Material Information: Concept / Treatment under the Securities Regulation Code of the Philippines

A material fact or information, as defined in the 2015 SRC Rules, refers to any fact or information that may result in a change in the market price or value of any of the Issuer’s securities, or may potentially affect the investment decision of an investor. Material information shall include, but not be limited to, the following: 

  • 1. Any event or transaction which increases or creates a risk on the investments or on the securities covered by the registration; 
  • 2. Increase or decrease in the volume of the securities being offered at an issue price higher or lower than the range set and disclosed in the registration statement and which results to a derogation of the rights of existing security holders, as may be determined by the Securities and Exchange Commission (SEC); 
  • 3. Major change in the primary business of the Issuer;
  • 4. Reorganization of the company;
  • 5. Loss, deterioration or substitution of the property underlying the securities; 
  • 6. Ten percent (10%) or more change in the financial condition or results of operation of the Issuer unless a report to that effect has been filed with the SEC and furnished the prospective purchaser; 
  • 7. Classification, de-classification or re-classification of securities which results to the derogation of the rights of existing security holders, as may be determined by the SEC. 

There are a number of responsibilities and prohibitions related to material information. For instance, an owner of more than 5% of the voting rights of a public and reporting company who holds material information, must disclose such information. 

A registered person (a Broker Dealer, Associated Person and salesman of a Broker Dealer) shall make adequate disclosure of material information in his dealings with his clients. 

A registration statement or prospectus on file with the SEC becomes incomplete or inaccurate in any material respect or if the Issuer wants to change any material information therein , the issuer shall make the necessary amendment and notification. 

It is unlawful for an insider to sell or buy a security of the issuer, while in possession of material non-public information. This is called insider trading, which is prohibited under the Securities Regulation Code of the Philippines. [See Insider trading prohibited under the Securities Regulation Code]

P&L Law

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.