Mr. Jorge Ma. A. Yuzon

February 6, 1996 Mr. Jorge Ma. A. Yuzon Angping & Associates Securities, Inc. Suite 2003/2004 The Peak, 107 Alfaro St., Salcedo Village, Makati, Metro Manila S i r : This refers to your letter dated November 15, 1995 requesting opinion on the possibility of making available shares or units of participation of an offshore mutual fund invested exclusively in Philippine listed equities under the following facts: 1. Participation in the fund shall be via private placements in the local currency. 2. The sponsors of the offshore fund are not looking at retailing subscriptions to the fund (i.e., selling to the public). Instead, they are looking at tapping a few high net worth individuals and potentially some institutions , to raise assets under management. Ideally individual subscriptions would be pegged at the amount of at least P10 million each. 3. The principal distributors of the fund (who most likely are the fund sponsors too) are looking at no more than twenty (20) individuals and/or institutional ( sic ) from whom subscriptions will be raised. 4. Subscription shall be denominated in the local currency. A working account shall be opened with a local commercial bank where subscriptions will be deposited and disbursements effected. 5. Angping and Associates Securities, Inc., (AASI) will most likely act as financial advisor and local representative agent and fund sponsors. Your queries are: 1. Does the Fund need to be registered under the Revised Securities Act considering that the Fund will not be retailed to the public? 2. Should the fund sponsor instead seek exemption from registration before commencing acceptance of placements? if so, what are the requirements and fees to be paid, if any? The pertinent provisions of the Revised Securities Act of the Philippines provide: "SECTION 4. Requirement of registration of securities . (a) No securities except of a class exempt under any of the provisions of Section five hereof or unless sold in any transaction exempt under any of the provisions of Section six hereof, shall be sold or offered for sale or distribution to the public within the Philippines unless such securities shall have been registered and permitted to be sold as hereinafter provided." (Emphasis supplied) "SECTION 6. Exempt transactions . . . . (b) The Commission may, from time to time and subject to such terms and conditions as it may prescribe, exempt transactions other than those provided in the preceding paragraph, if it finds that the enforcement of the requirements of registration under this Act with respect to such transactions is not necessary in the public interest and for the protection of the investors by reason of the small amount involved OR the limited character of the public offering ." (Emphasis supplied) Therefore, as a general rule selling or offering for sale or distribution of securities within the Philippines is subject to registration. However , the Law allows exemptions by reason of the small amount or limited character of the offering . Accordingly, if it can be shown that the offering will be limited only to not more than 20 investors who are in the position to know the present affairs of the Fund and the risks of investing therein such that the registration of the securities to be offered is necessary for the protection of the investors, the transaction may be exempted from the registration requirements under the Revised Securities Act, but only after complying with the following: 1. A certificate of exemption shall be secured by filing a request for exemption from the registration requirements stating the reasons why it should be exempted under Section 6(b) of the Revised Securities Act. 2. Payment of exemption fee amounting to one-tenth of one percentum of the maximum aggregate price or issued value of the securities as required under Section 6(c) of the Revised Securities Act. However, it is to be understood that the exemption which may be granted on the above transaction shall only be for the specific offering to the twenty (20) intended investors and shall not be construed to cover subsequent transfer of the shares in the course of repeated and successive transactions. Take note further that the moment the offshore mutual fund shall operate in the Philippines, it shall comply with registration requirements under the Corporation Code, Foreign Investments Act of 1991 and RA 2629, otherwise known as the Investment Company Act. Very truly yours, (SGD.) FE ELOISA C. GLORIA Associate Commissioner