Requirements and Procedures Relative to Applications for Registration of Securities Under the Revised Securities Act

October 22, 1970 REQUIREMENTS AND PROCEDURES RELATIVE TO APPLICATIONS FOR REGISTRATION OF SECURITIES UNDER THE REVISED SECURITIES A C T * 1. Procedure : 1. The first step that the applicant must do is to accomplish the Registration Statement (SEC Form RSA No. 1). 2. The said Registration Statement duly accomplished must be filed with the Brokers and Exchanges Department (SRLD) in triplicate, the same to be stamped "Received" indicating the date of receipt; and the necessary fee (1/10 of 1% of maximum aggregate price at which securities are proposed to be offered) + 1% legal research fee paid to the Cashier. 3. After the payment of the required fee the papers (SEC Form RSA No. 1 with accompanying documents) are sent to an Attorney in the SRLD of the BED for appropriate action. 4. The first step that the action attorney will do is to cause the preparation of the Notice and Order for publication, once a week for two consecutive weeks in two newspapers of general circulation at the expense of the applicant. 5. After the Notice and Order has been released for publication the records are sent to the FAFAD of BED and the case is assigned to an Examiner of the Division. 6. The FAFAD prepares its report and recommendation, principally on the financial condition of applicant and accounting requirements involved. 7. After the report and recommendation of the FAFAD is prepared, the same and the whole records of the same are returned to the SRLD, if it is an original application. If the application, however, is for the registration of additional shares, records are transmitted first to the STRD for further verification of the company's compliance with the terms and conditions of its Permit to Sell Securities. 8. With the report of the Examiner and the records, the action attorney in the SRLD, if all the requirements are complied with, prepares the memorandum and same is taken up in the Commission meeting. If approved, then Order and License is prepared. II. Requirements as to Documents and Papers to be submitted : A. Standard Requirements : At least three (3) copies of the following must be submitted: 1. Resolution of the Board of Directors authorizing the registration of applicant's securities; 2. Curriculum vitae of officers and members of the board of directors; 3. Samples of stock certificate; 4. Balance sheet Submission of a Long Form Audit Report by an independent certified public accountant and also Financial Work Program, duly certified by the President and/or Treasurer; 5. Underwriting agreement, if an underwriter to sell the securities will be engaged; 6. Statement by the Promoter, justifying the claim for promotion fee, in case such fee will be paid by the corporation. B. Special Requirements : With regard to oil and/or mining companies, in addition to the above papers and documents, at least three (3) copies of the following must be submitted: 1. A complete list of mining properties acquired and/or developed or intended to be acquired or developed by the issuer showing the names of mining, claims, names of locators and/or owners, and dates of their location and registration; 2. A certificate from the Director of Forestry showing that the mining properties in question are not located in any forest or national park; 3. A certified copy of the agreement or contract between the issuer and claim-owners, acknowledged and ratified before a notary public; 4. A preliminary report, under oath, of a duly licensed mining engineer showing the names of the mining claims, their location and accessibility, topography and geology, ore possibilities and probable cost of extracting it as may be practicable to estimate the same, certifying that the claims are mineralized and recommending further exploration and/or developing the same; 5. Duly approved lease contract, if any; 6. Work programs, showing the period covered and the funds required in prosecuting the program; 7. Prospectus; ** 8. Registrant engaged in the oil exploration business must, in addition to those enumerated under II-A and II-B, Nos. 6 and 7 must submit copies of their Petroleum Exploration Concession Application (PECA) filed with the Bureau of Mines and/or Petroleum Exploration Concession (PEC) awarded to and/or to be developed, operated and exploited by Registrant . III. Policy : 1. Expeditious action on all applications filed without the need on the part of anybody to follow it up, provided, of course, that the requirements are complied with. 2. In line with such expeditious actions, the required Notice and Order shall be immediately caused to be prepared for publication announcing the filing of the application with the Commission without waiting until all the necessary papers and documents have been completely submitted, if from the informational data contained in the Registration Statement and the papers and documents so far submitted, the said Notice and Order could be prepared. It is advisable to have this Notice and Order published right away because, assuming that all the requirements, have been complied with, final favorable action on the application cannot be taken by the Commission until after at least twenty-one (21) days shall have elapsed from the first day said Notice and Order has been published. IV. Instruction : 1. Regular and continuous checking must be made of the records of companies on registration of securities, particularly mining and oil firms whose securities are listed on the boards of the stock exchanges, to verify if the terms and conditions of the permits to sell shares issued to them are complied with. Securities agents of the Brokers and Exchanges Department assigned to the exchanges should report in writing any violation of said conditions or provisions of the Revised Securities Act * for appropriate action such as recommendation to the Commissioner for imposition of fines, suspension or revocation of the registration of their securities, if warranted after due hearing and investigation on the matter. llcd (SGD.) TROADIO T. QUIAZON, JR. Officer-in-Charge (Acting Secretary of Commerce and Industry) Footnotes * The Revised Securities Act, passed on February 23, 1982 supersedes Act of 1936 or CA No. 83. ** As per PD No. 87.