Philippines

Posted By Steve On Friday, October 16th, 2009 With 0 Comments

Disclosure Requirements
:
Shareholdings in this market may be required to be disclosed by the beneficial owner, particularly when such shareholdings reach or exceed prescribed disclosure limits. Investors must ensure that they comply in full by reporting such holdings to the appropriate organizations for this market, within the time frame required. If you have any questions regarding this issue we encourage you to consult your legal counsel.

Failure to comply with the reporting requirements in this market may lead to penalties and / or other sanctions.

Beneficial owners holding 5% or above, and up to 10%, must report these holdings to the SEC, the PSE and the issuing company within five days and 10 days upon reaching aforesaid substantial percentage respectively.

Beneficial owners holding more than 5% of any class of equity securities of a company is required to report to the SEC, Issuer, and the PSE within five days upon reaching aforesaid substantial percentage. Similarly, beneficial owners holding more than 10% of any class of equity securities of a company, is required to report to the aforesaid entities within ten days.

The BSP requires quarterly disclosure of the beneficial ownership of bank shares held in the name of PDTC Nominee Corporation. Corporate Secretaries of banks are obligated to prepare the report for submission to the BSP. Sub-custodians, in turn are obliged to forward the report to the Corporate Secretaries.

A 2% ownership of total subscribed capital of a domestic bank and 40% ownership of the voting stock of a domestic bank must be disclosed to the BSP or Central Bank of the Philippines. Investors must also secure Monetary Board approval prior to the sale or transfer that will result in an ownership of more than 20% and/or will change the majority ownership or control of voting stock of a bank.

Buy-Ins
No formal buy-in procedures. However, at T+3, 12:00, the broker is automatically penalized for failure to pay cash or deliver shares. For example, if the buying broker is unable to pay-up, he is given until 09:15 of SD+1 to pay the cash. If the broker still fails to settle, the SCCP conducts a sell-out at 10:00 in order to acquire the securities that should be delivered to the buying counter-party. SCCP will automatically execute a buy-In at 10:00.

Penalties charged to the delinquent selling broker:

* Cash Fail

P1000 + 1/4 of 1% or 0.0025 of the value of the cash fail compounded daily until paid or until payment of any advances made from the CTGF* is made a preventive suspension or a recommendation for suspension of the defaulting member will be made.

* Security Fail

P1000 + 1/4 of 1% or 0.0025 of the market value of the security fail compounded daily until delivery is rendered or until payment of any advances made from the CTGF is made. Plus actual out-of-pocket expenses incurred by SCCP to resolve the cash fail. If still not paid by 09:15 of T4, a preventive suspension or a recommendation for suspension of the defaulting member will be made.
*Clearing and Trade Guaranty Fund

Compensation Fund
The Securities Investors’ Protection Fund
Safeguards investors against fraud, broker failure or insolvency. It is only available to investors of securities companies which are forced to liquidate. However, this is currently under review to allow investors to claim before a company files for bankruptcy

Anti-Money Laundering
The sub-custodian is regulated by the Financial Services Authority (FSA) and is governed by the FSA’s regulations on money laundering, and by the UK’s statutory provisions and guidance from the Joint Money Laundering Steering Group. In Hong Kong, similar legislation and guidance is issued by the sub-custodian’s local regulator, the Hong Kong Monetary Authority.

Comprehensive policies and procedures are in place with the sub-custodian which meet or exceed local regulatory requirements. They are a signatory to the Wolfsberg Principles on anti-money laundering for international private banks and continually monitor sanctions on a global basis.

The standard anti-money laundering controls include identification procedures for account opening and methods for monitoring transactions.

Documents Required to Open Securities and Cash Accounts
Banks
:
Clients are required to sign, complete and forward the following documents to the sub-custodian. If these documents are already in place for accounts with other centres, the sub-custodian will provide certified copies of these documents to the branch.

* Custodian agreement
* List of specimen signatures of authorized signatories and details of signing arrangements
* Fee agreement
* Securities and cash account opening forms or an authenticated SWIFT instruction (Note 1)
* Standing instructions, when provided
* Contact lists, when provided
* Service Level Agreement, when provided

Non-banks:
Clients are required to sign, complete and forward the following documents to the sub-custodian. If these documents are already in place for accounts with other centres, the sub-custodian will provide certified copies of these documents to the branch.

* Custodian agreement
* List of specimen signatures of authorized signatories and details of signing arrangements (Note 3)
* Fee agreement
* Securities and cash account opening forms or an authenticated SWIFT instruction (Note 1)
* Director declaration form or Certificate of Incumbency issued by registered agent (sample form below for download)
* Memorandum and Articles of Association and any amending resolutions (or any equivalent document, e.g. By-laws)
* Certificate of Incorporation and Certificate of Incorporation of Change of Name (if applicable)
* Mandate for accounts of a limited company (sample form below for download)
* Board resolution authorizing the opening of the account and identifying those who have authority to operate the account (optional)
* Passport copies of the Principal Shareholders (Note 4), Directors and Authorized Signatories and the corresponding residential address proof (including permanent address is different)

Broker dealers:
For broker dealer client, Securities Clearing Agreement (instead of Custodian Agreement) should be completed together with the relevant documents as stated above for non-bank clients.

Notes:
1. The sub-custodian will arrange SWIFT keys to be set up between the branch and the client.
2. Account opening instructions should indicate the nationality and tax residency (if different from nationality) of the account. The nationality (country of incorporation) is recorded in the sub-custodian’s proprietary system and will be the basis of central bank reporting requirements for foreign investments by country. The tax residency (place where they conduct business) will be the basis of the withholding tax agent for determining the applicable tax rate on dividend income. The Philippines has existing tax treaties with several countries allowing their residents to enjoy preferential tax rates. To enjoy the preferential rate, it is essential to provide the correct tax residency. It is also imperative to indicate whether the account is owned or controlled by a government entity as full exemption may apply (Note 6).
3. Signatures appearing on the account opening forms/list of specimen signatures of the authorized signatories list must be duly verified by your present banker (for non-bank clients).
4. A person entitled to exercise or control the exercise of 10 per cent or more of the voting rights of a company is regarded as a principal shareholder of the company (for non-bank clients).
5. Copies of company documentation (local version plus English version) must all be certified as true copies by a Certified Public Accountant, solicitor/notary public or banker (for non-bank clients).
6. Should any of the directors or authorized signatories be corporate entities, additional account opening documentation will be required. Please contact your relationship manager for the details (for non-bank clients).

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