Rules Governing Transfer Agents, Brokers and Clearing House in Connection with Issuance of Stock Certificates

September 18, 1970 RULES GOVERNING TRANSFER AGENTS, BROKERS AND CLEARING HOUSES IN CONNECTION WITH ISSUANCE OF STOCK CERTIFICATES (AS AMENDED) For the purpose of regulating the activities of transfer agents, brokers and clearing houses in connection with the issuance of certificates of securities purchased in any stock exchange, and thus expedite the release of such certificates to the buyers, the Commission, pursuant to the powers vested in it under existing laws, hereby promulgates the following rules: cdlex 1. Qualifications . No person may act as transfer agent or clearing house without, the prior approval of the Securities and Exchange Commission which shall satisfy itself of the qualifications and competence of the applicant. A transfer agent shall be a corporation or partnership with a paid up capital not less than P50,000.00 at least one officer or partner of which shall be certified public, accountant. An individual who is now a transfer agent is excepted from this requirement. A bank shall be preferred to act as transfer agent or clearing house. 2. Duties of transfer agents . The transfer agent will prepare and issue stock certificates on fully paid subscriptions duly certified to him by the treasurer of the issuer company. He will also record transfers of stock for shares which are outstanding or thereafter issued when, from time to time, such certificates are surrendered to the company for that purpose. Upon cancellation of the certificates so surrendered, the transfer agent will countersign the new certificates for the same number of shares represented by the certificates surrendered and will effect delivery thereof. The transfer agent shall maintain ledgers for each issuer company showing the name and address of, and the number of shares held by, each registered stockholder, together with such record as a customary. 3. Transfer Agent Not to Act as Registrar or Auditor of Same Company . Persons or companies commencing to perform the functions of a transfer agent after the effectivity of these rules, shall not act as registrar or auditor of the same issuer. * A transfer agent who, at the time of the effectivity of these rules, is also the auditor of the same company shall have an independent auditor check and verify his work as such transfer agent quarterly. Within thirty (30) days after the end of each quarter, the independent auditor shall submit to the Securities and Exchange Commission a certified statement in duplicate, on the result of his audit, as well as on the authorized, issued and outstanding capital stock of each company for whom the transfer agent performs his work as such and as auditor. 4. Deadlines for Delivery of documents . All requirements must be complied with and the certificates of stock, as well as other necessary documents required for the transfer of shares shall be delivered within the following periods: a) From broker to clearing house Not longer than four (4) days from the date of transaction. b) From clearing house to transfer agent Not longer than four (4) days from receipt of the documents. c) From broker direct to transfer agent Not longer than four (4) days from the date of transaction. d) From transfer agent back to clearing house and/or broker Not longer than ten (10) days from receipt of documents provided there is a "good delivery." Where there is no "good delivery",the certificate and the accompanying documents shall be returned to the clearing house or broker not later than two (2) days after receipt thereof, except when the defects can be readily remedied, in which case the clearing house or the broker shall instead be notified of the requirements within the same period. The notice to the clearing house or broker shall indicate that the Securities and Exchange Commission has been notified of such defective delivery. On the tenth (10th) day, the transfer agent shall notify the clearing house and the broker in writing of completed transfers that are still with him pending pick up. A copy of such notification shall be furnished the Securities and Exchange Commission. e) From clearing house to purchasing broker Not later than two (2) days from receipt of the certificate of stock, except pull-out certificate which shall be returned to the transfer agent within the same period. f) From purchasing broker to customer Not later than two (2) days from receipt of the certificate. If the actual delivery of the certificate cannot be made, notice shall be given to the customer by mail or otherwise within the same period. The party who delivers the documents shall see to it that the receiving party stamps thereon the true date and time of his receipt thereof. The period of deliveries mentioned above shall not apply to transactions in stock exchanges outside the Greater Manila area, as to which appropriate rules shall be promulgated. All deliveries above-mentioned which are made after 12:00 noon shall be considered as received the following day. The number of days listed above shall refer to "working days" and will not include Sundays and holidays. ** 5. Penalties . Any violation of the periods of deliveries mentioned under No. 4 shall be penalized by a fine of one hundred (P100.00) pesos and an additional ten (10) pesos per day for every day of delay, as well as/or suspension of license or certificate of authority after proper notice and hearing. Any other violation of these rules shall be punished by fine in such sum as the Commission may impose under Republic Act No. 1143. 6. Effectivity . These rules shall take effect fifteen (15) days after the have been publicly promulgated (See. 551, R. Adm. Code) by publication in at least two newspapers of general circulation throughout the Philippines, and official notification of the existing stock exchanges in the Greater Manila area. cdll (SGD.) ARCADIO E. YABYABIN Deputy Securities and Exchange Commissioner Approved: September 22, 1970 (SGD.) ERNESTO M. MACEDA Secretary of Commerce and Industry Footnotes * As amended on Rules dated April 20, 1 977 ** As Amended on Rules opted Dec. 27, 1972 ATTACHMENT PRESIDENTIAL DECREE NO. 154 REDUCING THE COMMISSION CHARGED BY STOCKBROKERS TO CUSTOMERS WHEREAS, the rate of commission charged by brokers in the Manila Stock Exchange and the Makati Stock Exchange for each transaction is admittedly high, compared with other stock exchanges in some cities in developing countries of Southeast Asia; prcd WHEREAS, the stockbrokerage business is lucrative especially when the stock market is bullish and the stock transaction is voluminous; WHEREAS, some forms of restraint or regulatory measures should be provided by the government by reducing the current rate of brokers' commission from its present level to a more reasonable one in order to provide incentives to investors to participate more actively in the operation of stock markets, and thereby channel their savings to needed industries and enterprises; and WHEREAS, reduction of the current rate of brokers' commission is deemed necessary in the public interest. NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue of the powers in me vested by the Constitution as Commander-in-Chief of all the Armed Forces of the Philippines, and pursuant to Proclamation No. 1081, dated September 21, 1972 and General Order No. 1, dated September 22, 1972, as amended, do hereby order and decree: SECTION 1. Rate of Brokers' Commission . No stockbroker using the facilities of any stock exchange shall charge, collect or receive a commission of more than one per cent (1%) of the value of each transaction, whether a purchase or a sale, but in no case shall the commission be less than twenty (P20.00) pesos for a transaction. SECTION 2. Adjustment of rates to prevailing conditions . The Securities and Exchange Commission (SEC) shall have the power to study and adjust from time to time the rate of commission herein established to conform with prevailing conditions when the same is necessary in the public interest, but in no case shall the change of rate be more than once in one year. SECTION 3. Penalty . Any violation of Section 1 of this Decree shall be punished in accordance with the provisions of Section 40 (Penalties) of the Securities Act. Any provision of law, executive order, rule or regulation in conflict with, or contrary to, this Decree is hereby repealed or modified accordingly. This Decree is hereby made a part of the laws of the land and shall take effect immediately. LibLex Done in the City of Manila this 14th day of March in the year of Our Lord, Nineteen Hundred and Seventy-Three. (SGD.) FERDINAND E. MARCOS President of the Philippines By the President: (SGD.) ALEJANDRO MELCHOR Executive Secretary