CBP Circular No. 1059-85

April 29, 1985 CBP CIRCULAR NO. 1059-85 The Monetary Board, in its Resolution No. 416 dated April 19, 1985, approved the following amendments/-deletions of certain provisions in Books I, II, and IV of the Manual of Regulations for Banks and Other Financial Intermediaries, consistent with the attached New Rules on Registration of Short Term Commercial Papers and New Rules on the Registration of Long Term Commercial Papers. LLphil BOOK I SECTION 1. Section 1289 of Book I shall be amended by adding Subsection 1289.6 after Subsection 1289.5 thereof, to read as follows: Subsection 1289.6. Issuance of Commercial Paper . The issuance of commercial paper by all banks shall be in compliance with the applicable provisions of the SEC rules on registration of commercial papers appended hereto as Appendices 18 and 19. "No commercial paper shall be issued in the name of two or more persons or accounts, as defined under existing rules of the Central Bank." SECTION 2. Section 1293 and Subsections 1293.1, 1293.2 and 1293.3 of Book I are hereby deleted. SECTION 3. Subsection 1301.1 of Book I shall be amended by adding Subsections 1301.1h and 1301.1i after Subsection 1301.1g, as follows: "h. The total liabilities of a commercial paper issuer for commercial papers held by an expanded commercial bank as selling agent or a firm underwriter shall not be counted in determining compliance with the loan limit to a single borrower within a period of one hundred eight days from the acquisition of the commercial paper by an expanded commercial bank; Provided , That in no case shall such liabilities exceed five percent (5%) of the net worth of the selling agent beyond the normal applicable single borrower limit. "i. Commitments under a committed credit line issued by the bank in favor of a registered commercial paper issuer as provided under Subsection 1348.2." SECTION 4. Section 1388 of the same book shall be amended by adding Subsection 1388.3 after Subsection 1388.2 thereof, to read as follows: "Subsection 1388.3. Purchase of Commercial Paper . Before purchasing registered commercial paper, banks shall: "(a) Require the issuing entity to submit a duly certified true copy of its Certificate of Registration and Authority to Issue Commercial Paper; and "(b) Ascertain that the registration number and expiry date indicated in the commercial paper are the same as those in the Certificate of Registration submitted. "Any violation or failure to comply with the provisions of this subsection shall subject the erring bank to suspension or revocation of its authority to engage in quasi-banking functions." SECTION 5. Section 1408 of Book I shall be amended by adding Item "d" after item "c" thereof, to read as follows: "d. Commingle trust funds for the purpose of complying with the prescribed minimum denomination of principal amount of a duly registered commercial paper." SECTION 6. Subsection 1424.1 of Book I shall be amended to read as follows: "Subsec. 1424.1. Commingling of Funds . No financial manager shall commingle the funds of two or more accounts for the purpose of investing in the money market. However, managed funds may be commingled for the purpose of complying with the prescribed minimum denomination or principal amount of a duly registered commercial paper; Provided , That the owners of the funds have specifically agreed in writing to such commingling." BOOK II SECTION 7. Section 2289 of Book II shall be amended by adding Subsec. 2289.6 after Subsec. 2289.5 thereof, to read as follows: "Subsec. 2289.6. Issuance of Commercial Paper . The issuance of commercial paper by thrift banks authorized to perform quasi-banking functions shall be in compliance with the applicable provisions of the SEC rules on registration of commercial papers appended hereto as Appendices 21 and 22. "Thrift banks not authorized to perform quasi-banking functions may issue commercial paper exempt per se under Section 4 (f) and 7.g. of the New Rules on Registration of Short Term Commercial Papers and the New Rules on the Registration of Long Term Commercial Papers, respectively: Provided , That such commercial paper shall not be issued to more than 19 lenders. "No commercial paper shall be issued in the name of two or more persons or accounts, as defined under existing rules of the Central Bank." SECTION 8. Section 2293, Subsections 2293.1, 2293.2 and 2293.3 of Books II are hereby deleted. SECTION 9. Subsection 2301.1 of Book II shall be amended by adding item "e" after item "d", thereof, to read as follows: "e. Commitments under a committed credit line issued by the bank in favor of a registered commercial paper issuer as provided under item "d" of Section 2348." SECTION 10. Section 2188 of the same Book shall be amended by adding Subsection 2388.3 after Subsec. 2388.2, to read as follows: "Subsec. 2388.3. Purchase of Commercial Papers Before purchasing registered commercial paper, thrift banks shall: "(a) Require the issuing entity to submit a duly certified true copy of its Certificate of Registration and Authority to Issue Commercial Paper, and "(b) Ascertain that the registration number and expiry date indicated in the commercial paper are the same as those in the Certificate of Registration submitted. "Any violation or failure to comply with the provisions of this Subsection shall subject the thrift bank to sanctions provided by law." SECTION 11. Section 2408 of Book II shall be amended by adding Item "d" after Item "c" thereof, to read as follows: "d. Commingle trust funds for the purpose of complying with the prescribed minimum denomination or principal amount of a duly registered commercial paper." SECTION 12. Subsection 2424.1 of Book II shall be amended to read as follows: "Subsec. 2424.1. Commingling of Funds No financial manager shall commingle the funds of two or more accounts for the purpose of investing in the money market. However, managed funds may be commingled for the purpose of complying with the prescribed minimum denomination or principal amount of a duly registered commercial paper; Provided , That the owners of the funds specifically agreed in writing to such commingling." BOOK IV SECTION 13. Section 4289Q of Book IV shall provide for rules on the issuance of papers to read as follows: "SECTION 4289Q. Issuance of Commercial Paper . All financial intermediaries authorized to engage in quasi-banking functions and issuing or intending to issue commercial papers shall comply with the applicable provisions of the SEC rules on the registration of commercial papers appended hereto as Appendices 15 and 16. dctai "No commercial paper shall be issued in the name of two or more persons or accounts as defined under existing rules of the Central Bank." SECTION 14. Section 4293Q, Subsections 4293Q.1 and 4293Q.2 of Book IV are hereby deleted. SECTION 15. Section 431Q of Book IV shall be amended by adding Subsec. 4301Q.2 after Subsec. 4301Q.1 thereof, to read as follows: "Subsec. 4301Q.2. Exclusions from Loan Limit In addition to those enumerated in Sec. 4301Q, the total liabilities of a commercial paper issuer for commercial papers held by a non-bank financial intermediary authorized to engage in quasi-banking functions as selling agent or a firm underwriter shall not be counted in determining compliance with the loan limit to a single borrower within a period of one hundred eighty days from the acquisition of the commercial paper by a non-bank financial intermediary authorized to engage in quasi-banking functions; Provided , That in no case shall such liabilities exceed five percent (5%) of the net worth of the selling agent beyond the normal applicable single borrower limit. SECTION 16. Section 4388Q of Book IV shall be amended to read as follows: "SECTION 4388Q. Purchase of Commercial Paper . Before purchasing registered commercial paper, financial intermediaries authorized to engage in quasi-banking functions shall: "(a) Require the issuing entity to submit a duly certified true copy of its Certificate of Registration and Authority to Issue Commercial Paper; and "b) Ascertain that the registration number and expiry date indicated in the commercial paper are the same as those in the Certificate of Registration submitted. "Any violation or failure to comply with the provisions of this Section shall subject the erring financial intermediary to suspension or revocation of its authority to engage in quasi-banking functions." SECTION 17. Section 4408Q of Book IV shall be amended by adding item "d" after Item "c" thereof, to read as follows: "d. Commingle trust funds for the purpose of complying with the prescribed minimum denomination or principal amount of a duly registered commercial paper." SECTION 18. Subsection 4424Q.1 of Book IV shall be amended to read as follows: "Subsec. 4424Q.1. Commingling of Funds No financial manager shall commingle the funds of two or more accounts for the purpose of investing in the money market. However, managed funds may be commingled for the purpose of complying with the prescribed minimum denomination or principal amount of a duly registered commercial paper; Provided , That the owners of the funds have specifically agreed in writing to such commingling." This Circular shall take effect immediately. FOR THE MONETARY BOARD: (SGD.) GABRIEL C. SINGSON Senior Deputy Governor New Rules on the Registration of Long Term Commercial Papers Pursuant to Section 4(b) of the Revised Securities Act and other existing applicable laws, the Securities and Exchange Commission hereby promulgates the following New Rules and Regulations governing long term commercial papers, in the interest of full disclosure and protection of investors and lenders in accordance with the monetary and credit policies of the Central Bank: SECTION 1. Scope . These Rules shall apply to long term commercial papers issued by corporations. SECTION 2. Definitions . For purposes of these Rules, the following definitions shall apply: a. Long term commercial papers shall refer to evidence of indebtedness of any corporation to any person or entity with maturity period of more than three hundred sixty-five (365) days. b. Interbank loan transactions shall refer to borrowings between and among banks and non-bank financial intermediaries duly authorized to perform quasi-banking functions. c. Issue shall refer to the creation of commercial paper and its actual or constructive delivery to the payee. d. Appraised value shall refer to the value of chattel and real property as established by a duly licensed and independent appraiser. e. Current market value shall refer to the value of the securities at current prices as quoted at the stock exchanges. f. Recomputed debt to equity ratio shall refer to the proportion of total outstanding liabilities including the amount of long term commercial papers applied for and any unissued authorized commercial papers to net worth. g. Specific person shall refer to a duly named juridical or natural person as an investor for its or his own account, a trustee for one or more trustors, agent or fund manager for a principal under a fund management agreement and does not include numbered accounts. h. Net worth shall refer to the excess of total assets over total liabilities, net of appraisal surplus. i. Subsidiary shall refer to a company more than fifty (50%) percent of the outstanding voting stock of which is directly or indirectly, owned, controlled, or held with power to vote by another company." j. Affiliate shall refer to a concern linked, directly or indirectly, to another by means of; 1) Ownership, control and power to vote of 10% but not more than 50% of the outstanding voting stock. 2) Common major stockholders, i.e. owning 10% but not more than 50% of the outstanding voting stock. 3) Management contract or any arrangement granting power to direct or cause the direction of management and policies. 4) Voting trustee holding 10% but not more than 50% of the outstanding voting stock. 5) Permanent proxy constituting 10% but not more than 50% of the outstanding voting stock. k. Underwriting shall refer to the act or process of distributing and selling of any kind of original issues of long term commercial papers of a corporation other than those of the underwriter itself either on guaranteed or best effort basis. l. Trust accounts shall refer to those accounts with a financial institution authorized by the Central Bank to engage in trust functions wherein there is a trustor-trustee relationship under a trust agreement. SECTION 3. Conditions for Registration . Long term commercial papers shall be registered under any of the following conditions: a. Collateral The amount of long term commercial papers applied for is covered by the following collaterals which are not encumbered, restricted or ear-marked for any other purpose and which shall be maintained at their respective values at all times indicated in relation to the face value of the long term commercial paper issue; 1) Securities listed in Current market value the stock exchange of 200% 2) Registered real estate Appraisal value of 150% mortgage 3) Registered chattel mortgage Appraised value of 200% on heavy equipment, machinery and similar assets acceptable to the Commission and registrable with the appropriate government agency b. Financial Ratios A registrant who meets such standard as may be prescribed by the Commission based on the following complementary financial ratios for each of the immediate past three (3) fiscal years: 1) Ratio of (a) the total cash, marketable securities, current receivable to (b) the total of current liabilities; 2) Debt to equity ratio, with debt referring to all kinds of indebtedness including guarantees; 3) Ratio of (a) net income after taxes to (b) net worth; 4) Net profits to sales ratio; and 5) Such other financial indicators as may be required by the Commission. c. Debt to equity The recomputed debt to equity ratio of the applicant based on the financial statements required under Sec. 4. c. hereof shall not exceed 4:1, provided that the authorized short term commercial papers do not exceed 300% of net worth; and upon compliance with the registration requirements specified in Sec. 4 hereof. The conditions under which the commercial papers of a registrant were registered shall be strictly maintained during the validity of the Certificate of Registration. SECTION 4. Registration Requirements . Any corporation desiring to issue long term commercial papers shall apply for registration with, and submit to the Commission the following: a. Sworn Registration Statement in the form prescribed by the Commission; b. Board resolution signed by a majority of its members 1) authorizing the issue of long term commercial papers; 2) indicating the aggregate amount to be applied for; 3) stating purpose or usage of proceeds thereof; 4) providing that the registration statement shall be signed by any of the following: the principal executive officer, the principal operating officer, the principal financial officer, the comptroller or principal accounting officer, or persons performing similar functions, and 5) designing at least two senior officers with a rank of vice-president or higher or their equivalent, to sign the commercial paper instruments to be issued. c. The latest audited financial statements and should the same be as of date more than three (3) months prior to the filing of the registration statements, on unaudited financial statement as of the end of the immediately preceding month: Provided, however , That such unaudited financial statement shall be certified under oath by the accountant and the senior financial officer of the applicant duly authorized for the purpose and substituted with an audited financial statement within one hundred five (105) days after the end of the applicant's fiscal year; d. Schedules A to L based on subsection c. above, in the form attached as Annex "A"; e. Income statements for the immediate past three (3) fiscal years audited by an independent certified public accountant: Provided , That if the applicant has been in operation for less than three (3) years, it shall submit income statements for such number of years that it has been in operation; f. An underwriting agreement for the long term commercial paper issues with an expanded commercial bank or an investment house, or any other financial institution which may be qualified subsequently by the Central Bank with minimum condition, among others, that the underwriter and the issuer shall be jointly responsible for complying with all reportorial requirements of the Commission and the Central Bank in connection with the long term commercial paper issue it being understood that the primary responsibility for the submission of the report to these regulatory agencies is upon the underwriter during the effectivity of the underwriting agreement and thereafter the responsibility shall devolve upon the issuer, Provided, however , That if the issuer is unable to provide the information necessary to meet such reportorial requirements, the underwriter shall, not later than two (2) working days prior to the date when the report is due, notify the Commission of such inability on the part of the issuer. Provided, further , that if the underwriting agreement is with a group composed of expanded commercial banks and/or investment houses or any financial institutions which may be qualified subsequently by the Central Bank, there shall be a syndicate manager acting and responsible for the group: Provided, finally , That the underwriter may be changed subject to prior approval by the Commission. g. A typewritten copy of a preliminary prospectus approved by the applicant's Board of Directors which, among others, shall contain the following: 1) A statement printed in red on the left hand margin of the front page, to wit: "A registration statement relating to these long term (commercial papers has been filed with, but has not yet been approved by, the Securities and Exchange Commission: Information contained herein is subject to completion or amendment. These long term commercial papers may not be sold nor may offers to buy be accepted prior to the approval of the registration statement This preliminary prospectus shall not constitute an offer to buy nor shall there be any sale of these long term commercial papers in the Philippines as such offer, solicitation or sale is prohibited prior to registration under the Revised Securities Act." 2) Aggregate maximum amount applied for, stated on the front page of the prospectus; 3) Description and nature of the applicant's business; 4) Intended use of proceeds; 5) Provisions in the underwriting agreement naming the underwriter and its responsibilities in connection with, among others, the reportorial requirements under these Rules; 6) Other obligations of the applicant classified by maturities-maturing within six (6) months; from six (6) months to one (1) year; and one (1) year and past due amounts; 7) List of assets which are encumbered, restricted or earmarked for any other purposes; 8) List of directors, officers and stockholders owning 2% or more the total outstanding voting stock of the corporation, indicating any advance to said directors, officers and stockholders; 9) List of entities where it owns more than 33-1/3% of the total outstanding voting stock, as well as borrowings from, and advances to, said entities. h. Projected annual cash flow statement presented on a quarterly basis as of the approximate data of issuance for a period co-terminus with the life time of the issue indicating the basic assumptions thereto and supported by schedules on actual maturity patterns of outstanding receivables and liabilities (under (6) months, six (6) months to one (1) year, over one (1) year and past due accounts) and inventory turn over. i. Data on financial indicators as may be prescribed by the Commission for each of the immediate past three (3) fiscal years such as on solvency, liquidity and profitability. The Commission may, whenever it deems necessary, impose other requirements in addition to those enumerated above. SECTION 5. Action on Application for Registration . a. Within sixty (60) days after receipt of the complete application for registration, the Commission shall act upon the application and shall in the appropriate case grant the applicant a Certificate of Registration and Authority to Issue Long Term Commercial Papers valid for one year which may be renewed annually with respect to the unissued balance of the authorized amount upon showing that the registrant has strictly complied with the provisions of these Rules and the terms and conditions of the Certificate of Registration. b. The Commission shall return any application for registration, in cases where the requirements of applicable laws and regulations governing the issuance of long term commercial papers have not complied with, or for reasons which shall be so stated. SECTION 6. Close-end Registration . Registration of long term commercial papers under these Rules shall be a close-end process whereby the portion of the authorized amount already issued shall be deducted from the authorized amount and may no longer be reissued even if reacquired in any manner, pursuant to the terms and conditions of issue. SECTION 7. Long Term Commercial Papers Exempt Per Se . The following specific long term debt instruments are exempt per se as from the provisions of these Rules: a. Evidence, of indebtedness arising from interbank loan transactions; b. Evidence of indebtedness issued by the national and local governments; c. Evidence of indebtedness issued by government instrumentalities the re-payment and servicing of which are fully guaranteed by the National Government; d. Evidence of indebtedness issued to the Central Bank under its open market and/or rediscounting operations; e. Evidence of indebtedness issued by the Central Bank of the Philippines, Philippine National Bank, Development Bank of the Philippines, and Land Bank of the Philippines; f. Evidence of indebtedness issued to the following primary institutional leaders: banks including their trust accounts, trust companies, non-bank financial intermediaries authorized to engage in quasi-banking functions, investment houses including their trust accounts, financing companies, investment companies, non-stock savings and loan associations, venture capital corporations, special purpose corporations referred to in Central Bank Monetary Board Resolution No. 1051 dated June 19, 1981, insurance companies, government financial institutions, pawnshops, pension and retirement funds approved by the Bureau of Internal Revenue, educational assistance funds established by the national government; and other entities that may be classified as primary institutional lenders by the Central Bank, in consultation with the Commission; provided all such evidences of indebtedness shall be held on to maturity and shall neither be negotiated nor assigned to any one other than the Central Bank, and the Development Bank of the Philippines with respect to private development banks in connection with their rediscounting privileges; g. Evidence of indebtedness the total outstanding amount of which does not exceed Fifteen Million Pesos (P15,000,000.00) and issued to not more than fifteen (15) primary lenders other than those mentioned in subsection (f) above, which evidence of indebtedness shall be payable to specific persons, and not to bearers, and shall neither be negotiated nor assigned but held on to maturity; Provided , That the aggregate amount of P15,000,000.00 shall include outstanding short term commercial papers; Provided, further , that in reckoning compliance with the number of primary lenders under this Section, holders of such papers exempt under Sec. 4(f) of the Rules on Registration of Short Term Commercial Papers, as amended, shall be counted: Provided, furthermore , That such issuer shall: 1) File (1) a disclosure statement prior to the issuance of any evidence of indebtedness; and (2) a quarterly report on such borrowings in the forms prescribed by the Commission; and 2) Indicate in bold letters on the face of the instrument the words "NON-NEGOTIABLE, NON-ASSIGNABLE"; and Provided, finally , That any issuer in accordance with the Rules on Registration of Long Term Commercial Papers and Bonds dated October 15, 1976 and with outstanding long term commercial papers falling under this subsection as of the effectivity date hereof, shall likewise file the prescribed disclosure statement and the quarterly report on such borrowings; h. Evidence of indebtedness denominated in foreign currencies; and i. Evidence of indebtedness arising from bona fide sale of goods or property. SECTION 8. Other Long Term Commercial Papers Exempt from Registration . The following long term commercial papers shall be exempt from registration under Secs. 3 and 4 hereof, but shall be subject to the payment of the exemption fee as prescribed under Section 14 and to the reportorial requirements under Section 15 of these Rules: a. Long term commercial papers issued by a financial intermediary's authorized by the Central Bank to engage in quasi-banking functions; b. Long term commercial papers fully secured by debt instruments of the National Government and the Central Bank of the Philippines and physically delivered to the trustee in the Trust Indenture. SECTION 9. Prohibitions . a. No long term commercial papers shall be issued, or negotiated or assigned unless the requirements of these Rules shall have been complied with: Provided , That no registered long term commercial paper issuer may issue long term commercial paper exempt per se under Section 7(g) hereof. b. There shall be no pretermination of long term commercial papers either by the issuer or the lender within 730 days from issue date. Pretermination shall include optional redemption, partial installments and amortization payments; however, installment and amortization payments may be allowed if so stipulated in the loan agreement. SECTION 10. Compliance with Central Bank Quasi-Banking Requirements . Nothing in these Rules shall be construed as an exemption from or a waiver of, the applicable Central Bank rules and regulations governing the performance of quasi-banking functions. Any violation of said Central Bank rules and regulations shall be considered a violation of these Rules. SECTION 11. Conditions of the Authority to Issue Long Term Commercial Papers . a. During the effectivity of the underwriting agreement, should the issuer fail to pay in full any interest due on or principal of long term commercial paper upon demand at stated maturity date, the authority to issue long term commercial papers shall be automatically suspended. The underwriter shall, within the next working day, notify the Commission thereof and the Commission shall forthwith issue a formal Cease and Desist Order enjoining both the issuer and the underwriter from further issuing or underwriting long term commercial papers. b. Upon the expiration of the underwriting agreement, it shall be the responsibility of the issuer to notify the Commission that it failed to pay in full any interest due on, or principal of, long term commercial paper upon demand at stated maturity date and has accordingly automatically suspended the issuance of its long term commercial papers. Within the next working day, the Commission shall forthwith issue a formal Cease and Desist order enjoining the issuer from further issuing long term commercial papers. c. Whenever necessary to implement the monetary and credit policies promulgated from time to time by the Monetary Board of the Central Bank, the Commission may suspend the authority to issue long term commercial paper, or reduce the authorized amount thereunder, or schedule the maturities of the registered long term commercial paper to be issued. SECTION 12. Basic Features of Registered Commercial Papers . a. All registered commercial paper instruments shall have a standard format, serially pre-numbered, and denominated. The instrument shall state, among others, the debt ceiling of the registrant and a notice that information about the registrant submitted in connection with the registration and other reportorial requirements from the issuer is available at the Commission and open to public inspection and that the issuer is not authorized by the Central Bank to perform quasi-banking functions. b. A specimen of the proposed commercial paper instrument shall be submitted to the Commission for approval of the text thereof. c. The instrument approved by the Commission shall be printed by an entity authorized by the Commission and shall be released by the Commission to the issuer. SECTION 13. Minimum Principal Amount . The minimum principal amount of each registered long term commercial paper instrument shall not be lower than the amounts indicated in the following schedule: a. Up to two years P100,000.00 b. Over two years but less than four years 50,000.00 c. Four years or more 20,000.00 SECTION 14. Fees . Every registrant shall pay the following fees: a. Upon application for registration, a filing fee of 1/20 of 1% based on total commercial paper proposed to be issued, but not to exceed P75,000.00. b. For issuers of commercial papers exempt under Section 8 hereof, an annual exemption fee of 10,000.00. SECTION 15. Periodic Reports . a. Issuers of registered long term commercial papers through their underwriters and those exempt under Section 8 hereof shall submit the following reports in the form prescribed by the Commission: 1) Monthly reports on long term commercial papers outstanding as at the end of each month, to be submitted within ten (10) working days following the end of the reference month; 2) Quarterly reports on long term commercial paper transactions accompanied by an interim quarterly financial statement to be submitted within thirty (30) calendar days following the end of the reference quarter; and 3) Actual quarterly cash flow statement to be submitted within ten (10) working days following the end of the reference quarter. b. These periodic reports shall be signed under oath by the corporate officers authorized pursuant to a board resolution previously filed with the Commission. c. Issuers whose offices are located in the province may, through their underwriters, submit reports to the nearest extension office of the Commission. SECTION 16. Administrative Sanctions . If the Commission finds that there is a violation of any of these Rules and Regulations and implementing circulars or that any issuer, in a registration statement and its supporting papers, as well as in the periodic reports required to be filed with the Commission and the Central Bank, has made any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements therein not misleading, or refuses to permit any lawful examination into its corporate affairs, the Commission shall in its discretion, impose any or all of the following sanctions: a. Suspension or revocation, after proper notice and hearing, of the Certificate of Registration and Authority to Issue Commercial Paper; b. A fine in accordance with the guidelines that the Commission shall issue from time to time: Provided, however , That such fine shall in no case be less than P200.00 nor more than P50,000.00 for each violation plus not more than P500.00 for each day of continuing violation. Annex "B" hereof shall initially be the guidelines on the scale of fines. c. Other penalties within the power of the Commission under existing laws; and d. The filing of criminal charges against the individuals responsible for the violation. SECTION 17. Cease and Desist Order . a. The Commission may, on its own motion or upon verified complaint by an aggrieved party, issue a Cease and Desist Order ex-parte, if the violation(s) mentioned in Section 16 hereof may cause great or irreparable injury to the investing public or will amount to palpable fraud or violation of the disclosure requirements of the Revised Securities Act and of these Rules and Regulations. b. The issuance of such Cease and Desist Order automatically suspends the Authority to Issue Long Term Commercial Paper. c. Such Cease and Desist Order shall be confidential in nature until after the imposition of the sanctions mentioned in Section 16 hereof shall have become final executory. d. Immediately upon the issuance of an ex-parte Cease and Desist Order, the Commission shall notify the parties involved and schedule a hearing on whether to lift such order or to impose the administrative sanctions provided for in Section 16 not later than fifteen (15) days after receipt of notice. SECTION 18. Repealing Clause . These Rules and Regulations supersede the Rules on Registration of Long Term Commercial Paper and Bonds dated October 15, 1976 and all the amendments to said Rules except as provided in Section 19 hereof. All other rules, regulations, orders, memoranda-circular of the Commission which are inconsistent herewith are likewise hereby repealed or modified accordingly. SECTION 19. Transitory Provision . a. Any authority or Certificate of Exemption to Issue Long Term Commercial Papers, granted under the Rules on Registration of Long Term Commercial Papers dated October 15, 1976, valid and subsisting as of the date of the effectivity of these Rules shall remain valid with respect only to all outstanding issues until such issues are retired or redeemed. b. The Commission may, at its discretion and subject to such conditions it may impose, authorize issuance of any unissued portion of the issuer's approved long term debt ceiling solely for refinancing of maturing long term commercial paper issue for a period not beyond fifteen (15) months from the effectivity date of these Rules. SECTION 20. Effectivity . These Rules and Regulations shall take effect fifteen (15) days after publication in two newspapers of general circulation in the Philippines. Mandaluyong, Metro Manila, Philippines. May 17, 1984. (SGD.) MANUEL G. ABELLO Chairman Securities and Exchange Commission APPROVED: (SGD.) JOSE B. FERNANDEZ, JR. (SGD.) CESAR E. A. VIRATA Chairman Minister Monetary Board of the Central Bank Ministry of Finance of the Philippines REPUBLIC OF THE PHILIPPINES Ministry of Finance SECURITIES AND EXCHANGE COMMISSION Mandaluyong, Metro Manila New Rules on Registration of Short Term Commercial Papers Pursuant to Presidential Decree No. 678, as amended by Presidential Decree No. 1798, and other existing applicable laws, the Commission hereby promulgates the following new Rules and Regulations governing short term commercial papers, in the interest of full disclosure and protection of investors and lenders in accordance with the monetary and credit policies of the Central Bank. SECTION 1. Scope . These Rules and Regulations shall apply to short term commercial papers issued by corporations. SECTION 2. Definition . For the purpose of these Rules, the following definitions shall apply: (a) Commercial paper is an evidence of indebtedness of any corporation to any person or entity with a maturity of three hundred sixty-five (365) days or less. (b) Interbank loan transactions shall refer to borrowings between and among banks and non-bank financial intermediaries duly authorized to perform quasi-banking functions. (c) Issue means creation of a commercial paper and its actual or constructive delivery to the payee. SECTION 3. Registration of Commercial Papers . Any corporation preferring to issue commercial paper shall apply for registration with, and submit to, the Commission the following: (a) Summary Registration (1) Sworn Registration Statement in the prescribed form; (2) Board resolution signed by majority of its members (a) authorizing the issue of commercial paper, (b) indicating the aggregate amount to be applied for, (c) providing that the registration statement shall be signed by the principal executive officer, the principal operating officer, the principal financial officer, the comptroller or principal accounting officer or persons performing similar functions, and (d) designating at least two senior officers with a rank of vice-president or higher, or their equivalent, to sign the commercial paper instruments to be issued; (3) The latest audited financial statements; and should the same be as of a date more than three (3) months prior to the filing of the registration statement, an unaudited financial statement as of the end of the immediately preceding month: Provided, however , That such unaudited financial statement shall be certified under oath by the account and the senior financial officer of the applicant duly authorized for the purpose and substituted with an audited financial statement within one hundred twenty (120) days after the end of the applicant's fiscal year. (4) Schedules A to L based on sub-section (3) above in the form attached as Annex "A"; (5) A committed credit line agreement with a bank, or any financial institution which may be qualified subsequently by the Central Bank, earmarked specifically for repayment of aggregate outstanding commercial paper issues on a pro rata basis, with the following features; (i) A firm irrevocable commitment to make available funds to cover at least 20% of the aggregate commercial papers outstanding at any time: Provided , That if the commitment is extended by a group there shall be a lead bank or any financial institution which may be qualified subsequently by the Central Bank acting for the group. (ii) The commitment shall be effective for as long as the issues are outstanding and may be renewed by the bank or any financial institution which may be qualified subsequently by the Central Bank; (iii) The request for drawdown shall be addressed to the bank or any financial institution which may be qualified subsequently by the Central Bank, which request shall be duly signed by a member of the board of directors and a senior financial officer of the commercial paper issuer duly authorized for the purpose by an appropriate board resolution which shall also provide for the designation of the alternate signatories (likewise a member of the board of directors and a senior financial officer); (iv) A provision that availments shall be allowed only for repayment of commercial papers which are due and payable in accordance with the terms of the commercial paper; (v) Notwithstanding the foregoing requirements for a committed credit line with a bank, or any financial institution which may be qualified subsequently by the Central Bank of the Philippines, any corporation desiring to issue commercial papers may be exempted from compliance therewith by the Securities and Exchange Commission, should it meet all of the following financial ratios based on consolidated audited financial statements for the immediate past three (3) years: (1) Average current ratio shall be at least 1.2r computed as follows: Current Assets Current ratio = Current Liabilities OR Average acid-test ratios shall be at least 0.5:1 computed as follows: Cash, receivables and marketable securities Acid-test ratio = Current Liabilities (2) Average solvency position shall be one whereby total assets must not be less than total liabilities; (3) Average net profit margin shall be at least 3% computed as follows: Net income after income tax, corporate development taxes Net profit margin = and other non-cash charges Net sales or revenues OR Average annual return on equity shall be at least 8% computed as follows: Net income after income tax, corporate development taxes and other non-cash charges Return on equity = Total stockholders' equity (4) Average interest service coverage ratio shall be at least 1.2:1 computed as follows: Net income before interest expense, income tax, corporate development taxes and other non-cash charges Interest service = coverage ratio Interest expense (5) Debt to equity ratio shall not exceed 2.5.1. The Securities and Exchange Commission may, in its discretion, consult with industry organization(s) such as Investment Houses Association of the Philippines (IHAP) and Bankers Association of the Philippines (BAP) and/or the Credit Information Bureau, Inc. (6) A selling agreement for the commercial paper issues with an expanded commercial bank or an investment house, or any financial institution which may be qualified subsequently by the Central Bank, with minimum conditions that the selling agent, among others, shall be responsible for ensuring that the issuer observes the provisions of these rules pertaining to the use of proceeds of the committed credit line and, with the issuer, shall be jointly responsible for complying with all reportorial requirements of the Commission and the Central Bank in connection with the commercial paper issue, it being understood that the primary responsibility for the submission of the report to said regulatory agencies is upon the selling agent: Provided, however , that if the commercial paper issuer is unable to provide the information necessary to meet such reportorial requirements, the selling agent shall, not later than two (2) working days prior to the date when the report is due, notify the Commission of such inability on the part of the issuer: Provided, finally , That if the selling agreement is with a group, composed of expanded commercial banks and/or investment houses or any financial institutions which may be qualified subsequently by the Central Bank, there shall be a syndicate manager acting and responsible for the group. (7) Income statements for the immediate past three (3) fiscal years audited by an independent certified public accountant provided that, if the applicant has been in operation for less than three years, it shall submit income statements for such number of years that it has been in operation. (8) A printed copy of a preliminary prospectus approved by the applicant's Board of Directors which, among others, shall contain the following: (i) A statement printed in red on the left hand margin of the front page of the following tenor: "A registration statement relating to these short term commercial papers has been filed with, but has not yet been approved by, the Securities and Exchange Commission. Information contained herein is subject to completion or amendment. These short term commercial papers may not be sold nor may offer to buy be accepted prior to the time the registration statement is approved. This preliminary prospectus shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these commercial papers in the Philippines as such offer, solicitation or sale is prohibited prior to registration under the Securities Act, as amended by P.D. No. 678 and P.D. No. 1798." (ii) Aggregate maximum amount applied for, stated on the front page of the prospectus; (iii) Description and nature of the applicant's business; (iv) Intended use of proceeds; (v) The nature of the firm, irrevocable and committed credit line, the amount of the line which shall be at least 20% of the aggregate outstanding commercial paper issues (proceeds of which shall be allocated on a pro rata basis to the aggregate outstanding commercial paper issue regardless of the order of their maturities), and the manner of availment as stipulated in the credit line agreement between the bank and the issuer; (vi) The provision in the selling agreement naming the selling agent and the responsibilities of the selling agent in connection with, among others, the use by the issuer of the proceeds of the bank committed credit line and the reportorial requirements under these rules; (vii) Other obligations of the commercial paper issuer classified by maturities (maturing within six (6) months; from six (6) months to one (1) year, over one (1) year, and past due amounts); (viii) Encumbered assets; (ix) Directors, officers, and stockholders owning 2% or more of the total subscribed stock of the corporation, indicating any advance to said directors, officers and stockholders; (x) List of entities where it owns more than 33-1/3% of the total equity; as well as borrowings from and advances to said entities; (xi) Financial statements for the immediate past three (3) fiscal years audited by an independent certified public accountant provided, that , if the applicant has been in operation for less than three years, it shall submit financial statements for such number of years that it has been in operation. (b) Special Registration In the case of special registration provided for under Section 10 hereof, the following shall, in addition to the immediately preceding requirements, be prepared and submitted by the selling agent on behalf of the applicant: (1) Projected annual cash flow statement as of the date of filing presented on a quarterly basis supported by schedules on actual maturity patterns of existing receivables and liabilities (under six (6) months; six (6) months to one (1) year; over one (1) year and past due amounts) and inventory turnover as of the end of the month prior to the filing of the registration statement; and (2) Complementary financial ratios for each of the immediate past three (3) fiscal years: (i) Ratio of (a) the total of cash on hand, marketable securities, current receivables to (b) the total of current liabilities; (ii) Debt to equity ratio, with debt referring to all kinds of indebtedness including guarantees; (iii) Ratio of (a) net income after taxes to (b) net worth; (iv) Net profits to sales ratio; and (v) Such other financial indicators as may be prescribed by the Commission. These additional data shall likewise be incorporated in the prospectus. (c) The Commission may, whenever it deems necessary, impose other requirements in addition to those enumerated in subsections (a) and/or (b) above. SECTION 4. Commercial Papers Exempt Per Se . The following specific debt instruments are exempt per se from the provisions of these Rules. (a) Evidence of indebtedness arising from interbank loan transactions; (b) Evidence of indebtedness issued by the national and local governments; (c) Evidence of indebtedness issued to the Central Bank under its open market and/or rediscounting operations; (d) Evidence of indebtedness issued by the Central Bank of the Philippines, Philippine National Bank, Development Bank of the Philippines, Land Bank of the Philippines, Government Service Insurance System and the Social Security System; (e) Evidence of indebtedness issued to the following primary institutional lenders: banks, non-bank financial intermediaries authorized to engage in quasi-banking functions, investment houses, financing companies, investment companies, non-stock savings and loans associations, building and loan associations, venture capital corporations, special purpose corporations referred to in Central Bank Monetary Board Res. No. 1051 dated June 19, 1981, insurance companies, government financial institutions and pawnshops; and other entities that may be classified as primary institutional lenders by the Central Bank, in consultation with the Securities and Exchange Commission; provided all such evidences of indebtedness shall be held on to maturity and shall neither be negotiated nor assigned to any one other than the Central Bank, and the Development Bank of the Philippines with respect to private development banks in connection with their rediscounting privilege; (f) Evidence of indebtedness the total outstanding amount of which does not exceed Five Million Pesos (P5,000,000.00) and issued to nor more than ten (10) primary lenders other than those mentioned in subsection (e) above, which evidence of indebtedness shall be payable to a specific person and not to bearer and shall neither be negotiated nor assigned but held on to maturity; (g) Evidence of indebtedness denominated in foreign currencies; and (h) Evidence of indebtedness arising from bona-fide sale of goods or property. SECTION 5. Other Commercial Papers Exempt from Registration . Commercial papers issued by any financial intermediary authorized by the Central Bank to engage in quasi-banking functions shall be exempt from registration under Section 3, but shall be subject to payment of the exemption fee as provided under Section 15 and to the reportorial requirements under Section 17, all under these Rules. SECTION 6. Prohibition . No commercial paper except of a class exempt under Sections 4 and 5 hereof, shall be issued unless such commercial paper shall have been registered under these Rules: Provided , That no registered commercial paper issuer may issue commercial paper exempt per se under Section 4 (f) hereof. SECTION 7. Compliance with Central Bank Quasi-Banking Requirements . Nothing in these Rules shall be construed as an exemption from or a waiver of the applicable Central Bank rules/regulations or circulars governing the performance of quasi-banking functions or financial intermediaries duly authorized to engage in quasi-banking activities. Any violation of said Central Bank rules/regulations or circulars shall be considered a violation of these rules and regulations. SECTION 8. Action on Application for Registration . (a) Within sixty (60) days after receipt of the complete application for registration, the Commission shall act upon the application and shall in the appropriate case grant the applicant a Certificate of Registration and Authority to Issue Commercial Papers. (b) The Commission shall return any application for registration, in cases where the requirement of applicable laws and regulations governing the issuance of commercial papers have not been complied with, or for reasons which shall be so stated. SECTION 9. Ordinary Registration . If the value of commercial papers applied for, when added to the total outstanding liabilities of the applicant, does not exceed three hundred percent (300%) of networth based on the financial statements referred to under Section 3(a) (3), the commercial papers shall be registered upon compliance with the requirements specified in Section 3(a) hereof. The same principle shall apply in the case of renewal of the Authority to Issue Commercial Paper. SECTION 10. Special Registration . If the value of commercial paper applied for exceeds three hundred percent (300%) of networth as contemplated in the preceding section, it shall be subject to compliance with the requirement under Section 3(b) hereof. SECTION 11. Validity Period of the Authority to Issue Commercial Paper . The authority to issue commercial paper shall be valid for a period of three hundred sixty five (365) days which shall be indicated in the Authority to Issue Commercial Paper, provided that renewal thereof, upon application filed at least forty five (45) days prior to its expiry date, may be for a period shorter than three hundred sixty-five (365) days. SECTION 12. Conditions of the Authority to Issue Commercial Paper . (a) In the event that the commercial paper issuer fails to pay in full any commercial paper upon demand at stated maturity date, the Authority to Issue Commercial Paper is automatically suspended. The selling agent shall, within the next working day, notify the Commission thereof and the Commission shall forthwith issue a formal Cease and Desist Order enjoining both the issuer and the selling agent from further issuing or selling commercial papers. (b) Whenever necessary to implement the monetary and credit policies promulgated from time to time by the Monetary Board of the Central Bank, the Commission may suspend the Authority to Issue Commercial Paper, or reduce the authorized amount thereunder, or schedule the maturities of the registered commercial paper to be issued. SECTION 13. Basic Features of Registered Commercial Papers . (a) All registered commercial paper instruments shall have a standard format, serially pre-numbered and denominated. The instrument shall state, among others, the debt ceiling of the registrant and a notice that information about the registrant submitted in connection with the registration and other reportorial requirements from the issuer is available at the Commission and open to public inspection and that the issuer is not authorized by the Central Bank to perform quasi-banking functions. (b) A specimen of the proposed commercial paper instrument shall be submitted to the Commission for approval of the text thereof. (c) The approved instrument shall be printed by the Central Bank Security Printing Plant pursuant to a prior authorization from the Commission, and shall be released by the Commission to the issuer. SECTION 14. Minimum Maturity Value . The maturity value of each registered commercial paper instrument shall not be lower than Three Hundred Thousand Pesos (P300,000). SECTION 15. Fees . Every registrant shall pay the following fees: (a) Upon application for registration, and for renewals thereof, a filing fee of not more than 1/50th of 1% based on the total commercial paper proposed to be issued. (b) For issuers of commercial paper exempt under Section 5 hereof, an annual exemption fee of P10,000. SECTION 16. Notice of Availment . Whenever the credit line is drawn upon, the selling agent and/or issuer shall within two (2) working days immediately following the date of drawdown notify the Commission of such event indicating the amount availed of and the total availment as of that given time. SECTION 17. Periodic Reports . (a) Issuers of registered commercial papers and those exempt under Section 5 hereof shall submit to the Commission and the Central Bank the following reports in the prescribed form: (1) Monthly reports on commercial papers outstanding as at the end of each month, to be submitted within ten (10) working days following the end of the reference month; (2) Quarterly reports on commercial paper transactions accompanied by an interim quarterly financial statement to be submitted within thirty (30) calendar days following the end of the reference quarter; and (3) For issuers whose application for registration was under Section 10 hereof, the projected quarterly cash flow statements with the corresponding quarter's actual figure to be submitted within ten (10) working days following the end of the reference quarter; (b) These periodic reports shall be signed under oath by the corporate officers authorized pursuant to a board resolution previously filed with the Commission; (c) Issuers whose offices are located in the provinces may submit their reports to the nearest extension offices of the Commission. SECTION 18. Administrative Sanctions . If the Commission finds that there is a violation of any of these Rules and Regulations and implementing circulars or that any issuer; in a registration statement and its supporting papers, as well as in the periodic reports required to be filed with the Commission and the Central Bank, has made any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements therein not misleading, or refuses to permit any lawful examination into its corporate affairs, the Commission shall, in its discretion, impose any or all of the following sanctions: (a) Suspension, or revocation, after proper notice and hearing of the Certificate of Registration and Authority to Issue Commercial Paper; (b) A fine in accordance with the guidelines that the Commission shall issue from time to time: Provided, however , That such fine shall in no case be less than P200 nor more than P50,000 for each violation plus not more than P500 for each day of continuing violation. Annex "B" hereof shall initially be the guideline on the scale of fines. (c) Other penalties within the power of the Commission under existing laws; and (d) The filing of criminal charges against the individuals responsible for the violation. SECTION 19. Cease and Desist Order . The Commission may, on its own motion or upon verified complaint by an aggrieved party, issue a Cease and Desist Order ex-parte if the violation(s) mentioned in Section 18 may cause great or irreparable injury to the investing public or may amount to palpable fraud or violation of the disclosure requirements of the Securities Act and of these Rules and Regulations. The issuance of such Cease and Desist Order automatically suspends the Authority to Issue Commercial Paper. Such Cease and Desist Order shall be confidential in nature until after the imposition of the sanctions mentioned in Section 18 shall have become final and executory. Immediately upon the issuance of an ex-parte Cease and Desist Order, the Commission shall notify the parties involved and schedule a hearing on whether to lift such order or to impose the administrative sanctions provided for in Section 18 not later than Fifteen (15) days after receipt of notice. SECTION 20. Repealing Clause . These Rules and Regulations supersede the Rules on Registration of Commercial Papers dated December 10, 1975, and all the amendments to said Rules. All other rules, regulations, orders, memoranda circular of the Commission which are inconsistent herewith are likewise hereby repealed or modified accordingly. SECTION 21. Transitory Provision . Any authority to Issue Commercial Paper valid and subsisting as of the date of the effectivity of these Rules and Regulations, shall remain valid and upon its expiration may, at the discretion of the Commission and subject to such conditions as it may impose, be renewed on the basis of the Rules of Registration of Commercial Papers dated December 10, 1975 for an aggregate period not exceeding fifteen (15) months from its expiry date. SECTION 22. Effectivity . These Rules and Regulations shall take effect on December 11, 1981. Mandaluyong, Metro-Manila, Philippines, December 8, 1981 (SGD.) MANUEL G. ABELLO Chairman Securities and Exchange Commission APPROVED: (SGD.) ALFREDO PIO DE RODA, JR. (SGD.) JAIME C. LAYA Acting Minister Chairman Ministry of Finance Monetary Board of the Central Bank of the Philippines ANNEX A Schedules A to L Schedule A - Marketable Securities: A. Name of Issuing No. of Total Market Quotations as at Entity Shares Amount (Cost) balance sheet date (1) (2) (3) (4) (1) To be classified according to the entity issuing the securities. (2) Total No. of shares held by registrant. (3) Total acquisition cost of securities held by registrant. (4) Reasonable market value of securities held by registrant. Schedule B - Amounts receivable from Directors, Officers, Stockholders and other Related Interests. B. Name of Designation Total Amount of Non-Current Date Explanation Amount debtor Amount Current Accounts Issue of Nature Written- Accounts Amount of Accounts off (1) (2) (3) (4) (5) (6) (7) (8) (1) Name of debtor (2) Capacity in the firm (3) As shown in the Balance Sheet (4) Portion collectible within one year (5) Portion collectible after one year (6) Date of collectibility (7) Description of debt (8) Estimated Amount to be written off. Schedule C - Investments in Securities C. Name of Issuing No. of Total Market Quotations as at Entity Shares Amount (Cost) balance sheet date (1) (2) (3) (4) (1) To be classified according to the entity issuing the securities. (2) Total No. of shares held by registrant. (3) Total acquisition cost of securities held by registrant. (4) Reasonable market value of securities held by registrant. Schedule D Advances to Subsidiaries & Affiliates D. Firm/ Total Amount of Non-current Nature Uncollectible Debtor Amount Current Accounts of Accounts Accounts Accounts Due Advances Amt. Reason Amount Date (1) (2) (3) (4) (5) (6) (7) (8) (1) Name of Firm (2) Amount shown in the Balance Sheet (3) Collectible within one year (4) Collectible after one year (5) Maturity date of advances (6) Description of debt (7) Estimated amounts not intended for collection (8) Conversion to equity investment; some other purpose which should be stated/disclosed. (9) Include column for collateral Schedule E Property, Plant, Equipment and Related Accumulated Depreciation E. Description Amount in Date of Accumulated Net Amount per of Asset B/S Acquisition Depreciation Balance Sheet to Date (1) (2) (3) (4) (5) (1) Properly grouped according to appropriate classifications (2) Acquisition cost (3) Purchase date or other similar reckoning date (4) Total write-offs against acquisition cost (5) Total of this column should be equal to amount shown in Balance Sheet. Schedule F Intangible Assets & Related Amortization/Depletion F. Title of Amount in Nature Accumulated Net Amount Asset B/S of Asset Amortization per Balance Account Depletion Sheet (1) (2) (3) (4) (5) (1) Properly grouped according to appropriate classifications (2) Total capitalized amount (3) Origination of asset (4) Total write-offs against capitalized value (5) Total of this column should equal the amount shown in the Financial Statement. Schedule C Long Term Debts I and E Name Total Date Date Portion Portion Nature Instrument Other of Shown Incurred of Due Due of used to Inform- Creditor in B/S Maturity Within after Debt Evidence ation One One Debt Year Year (1) (2) (3) (4) (5) (6) (7) (8) (9) (1) Name of person or entity to whom debt is due, if a traditional loan from financial institution; if as bonds, make mention of registry book which shall be opened for inspection but not necessary for long term commercial papers. (2) Amount reflected in the financial statement. (3) Date the loan was contracted. (4) Date the loan is due. (5) Current portion of long-term debt. (6) Portion of long-term debt due beyond one year from date of financial statement. (7) Pertinent information regarding loan. (8) Any debt instrument executed to evidence the loan. (9) Other information: Any collaterals, to be described/explained. Any guarantees, to be described/explained. Schedule H Indebtedness to Affiliates Name of Total Amount of Non-Current Accounts Nature Uncollectible Affiliate Amount Current Amount Due Date of Accounts Due Portion Debt Amount Reason (1) (2) (3) (4) (5) (6) (7) (8) (1) Person or entity to whom debt is due. (2) Amount shown in B/S. (3) Amount collectible within 1 year. (4) Collectible beyond one year. (5) Date due and deductible. (6) Description of debt. (7) Estimated Amount not intended for collection. (8) Conversion to equity investment some other purpose which should be stated/disclosed. (9) Include column for collateral. Schedule I Liability Reserves and Surplus Reserves Final I Description Purpose of Amount Disposition Other of Reserves Reserve/ Per Balance of Reserve/ Information Surplus Surplus Sheet Date Surplus Reserves Reserve Reserve (1) (2) (3) (4) (5) (1) Explanation of account. (2) Reason for setting up of account. (3) Value of account on the date of financial statement. (4) To be disclosed if account is intended to be closed as of a certain date. (5) Other relevant facts to be disclosed to investors. a. Concepts/journal entries/other accounts involved. b. Nature of account contingent, real liabilities etc. c. Reasons for setting up the account. Schedule J Capital Stock M Authorized Subscribed Outstanding Title of No. of Amount No. of Amount No. of Amount Issue Shares in P Shares in P Shares in P (1) (2) (3) (4) (5) (6) Schedule K List of Top 20 Stockholders of Record & Stockholdings of Board of Directors N Name of Stockholders Stockholding % to and Members of No. of Total Board of Directors Position Citizenship Shares Amount Outstanding (1) (2) (3) (4) (5) Schedule L Appraisal Increment New Affected Capitalized Capitalized Total Amount Total Asset Commission Asset Date Acquired Total Amount Total Asset Name of Account Acquired/ Capitalized of Increment Value on Appraiser Affected Capitalized Cost as of Date date of F/S Commission of F/S (1) (2) (3) (4) (5) ANNEX B Scale of Fines Nature of Violation 1. Issuance of registrable commercial paper without prior registration in violation of Section 6 .001 of the amount issued but in no case less than P1,000.00. 2. Negotiation or assignment of commercial paper exempt per se under Sec. 4(e) and (f) in violation of Sec. 6 .001 of the amount negotiated or assigned but in no case less than P1,000.00 3. Failure to notify the SEC within the prescribed period of the issuer's inability to pay in full any commercial paper upon demand at stated maturity date in violation of Sec. 12(a) P1,000.00. 4. Failure to provide selling agent/syndicate manager information necessary to meet the reportorial requirements in violation of Sec. 3 (6) P1,000.00. 5. Failure to notify SEC within the prescribed period of inability of issuer to provide information on reportorial requirements in violation of Sec. 3(6) P1,000.00. 6. Failure to ensure observance by issuer of the use of proceeds stated in the issuer's prospectus and Registration Statement in violation of Sec. 3(6) P1,000.00 7. Failure to notify the SEC of the amount of drawdown on the credit line, and the total availment as of that given time, within 2 days following the date of drawdown, in violation of Sec. 16 .001 of the amount of drawdown on the credit line and .0001 on the total availment as of that given date. 8. Issuance of registered commercial paper with a maturity value of less than P300,000.00 in violation of Sec. 14 P500.00 per paper. 9. Issuance of a registered commercial paper form printed in violation of Sec. 13 P500.00 10. Issuance of commercial papers in excess of debt ceiling 002 of the amount issued in excess of the debt ceiling but in no case less than P1,000.00. 11. Negotiation or assignment of commercial paper exempt per se in violation of Section 4(c) and (f) .001 of the amount negotiated or assigned but in no case less than P1,000.00. 12. Late or non-filing of audited financial statement in violation of Sec. 3(a) (3) P1,000.00. 13. Late or non-submission of monthly and quarterly reports in violation of Sec. 17 P1,000.00. 14. Inadequate or inaccurate disclosure of material information in registration statement and periodic reports P5,000.00. 15. Late filing of renewal application in violation of Sec. 11 P500.00. The foregoing scheduled of principal fines shall be imposed on first violations and the second and third or subsequent violations shall be fined double and triple the amount of the abovementioned fines, respectively. For continuing violations, an additional daily fine of not more than P500.00 for each day the violation persists shall be imposed. It shall be understood that the Commission may impose fines on other areas of violations that may be further detected as it implements P. D. No. 678, as amended by P.D. No. 1798 and its implementing rules and regulations and circulars, provided that such fine shall in no case be less than P200 nor more than P50,000 for each violation plus not more than P500 for each day of continuing violation. In addition, the imposition of the foregoing Scale of Fines shall be without prejudice to the application of other administrative sanctions provided for under the Rules and/or the filing of criminal charges against the individuals responsible for the violation. ANNEX A SCHEDULES A TO L Schedule A Marketable Securities Held Name of Issuing Entity No. of Shares Acquisition Cost Estimated Market Value 1 1. Stock market quotation as of balance sheet date, if other than stock market quotation, indicate basis. Schedule B Investments in Securities Name of Issuing Entity No. of Shares Acquisition Cost Estimated Market Value 1 1. Stock market quotation as of balance sheet date, if other than stock market quotation, indicate basis. Schedule C Amounts Receivable from Directors, Officers, Stockholders and Other Related Interests Amount Collectible Designation/ Amount After one year Accounts not collectible Capacity Amount Nature of Collectible Name of in the Receivable Receivable in one Amount Date Due Amount Reason/Remarks Debtor Firm year Schedule D Amounts Receivable from Subsidiaries and Affiliates Name of Per Cent of Amount Amount Collectible Accounts not Subsidiary Ownership/ Amount of Nature of Collectible after one year Collectible Affiliate Control Receivable Receivable in one year Collate Amount Date Due Amount Reason/ Remarks Schedule E Property, Plant and Equipment and Accumulated Depreciation/Depletion Description Date of Acquisition Acquisition Cost Accumulated Depreciation/Depletion New Amount of Asset 1 1. Grouped according to appropriate classification. Schedule F Intangible Assets and Amortization thereof Title of Asset Description of Asset Original Amount Net Amount Schedule G Appraisal increment Total Amount Date Acquired/ of Increment Total Asset Name of Asset Account Acquired/ Capitalized as of Date of Value on Appraiser Affected Capitalized Cost F/S date of F/S Commissioned Schedule H Long Term Debts PRINCIPAL Amount Amount Due Name of Date Nature Original Outstanding Due with After one year Interest/ Creditor Incurred of Debt Amount Balance in one year Amount Date Due Penalties Collaterals Schedule I Indebtedness to Subsidiaries and Affiliates Name of Per Cent of Amount Payable Account Payable Subsidiary/ Ownership/ Amount Nature within after one year Account not repayable Affiliate Control Payable of Debt one year Amount Date Due Amount Reason/Remarks Schedule J Liability Reserves and Surplus Reserves Surplus Reserves Surplus Reserves Sheet Date Surplus Reserves Information Description 1 Purpose of Amount Final Disposition 3 of Reserves/ Reserves/ Per Balance of Reserves/ Other 4 Surplus Reserves Surplus Reserves Sheet Date Surplus Reserves Information 1. Explanation of account. (Indicate also whether account is contingent, real, etc.) 2. Reason for setting up of account. 3. To be disclosed if account is intended to be closed as of a certain date. 4. Other relevant facts to be disclosed to investors, such as, concepts/journal entries/other accounts involve. Schedule K Capital Stock Authorized Subscribed/Outstanding Paid-Up Subscription Receivable Class of No. of Amount No. of Amount No. of Amount No. of Amount Shares Shares in P Shares in P Shares in P Shares in P Schedule L Stockholdings of Board of Directors and Top 20 Stockholders Subscription Name of Subscribed capital stock 1 % to total Receivable Director/Stockholder Citizenship No. of Shares Amount Subscribed No. of Shares Amount I Directors II Top 20 Stockholders 1. Indicate whether voting or non-voting. PROPOSED SCALE OF FINES Long-Term Commercial Papers) Nature of Violation Fines 1. Failure to notify SEC within the prescribed period of inability of issuer to provide information on reportorial requirements in violation of Sec. 4(5) P1,000.00 2. Failure to provide underwriter information necessary to meet the reportorial requirements in violation of Sec. 4(f). P1,000.00 3. Failure to ensure observance by issuer of the use of proceeds stated in the issuer's prospectus and Registration Statement in violation of Sec. 4(g). P1,000.00 4. Late or non-submission of audited financial statements in violation of Sec. 4(d). a) Late filing of audited financial statements 1 P500.00 b) Non-submission of audited financial statements 2 P1,000.00 1. Late filing means submitting the audited financial statements within thirty (30) calendar days after its due date. 2. Non-submission means submitting the audited financial statements thirty (30) calendar days after its due date. 5. Negotiation or assignment of commercial paper exempt .001 of the amount per se in violation of Sec. negotiated or assigned 7 (f) and (g). but in no case less than P1,000.00 6. Failure to indicate in bold letters on the face of the .001 of the amount commercial paper exempt per issued but in no case se the words: "NON-NEGOTIABLE, "ASSIGNABLE" less than P1,000.00 in violation of Sec. 7(e). 7. Issuance of commercial papers in excess of the limits .001 of the amount subscribed under Sec. 7(g). issued but in no case less than P1,000.00 8. The filing or non-submission of Disclosure Statement and violation of Sec. 7(g). a) Late filing of Disclosure Statement 1 P200.00 b) Non-submission of Disclosure P400.00 basic Statement 2 penalty and P100.00 per day until said disclosure statement is filed. 1. Late filing means submitting the Disclosure Statement within five (5) working days after the issuance of commercial papers. 2. Non-submission means submitting the Disclosure Statement five (5) days after the issuance of commercial papers. 9. Issuance of registrable commercial paper without prior .001 of the amount registration or violation of Sec. 9. issued but in no case less than P1,000.00 10. Negotiation/assignment of commercial papers referred .001 of the amount under Sec. 7(f) and (g). negotiated but in no case less than P1,000.00 11. Pretermination of long term commercial paper in .001 of the amount of the violation of Sec. 9. pre-terminated note but in no case less than P1,000.00 12. Failure to notify the SEC within the prescribed period of the issuer's inability to pay in full any commercial paper upon demand at stated maturity date in violation of Sec. 11. P1,000.00 13. Issuance of registered commercial paper with a principal amount less than the minimum prescribed under and in violation of Sec. 12. P500.00 per paper 14. Late or non-submission of monthly and quarterly reports in violation of Sec. 15. a) Late filing of monthly/quarterly 1 P500.00 b) Non-submission of monthly/quarterly reports 2 P1,000.00 1. Late filing means submitting the monthly/quarterly reports within thirty (30) calendar days after the due date. 2. Non-submission means submitting the monthly/quarterly reports thirty (30) calendar days after its due date. 15. Inadequate or inaccurate disclosure of lateral information in registration statement and periodic reports. P5,000.00 16. Issuance of commercial papers in excess of debt ceiling. .002 of the amount issued in excess of the debt ceiling but in no case less than P1,000.00 17. Violation of the Cease and Desist Order issued under Sec. 17. P5,000.00 The foregoing schedule of principal fines shall be imposed on first violations and the second and third or subsequent violations shall be fined double and triple the amount of the above-mentioned fines, respectively. For continuing violations, an additional daily fine of not more than P500.00 for each day the violation persists shall be imposed. It shall be understood that the Commission may impose fines on other areas of violations that may be further detected as it implements the Revised Securities Act and its implementing rules and regulations and circulars, provided that such fine shall in no case be less than P500.00 for each day of continuing violation. In addition, the imposition of the foregoing Scale of Fines shall be without prejudice to the application of other administrative sanctions provided for under the Rules and/or the filing of criminal charges against the individuals responsible for the violation. The foregoing schedule of principal fines shall be imposed on first violations and the second and third or subsequent violations shall be fined double and triple the amount of the above-mentioned fines, respectively. For continuing violations, an additional daily fine of not more than P500.00 for each day the violation persists shall be imposed. It shall be understood that the Commission may impose fines on other areas of violations that may be further detected as it implements the Revised Securities Act and its implementing rules and regulations and circulars, provided that such fine shall in no case be less than P200.00 nor more than P50,000.00 for such violation plus not more than P500.00 for each day of continuing violation. In addition, the imposition of the foregoing Scale of Fines shall be without prejudice to the application of others administrative sanctions provided for under the Rules and/or the filing of criminal charges against the individuals responsible for the violation.