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Philippine Stock Exchange Equities

Common and preferred shares, warrants, Philippine deposit receipts (PDRs)
New company listings typically offer one class of share, for residents and non-residents, with the level of foreign ownership monitored by the transfer agent.
Previously, companies issued two classes of shares proportionate to applicable foreign ownership limits: “A” shares sold only to residents, and “B” shares sold to both residents and non-residents.

Debt: Corporate bonds, commercial debentures, government debt, treasury bills, treasury bonds, commercial paper and small denominated treasury (SDT) bonds

Money Market: 90-day time deposit

Physical: The Philippines has been trading in scripless form since 1997.
For sale transactions, physical shares must be lodged in the broker’s PDTC account on SD. For certain issues, PSE require that all clients deliver stock certificates to the selling broker on or before trade date.
For purchase transactions, the subcustodian remits payment against the receipt of the stock certificate.

Board Lots

Equities: Board lots vary with share price and range from 10 shares to one million shares. Any unit smaller than a board lot is considered an odd lot. Trading is done by board lots and a maximum of five board lots are allowed per trade.
Debt: There is no minimum board lot however banks and financial institutions impose their own lot sizes which range from PHP 10,000 to PHP 1 million.

Dividend Payment Frequency:Quarterly, semi-annually or annually for blue chip issues. All others vary from company to company.

Interest Payment Frequency
Semi-annually (Fixed Rate Treasury Notes), quarterly (Retail treasury Bonds)

Interest Accrual Rate:
Actual rate on payment date.

Corporate Actions

Common Events: Stock dividends, bonus and rights issues, tender offers, conversions
Rights Tradeable: No
New Shares from Exercised Rights: Received within 15 to 45 days

Foreign Investor Restrictions
Foreign investors are entitled to exercise voting rights on series “B” shares and the new single class of shares subject to the set foreign ownership limit.

Shares Blocked No.

Meeting Notices/

Provided in English. Annual general meetings and extraordinary general meetings are announced one to two months in advance.

Meeting Outcome On request, subject to availability

Company Reports On request, subject to availability

Power of Attorney:
Not required.

Foreign Ownership
Market Entrance Requirements:


Foreign investment is limited to 40% for securities on the Foreign Investment Negative List. Foreign investors are restricted to owning “Class B" shares or the new single class of shares. Stock transfer agents monitor the ceiling on foreign ownership.

Repatriation Policy
Each purchase must be registered with Bangko Sentral ng Philippines (central bank) to allow sale proceeds or dividends to be repatriated through the banking system. Proof of inward remittance must be provided by the subcustodian to complete the registration process.

Exchange control regulations do not allow foreign investors to run overdrafts in PHP. The central bank imposes a minimum 90-day freeze on foreign funds placed in peso time deposits.

Securities Lending

The Philippine Stock Exchange, Inc. (PSE), the Securities and Exchange Commission (SEC), the Bureau of Internal Revenue (BIR), the Bangko Sentral ng Pilipinas (BSP), and the Department of Finance (DoF), has completed the regulatory framework to facilitate the implementation of Securities Borrowing and Lending facility in the Philippines. The SEC approved the PSE’s, Rules on Securities Borrowing and Lending and which took effect on February 15, 2007. Revenue Regulation No 10-2006 which prescribes the treatment of SBL transactions took effect July 2006. The Philippine Dealing System Holdings Corp (PDS) will also launch its SBL on debt securities, but they have yet to issue their implementing guidelines.

Although, SBL facility is available, brokers may continue to informally borrow securities from other participants during a one year transition period in order to avoid settlement failures. This period is to end on February 15, 2008.


Dividend Tax Rate
Dividends paid to non-resident investors are subject to 35% tax. Stock dividends are exempt.

Interest Tax Rate
Interest paid to non-resident investors is subject to 20% tax.

Capital Gains Tax Rate:
Net capital gains from shares not traded through the PSE are subject to capital gains tax calculated as follows:

* less than or equal to PHP 100,000 5%
* greater than PHP 100,000 10%

Tax Treaties

Australia Germany Norway
Austria Hungary Pakistan
Bahrain India Romania
Bangladesh Indonesia Russia
Belgium Israel Singapore
Brazil Italy Spain
Canada Japan Sweden
China Korea, South Switzerland
Czech Republic Malaysia Thailand
Denmark Netherlands United Kingdom
Finland New Zealand United States
France Vietnam

Tax Sparing is allowed for the following:
a) BIR ruling in place;
Bahamas, Bermuda, Hongkong, Cayman Islands, Luxembourg

b) No BIR ruling in place;
Brunei, Channel Islands, Greece, Ireland, Taiwan, Virgin Islands

Stamp DutyEffective from March 22, 2004, and for a period of five years, brokers operating locally will no longer collect Documentary Stamp Tax (DST) on sale, barter or exchange of shares of stock listed and traded through the local stock exchange. This is due to the issuance of Republic Act No. 9243, also knows as "An Act rationalising the provision on the Documentary Stamp Tax of the National Internal Revenue Code of 1997, as amended, and for other purposes". Salient provisions are:

* Reduction of the DST rate on the original issuance of shares of stocks to PHP1 on each PHP200 or fractional part thereof, of the par value, from the current PHP2.

* Reduction of the DST rate on sales, agreements to sell, memoranda of sales, deliveries or transfer of shares or certificates of stock to PHP0.75 on each PHP200 or fractional part thereof, of the par value, from the current PHP1.50.

* Increase of the DST rate for the original issuance of debt instruments to PHP1 on each PHP200 or fractional part thereof, of the issue price, from the current PHP0.30.

* Abolition of DST for the following instruments: a.) sale, barter or exchange of shares of stock listed and traded through the local stock exchange for a period of five years; b.) borrowing and lending of securities executed under the securities borrowing and lending program of a registered exchange, or in accordance with regulations prescribed by the regulatory authority; c.) fixed income and other securities traded in the secondary market or through an exchange; d.) derivatives or financial instruments whose values are derived from an underlying index.

Other Taxes:
Final Transfer Tax (or Sales Tax): 0.5% of the transaction value in lieu of the capital gains tax and paid by the seller.

Value Added Tax: the following are subject to 12% VAT:
Broker commission - Minimum commission of 0.25% up to maximum 1.5% of the transaction is payable by both buyer and seller

* Transactions worth below PHP 100 million – rate is 0.0025
* Transactions of PHP 100 million to PHP 500 million – rate is 0.0015
* Transactions above PHP 500 million – rate is 0.00125

SCCP fee (rates below already include 12% VAT) - Both purchase and sale of stocks are subject to 0.0001 or 1 basis point based on gross trade values (inclusive of block transactions and cross trades with common securities account or common flag)

Cancellation and Transfer fees - Transfer fee (for physical shares only): PHP20 per certificate cancellation fee + PHP100 for every new issue of certificate