Rules on Registration and Licensing of Stockbrokers, Dealers in Securities and Their Salesmen (As Amended)

October 15, 1981 RULES ON REGISTRATION AND LICENSING OF STOCKBROKERS, DEALERS IN SECURITIES AND THEIR SALESMEN (AS AMENDED) For the information and guidance of all concerned, the following guidelines and rules on the registration and licensing of stockbrokers, dealers in securities, and their salesmen under Section 19 of the Revised Securities Act, are hereby promulgated by this Commission pursuant to the powers vested in it by existing laws: 1. Registration/Licensing of Stock Brokers and Dealers in Securities 1. Every application for registration/licensing of stock broker or dealer in securities shall be filed in SEC Form No. 3, which must be verified under oath. 2. The application shall be submitted in two (2) copies accompanied by the following papers or documents: 1) Five testimonial letters attesting to the good repute of all the persons named in the application as managing or administering the affairs of the applicant, that such persons are honest and scrupulous and that applicant is fully qualified to engage in the business of stock broker or dealer in securities, passport size photo of all officers/directors named in the application. 2) Certification of a bank to the effect that the applicant has credit facility in said bank. 3) Surety bond in the amount of P200,000.00 for a stock broker, and P100,000.00 in the case of a dealer in securities. The surety bond shall be filed in two copies, the original copy and a duplicate thereof, and should be accompanied by the required clearances of the bonding company issued by the Supreme Court of the Philippines, the Regional Trial Court of the locality wherein the principal office of the insurance company is located, and a statement from the Office of the Insurance Commissioner that the authority of the bonding company to issue surety bonds is still valid and should also indicate the maximum amount it can underwrite per risk. 4) If the application is for the registration/licensing of a stock broker and the applicant is a corporation, it should also submit: a) Unlimited and joint liability undertaking executive by at least two stockholders (including the member, if applicant is a member-firm of a stock exchange), owning not less than 95% of the company's subscribed capital stock. If 95% of the capital stock is owned by only one stockholder, or by stockholder and his/her spouse, another stockholder shall also sign the undertaking. b) Certification of the Corporate Secretary that the Board of Directors has authorized, in a resolution, the President and Secretary to sign an Irrevocable Consent to Service of Process upon the Securities and Exchange Commission as service to the corporation (document embodied in pages 7 and 8 of SEC Form No. 3). c) A copy of the resolution of the stockholders authorizing the corporation to engage in stock brokerage business or in the business of dealer in securities if said business activities are not provided for in the primary purpose clause of the Articles of Incorporation of the company, and d) If the applicant shall operate as a member-firm of a stock exchange, it shall submit a certification by the Secretary of the Exchange that all stockholders thereof are acceptable to the Board of Governors of the Exchange. 3. A minimum paid-up capital in the amount of P1,000,000.00 is required of every applicant for license as stock broker or dealer in securities. 4. Upon filing of the application the following fees shall be collected: a) Stockbroker P1,000.00 b) Dealer in Securities P1,000.00 5. A Notice and Order shall be issued by the Commission upon filing of the application. Said notice and Order shall be published by the applicant, once in a newspaper of general circulation in the Philippines thus, giving notice to any person or party having a valid reason to file an opposition to the issuance of such license as stockbroker and/or dealer in securities within ten (10) days from the date of publication of the Notice and Order. Receiving no opposition from any party, the Commission shall proceed to process the application on its merits. Should there be an opposition filed within the reglementary period set forth herein, the Commission shall conduct a hearing of the case to determine whether or not said application should be approved. II. Registration/Licensing of Salesmen 1. Only such natural persons, as stock broker or dealer in securities may request, shall be registered/licensed as salesmen of securities. Such registration/license shall cease upon the termination of the employment of such salesmen by such broker or dealer. 2. Application for salesman's license shall be filed in SEC Form No. 4 in two copies verified and under oath by such stock broker or dealer in securities as principal of the salesman. 3. Every application shall be accompanied by three (3) testimonial letters vouching to the good moral character of the applicant. A passport size photograph of the applicant shall be attached to the original copy of the application. cdll 4. A filing fee of P100.00 shall be collected by the Commission upon filing of the application. 5. If the applicant is applying for a salesman's license for the first time, he should pass a written examination to be given by the BED. III. Every registration/license issued under these rules shall expire on the 31st day of December of the year in which it is issued, but new registration/license for the succeeding year may be issued upon written application and upon payment of the fee as herein before provided, without filing of further statements or furnishing any further information unless specifically required by the Commission. Applications for renewal must be made not less than 30 days nor more than 60 days before the first day of the ensuing year, otherwise they shall be treated as original applications. IV. All securities issuers, selling their own securities without the intervention of duly licensed brokers or dealers in securities, are deemed dealers pursuant to Section 19 of the Revised Securities Act and shall be licensed as such dealers in accordance with these rule. V. Effectivity . These rules shall take effect immediately. (SGD.) MANUEL G. ABELLO Chairman Securities and Exchange Commission CIRCULAR NO. 2 SUBJECT : Updating the Information Contained in Applications for Registration/Licensing of Stockbrokers and Dealers in Securities and their Salesmen For the information and compliance of all concerned, all stockbrokers and dealers as well as their salesmen whose licenses were approved pursuant to Commonwealth Act No. 83, as amended, must update the information contained in their applications by filing the Revised SEC Form Nos. 3 and 4 together with the requirements set forth below and submit the same to this Commission not later than February 24, 1983. 1. All persons named in the application as managing or administering the affairs of the applicant, must submit five testimonial letters attesting to their good business repute, as well as passport size photographs taken not more than thirty (30) days prior to the submission with the SEC. 2. All salesmen must submit three testimonial letters from reputable persons vouching to their good moral character, as well as passport size photographs taken not more than thirty (30) days prior to the submission with the SEC. Strict compliance herewith by all concerned is hereby enjoined. GONZALO T. SANTOS, JR. Associate Commissioner