
• Investment Houses must coordinate credit policies with Monetary Board.
- Reporting (Section 10):
• Submit semi-annual reports to SEC and Central Bank.
• SEC may require including underwriting commitments as contingent accounts.
- Regulations (Section 11):
• SEC and Central Bank to promulgate implementing rules within 6 months.
- Central Bank Regulatory Powers (Section 12):
• Subject to Central Bank regulations for non-bank financial intermediaries.
• Monetary Board may allow quasi-banking functions with conditions like capital, liquidity, interest rate ceilings.
• Central Bank can issue cease-and-desist orders and impose fines for non-compliance.
- Other Provisions:
• No separate broker/dealer license needed under Securities Act. (Section 13)
• Corporation Law applies unless inconsistent. (Section 14)
• Existing Investment Houses have 1 year to comply, except information sheet. (Section 15)
• Penalties for violations include fines up to 20,000 pesos and/or 5 years imprisonment. (Section 16)
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Governing The Establishment, Operation And Regulation Of Investment Houses
Presidential Decree No. 129
•February 15, 1973
MALACAÑANGM a n i l a
PRESIDENTIAL DECREE No. 129 February 15, 1973
GOVERNING THE ESTABLISHMENT, OPERATION AND REGULATION OF INVESTMENT HOUSES
WHEREAS, there were pending before Congress, prior to the promulgation of Proclamation No. 1081, dated September 21, 1972, urgent measures proposing the regulation of the so-called investment banks;
WHEREAS, an extensive survey and study of the Philippine financial system had been undertaken in order to determine its adequacy in Philippine economic development, and an integrated set of recommendations were submitted;
WHEREAS, the recommendations, as endorsed with modifications by the monetary authorities and made the basis of this Decree, advocated the enactment of the statutory framework within which the underwriting of securities may be governed and, to the extent that these entities perform quasi-banking functions, to harmonize their operations with national monetary goals.
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue of the powers vested in me by the Constitution as Commander-in-Chief of all the Armed Forces of the Philippines, and pursuant to Proclamation No. 1081, dated September 21, 1972,...
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