Securities cannot be sold or offered for sale within the Philippines without a registration statement filed with and approved by the Securities and Exchange Commission (SEC). The SEC, however, may provide for certain exemptions, such as the sale of securities under the Crowdfunding Rules.
GROUNDS FOR DISQUALIFICATION
Crowdfunding is not available to an issuer in certain instances. The grounds for disqualification of an issuer are as follows:
I. The issuer has been judicially declared insolvent.
II. The issuer has violated any of the provision of the Crowdfunding Rules, and the Securities Regulation Code (SRC) and its rules, or any order of the SEC of which the issuer has notice in connection with the offered securities.
III. The issuer has been or is engaged or is about to engage in fraudulent transactions.
IV. The issuer has made any false or misleading representation of material facts in any disclosure concerning the issuer or its securities.
V. The issuer has failed to comply with any requirements that the Intermediary may impose as a condition for application of securities for crowdfunding.
VI. The disclosure statement is on its face incomplete or inaccurate in any material respect or includes any untrue statements of a material fact required to be stated therein or necessary to make the statement therein not misleading. A disclosure statement may be withdrawn by the issuer only with the consent of the Intermediary and/or the SEC.
VI. The issuer, any officer, director or controlling person performing similar functions, or any underwriter, has been convicted by a competent judicial or administrative body, upon plea of guilty, or otherwise, of an offense involving moral turpitude and /or fraud or is enjoined or restrained by the Intermediary, the SEC or other competent or administrative body for violations of securities, commodities, and other related laws. For purposes of this subsection, the term “competent judicial or administrative body” shall include a foreign court of competent jurisdiction and a foreign financial regulator.
VII. Refusal by the issuer to permit an examination to be made by the Intermediary and/or the SEC, its refusal shall be ground for the refusal or revocation of the registration of its securities. The Intermediary and the SEC may compel the production of all the books and papers of such issuer, and may administer oaths to, and examine the officers of such the issuer or any other person connected therewith as to its business and affairs.
SUSPENSION PENDING INVESTIGATION
If the Intermediary and/or SEC deems it necessary, it may issue an order suspending the offer and sale of the securities pending any investigation. The order shall state the grounds for taking such action, but such order of suspension although binding upon the persons notified thereof, shall be deemed confidential, and shall not be published.
Upon the issuance of the suspension order, no further offer or sale of such security shall be made until the same is lifted or set aside by the Intermediary and/or SEC. Otherwise, such sale shall be void.
Notice of issuance of such order shall be given to the issuer and every broker who shall have notified the Intermediary and/or SEC of an intention to sell such security.
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