Protection of Investors Acquisition of even less than 35% but would

result in ownership of more than 51% of the

● Tender Offer Rule
total outstanding equity securities of a public
Publicly announced intention by a person, acting company (2015 IRR of R.A. 8799 Rule 19.2.5)
alone or in concert with other persons to acquire
NOTE: If any acquisition that would result in
equity securities of a public company (SRC,
ownership of over fifty percent (50%) of the
Sec. 19)
total outstanding equity securities of a public
It also means: a publicly announced intention by company, the acquirer shall be required to
a person acting alone or in concert with other make a tender offer under this Rule for all
persons (hereinafter referred to as "person") to the outstanding equity securities to all
acquire outstanding equity securities of a public remaining stockholders of the said company
company as defined in SRC Rule 3, or at a price supported by a fairness opinion
outstanding equity securities of an associate or provided by an independent financial advisor
related company of such public company which or equivalent third party. The acquirer in
controls the said public company. (2015 IRR of such a tender offer shall be required to accept
R.A. 8799 Rule 19.1.8) all securities tendered. (2015 IRR of R.A.
8799 Rule 19.2.5)
● Cases
A “tender offer” is a publicly announced
intention by a person acting alone or in concert Exemptions to the Mandatory Tender Offer
with other persons to acquire equity securities of Rule under the 2015 IRR of the SRC:’
a public company, i.e., one listed on an
a. From unissued capital stock, provided
exchange, among others.
that the acquisition will not result in a
The term is also defined as “an offer by the 50% or more ownership;
acquiring person to stockholders of a public
b. Increase in authorized capital stock;
company for the latter to tender their shares
therein on the terms specified in the offer.” c. Foreclosure proceedings;
(Morales, The Philippine Securities Regulation
d. Privatization by the government;
Code, 2005 ed., p. 153, as cited in Osmeña, 533
SCRA 313). e. Rehabilitation under court
supervision;
Tender offer is in place to protect the interests of f. Through an open market at the
minority stockholders of a target company prevailing market price;
against any scheme that dilutes the share value
of their investments. It affords such minority g. Merger or consolidation; and
shareholders the opportunity to withdraw or exit h. By any person or group of persons
from the company under reasonable terms, a who intends to acquire 35% through an
chance to sell their shares at the same price as exchange trading system.
those of the majority stockholders (Cemco
Holdings, Inc. v. National Life Insurance Co., ● Transactions exempt from the
G.R. No. 171815, 2007, as cited in Osmeña, 533 mandatory tender offer requirement:
SCRA 313).
- Any purchase of shares from the
It is done by filing with the SEC a declaration to unissued capital stock provided that the
that effect, furnishing the issuer with a statement acquisition will not result to a 50% or
with the facts required by the SEC, and the more ownership of shares by the
publication of all requests or invitations for purchaser
tender.
- Any purchase of shares from an increase
in authorized capital stock
● Mandatory Tender Offer Rule
- Purchase in connection with foreclosure
Any person or group of person intends to proceedings involving a duly constituted
acquire 35% or more of equity shares in a public pledge or security arrangement where
company, in one or more transactions within a the acquisition is made by the debtor or
period of 12 months. (2015 IRR of R.A. 8799 creditor
Rule 19.2.1)
 – Purchases in connection with
privatization undertaken by the
● RULES ON PROXY
government of the Philippines
SOLICITATION
– Purchases in connection with
– This only refers to solicited
corporate rehabilitation under
proxies. (SRC, Sec. 20)
court supervision
Requirements:
– Purchases through an open
market at the prevailing market a. In writing; signed by the stockholder or duly
price authorized representative; and
– Merger or consolidation b. Filed before the scheduled meeting with the
corporate secretary
● Process
c. Valid only for the meeting for which it is
- Offeror will make an announcement in a intended.
newspaper of general circulation prior to
the commencement of the offer ● Cannot be valid for a period longer than
five years at one time (Maximum
- At least 2 business days prior to the date effectivity period: 5 years)
of the commencement of the tender ● Broker or dealer who holds or acquires
offer the proxy for at least 10% of the
- File sec form 19-1 with the SEC outstanding shares of the issuer shall
including all exhibits thereto and pay the submit a report identifying the beneficial
prescribed filing fees owner within 10 days after such
acquisition to the:o
- Hand deliver a copy of such form
including all exhibits to the target – Issuer of the security;
company at its principal executive office
– The Exchange where the
and to each exchange where such class
security is traded; and the
of the target company’s securities are
listed for trading – SEC.

● Insider trading where information DISCLOSURE RULE

relates to a tender offer ● This rule only applies to issuer
corporations that satisfy the any of
– If the information is relative to the following conditions (SRC Sec.
a tender offer, it is unlawful for 17):
any person (other than the
tender offeror) who is in – Has sold a class of its securities
possession of material pursuant to a registration;
nonpublic information relating
– Has a class of securities listed
to such tender offer, to buy, or
for trading on an Exchange; or
sell the securities of the issuer
that are sought or to be sought – With assets of at least ₱50
by such tender offer if such Million (or such other amount
person knows or has reason to as SEC shall prescribe), and
believe that the information is having 200 or more holders
nonpublic and has been each holding at least 100 shares
acquired directly or indirectly of a class of its equity securities
from the tender offeror, those (“Public company”)
acting on its behalf, the issuer of
the securities sought or to be ● Reportorial Requirements
sought by such tender offer or – A. Annual Report – for fiscal
any insider of such issuer. year in which registration
statement became effective and
every fiscal year thereafter,
within 135 days after the end of
the fiscal year
● Contains a Balance Sheet, Profit and – 3. Foreign corporations –
Loss Statement, and a statement of anniversary date of the SEC
Cash Flows certified by a CPA and a license.
management discussion and analysis
● Filing of annual financial statement
of results operation.
– 1. corporations using the
– B. Quarterly Report – within 45
calendar year: depending on the
days after the end of each of the
last numerical digit of their SEC
first three quarters of the fiscal
registration or license number in
year
accordance with the schedule
– C. Current Report – whenever set by the SEC
necessary to make a full, fair
– However, any corporation may
and accurate disclosure to the
file their AFS regardless of the
public of every material fact or
last numerical digit or license
event that occurs, which would
number on or before the last day
reasonable be expected to affect
stated in the coding schedule
investors’ decisions in relation
to those securities ● For corporations using the fiscal year
– D. Monthly Report (for issuers – General rule: 120 calendar days
of registered commercial from the end of the fiscal year
papers) –regarding commercial
paper total issuances – Exceptions
outstanding at the end of each ● Brokers dealers -110
month, within 10 business days calendar days from the
following the end of the month end of the fiscal year
● Reportorial requirements shall apply ● Listed companies and
to an issuer: public companies – 105
– Which has sold a class of its from the end of the
securities pursuant to a fiscal year
registration ● The AFS other than the consolidated
– With a class of securities listed financial statements, shall have the
for trading in an exchange stamped “received by the Bureau of
Internal Revenue” or its authorized
– With assets of at least banks, unless the BIR allows an
50,000,000 pesos or such other alternative proof of submission for its
amounts as the SEC shall authorized banks
prescribe and having 200 or
more shareholders each holding
at least 100 share of a class of
its equity securities provided
however that the obligation of
such issuer to file report shall be
terminated ninety days after
notification to the SEC by the
issuer that the number of its
holders holding at least one
hundred share reduced to less
than 100.
● Filing of General Information Sheet
– All corporations shall file their
GIS within 30 calendar days
from
– 1. Stock corporations – date of
annual stockholders meeting
– 2. Non-stock – date of annual
members meeting