The Securities and Exchange Commission (SEC) is seeking comments on the draft guidelines clarifying exempt transactions under the Securities Regulation Code (SRC) to streamline capital-raising activities, improve ease of doing business, and eliminate regulatory ambiguity.

In a notice dated 15 August, the SEC Markets and Securities Regulation Department released for public comment a draft memorandum circular providing further guidelines on exempt transactions under Section 10 of the SRC.

The measure would amend Rules 10.1, 10.2 and 10.3 of the implementing rules and regulations.

Section 10.1 lists securities exempt from registration requirements for sale or distribution in the country. 

Section 10.2 empowers the SEC to exempt transactions not covered by Section 10.1, while Section 10.3 requires applicants for exemption to file a notice and pay a fee equivalent to one-tenth of one percent of the maximum aggregate price or issued value of the securities.

However, the SEC noted that subsequent rules and memorandum circulars have created varying directives on how companies can secure or confirm exemptions.

Prospective guidance needed

“[T]here is a need for prospective guidance to the public on the applicability of the requirement to obtain confirmations of exemption under Section 10 of the SRC, consistent with the policy of the Commission to improve ease of doing business, facilitate access to the capital market, and provide predictability in government transactions, all while ensuring protection to the investing public,” the draft guidelines stated.

Under the proposal, persons claiming exemption under Section 10.1 would file SEC Form 10.1 — by checking “Notice of Exemption” — within 10 calendar days before the offer or sale of the securities. No filing fee would be required.

For a confirmation of exemption under Section 10.1, companies would also file SEC Form 10.1 — by checking “Application for Confirmation of Exempt Transaction” — and pay the prescribed fee under Section 10.3.

Applicants for exemption under Section 10.2 would file an “Application for Confirmation of Exempt Transaction” and pay the same fee rate.