MC No. 2 s.2003 - RE : Revised Scale of Fines

SEC MEMORANDUM CIRCULAR NO. 2 Series of 2003 REVISED SCALE OF FINES To further rationalize the penalties being imposed by the Commission, and to ensure strict compliance with the Securities Regulation Code ("SRC") and its Implementing Rules and Regulations, and the Investment Company Act (ICA) and its implementing rules and regulations, the Commission in its meeting of February 11, 2003, approved the following scale of fines: Penalty for Violation* SRC Violations Second Third Fourth Provisions Offense** Offense** Offense** First Offense Sections 8 OFFERING OF P10,000per P20.000 per P60,000per P240.000 per and 12 SECURITIES TO THE transaction or transaction or 1/10 of 1% of 2/10 of 1% of transaction or transaction or PUBLIC WITHOUT the aggregate the aggregate PRIOR 6/10 of 1% of 24/10 of 1% of REGISTRATION OR issuance, issuance, PERMIT whichever is whichever is the aggregate the aggregate higher. higher. issuance, issuance, whichever is whichever is higher. higher. Section 10 LATE FILING OF 50,000 100,000 300,000 600,000 and NOTICE OF suspension of EXEMPTION registration PURSUANT TO SRC RULE10.1(K) (In case of listed companies only) NON-COMPLIANCE 10,000 20,000 60,000 120,000 and WITH DISCLOSURE suspension of REQUIREMENTS registration UNDER SRC RULE 10.1 Section 14 FAILURE TO AMEND 50,000 or 100,000 or 1/10 300,000 or 3/10 600,000 or REGISTRATION 0.5/10 of 1% of of 1% of the of 1% of the 6/10 of 1% of STATEMENT IN the aggregate aggregate aggregate the aggregate ACCORDANCE amount of amount of amount of amount of WITH SRC RULE 14 securities sold securities sold securities sold securities sold under the new under the new under the new under the new terms, terms, terms, terms, whichever is whichever is whichever is whichever is higher. higher. higher. higher, and suspension of

registration Section LATE OR P50.000 ,or P100,000 or P300.000 or P600,000 or 17.1 INCOMPLETE 0.5/10 of 1% of 1/10 of 1% of 3/10 of 1% of 6/10 of 1% of FILING OF Consolidated Consolidated Consolidated Consolidated CURRENT REPORT Net Income / Net Income / Net Income / (SEC FORM 17-C) Net Income / Revenue, Revenue, Revenue, Revenue, whichever is whichever is whichever is whichever is higher, and higher. higher. higher. suspension of registration LATE OR 75,000 or 1/10 150,000 or 2/10 450,000 or 6/10 900,000 or INCOMPLETE FILING OF of 1% of of 1% of of 1% of 9/10 of 1% of QUARTERLY REPORT (SEC FORM Consolidated Consolidated Consolidated Consolidated 17-Q) Net Income / Net Income / Net Income / Net Income / Revenue, Revenue, Revenue, Revenue, whichever is whichever is whichever is whichever is higher. higher, higher. higher, and suspension of registration LATE OR 100,000 or 1/10 200,000 or 2/10 600,000 or 6/10 1,200,000 or INCOMPLETE of 1% of of 1% of of 1% of 12/10 of 1% of FILING OF ANNUAL Consolidated Consolidated Consolidated Consolidated REPORT (SEC FORM Net Income / Net Income / Net Income / Net Income / 17-A) Revenue, Revenue, Revenue, Revenue, whichever is whichever is whichever is whichever is higher. higher. higher. higher, and suspension of registration Section 18 LATE OR 50,000 or 100,000 300,000 or 3/10 900,000 or INCOMPLETE 0.5/10 of 1% of or1/10of1%of of 1% of the 9/10 of 1% of FILING OF REPORTS the maximum the maximum maximum Consolidated BY 5% OR MORE aggregate aggregate aggregate Net Income / HOLDERS OF purchase price purchase price purchase price Revenue, EQUITY SECURITIES of acquired of acquired of acquired whichever is (SECFORM18-AOR securities, securities, securities, higher, and 18-AS) whichever is whichever is whichever is suspension of higher. higher. higher. registration Section LATE OR 100,000 or 1/10 200,000 or 2/10 600,000 or 6/10 1,200,000 or 19.1 INCOMPLETE of 1%of the of 1% of the of 1% of the 12/10 of 1% of FILING OF TENDER maximum maximum maximum Consolidated OFFER REPORT (SEC aggregate aggregate aggregate Net Income / FORM 19-1) OR purchase price purchase price purchase price Revenue,

FAILURE TO of acquired of acquired of acquired whichever is COMPLY WITH ANY securities, securities, securities, higher, and REQUIREMENT OF whichever is whichever is whichever is suspension of SRC RULE 19-1 registration higher. higher. higher. Section 20 LATE OR 100,000 or 1/10 200,000 or 2/10 600,000 or 6/10 1,200,000 or [in relation INCOMPLETE of 1% of of 1% of of 1% of 12/10 of 1% of with FILING OF Consolidated Consolidated Consolidated Consolidated 17.1(b)] INFORMATION Net Income / Net Income / Net Income / Net Income / STATEMENT (SEC Revenue, Revenue, Revenue, Revenue, FORM 20-IS) OR whichever is whichever is whichever is whichever is FAILURE TO higher. higher. higher. higher, and COMPLY WITH ANY suspension of REQUIREMENT OF registration SRC RULE 20 Section 22 FAILURE TO P100,000 or P200,000 or P600.000 or P1,200,000 or OBSERVE MINIMUM 1/10 of 1% of 2/10 of 1% of INTERNAL Consolidated Consolidated 6/10 of 1% of 12/10 of 1% of CONTROLS AND Net Income / Net Income / RECORD KEEPING Consolidated Consolidated SYSTEM Revenue, Revenue, whichever is whichever is Net Income / Net Income / higher. higher. Revenue, Revenue, whichever is whichever is higher. higher, and suspension of registration Section 23 LATE OR 50,000 or 100,000 or 1/10 300,000 or 3/10 900,000 or INCOMPLETE FILING OF 0.5/10 of 1% of of 1% of the of 1% of the 9/10 of 1% of STATEMENT OF BENEFICIAL the maximum maximum maximum the maximum OWNERSHIP (SEC FORM 23-A OR B) aggregate aggregate aggregate aggregate purchase price purchase price purchase price purchase price of acquired of acquired of acquired of acquired securities, securities, securities, securities, whichever is whichever is whichever is whichever is higher. higher. higher. higher. DIRECTORS / OFFICERS Qualifying or not more 10,000 20,000 60,000 180,000 than shares (100) shares More than 100 shares 20,000 40,000 120,000 360,000 but less than 5% of the outstanding equity security

More than 5% but less 35,000 70,000 210,000 630,000 than 10% Section 38 FAILURE TO ELECT 100,000or 1/10 200,000 or 2/10 600,000 or 6/10 1,200,000 or INDEPENDENT DIRECTOR(S) of 1% of of 1% of of 1% of 12/10 of 1% of OR Consolidated Consolidated Consolidated Consolidated ELECTION OF AN Net Income / Net Income / Net Income / Net Income / UNQUALIFIED INDEPENDENT Revenue, Revenue, Revenue, Revenue, DIRECTOR whichever is whichever is whichever is whichever is higher. higher. higher. higher, and suspension of registration Section 54 MIS- 100,000 or 1/10 200,000 or 2/10 600,000 or 6/10 1,200,000 or REPRESENTATION, MISLEADING of 1% of of 1% of of 1% of 12/10 of 1% of STATEMENTS, OMISSION OF A Consolidated Consolidated Consolidated Consolidated MATERIAL FACT IN ANY FILINGS Net Income / Net Income / Net Income / Net Income / REQUIRED TO BE SUBMITTED Revenue, Revenue, Revenue, Revenue, whichever is whichever is whichever is whichever is higher. higher. higher. higher, and suspension of registration (This is in addition to the penalty on the principal report, if any.) Penalty for Violation* ICA Violations Second Third Provisions Offense** Offense** First Offense Fourth Offense** Sections 7 VIOLATION OF P10,000 per P20.000 per P60.000 per P240.000 per and 24 REGISTRATION violation or violation or 2/10 of 1% of violation or violation or 24/10 REQUIREMENTS 1/10 of the aggregate 1%ofthe issuance, 6/10 of 1% of of 1% of the aggregate whichever is issuance, the aggregate aggregate whichever is higher. higher. issuance, issuance, whichever is whichever is higher. higher

Section 8 ELECTION OF 50,000 or 100,000 or 300,000 or 600,000 or 6/10 CERTAIN INELIGIBLE 0.5/10 of 1% of 1/10 of 1% of 3/10 of 1% of of 1% of AFFILIATED PERSONS AND Consolidated Consolidated Consolidated Consolidated Net UNDERWRITERS Net Income / Net Income / Net Income / Income / Revenue, Revenue, Revenue, Revenue, whichever is whichever is whichever is whichever is higher. higher. higher. higher, and suspension of registration Section 9 UNAUTHORIZED 50,000 100,000 300,000 900,000 AFFILIATIONS OF DIRECTORS, OFFICERS AND EMPLOYEES Section 10 PROHIBITED 10,000 per 20,000 per 60,000 per 240,000 per OFFERS TO transaction or transaction or transaction or transaction or EXCHANGE 1/10 of 1% of 2/10 of 1% of 6/10 of 1% of 24/10 of 1% of SECURITIES the aggregate the aggregate the aggregate the aggregate issuance, issuance, issuance, issuance, whichever is whichever is whichever is whichever is higher, and higher. higher. higher. suspension of registration Section 11 UNAUTHORIZED 50,000 or 100,000 or 300,000 or 600,000 or 6/10 OR ILLEGAL ACTIVITIES OF 0.5/10 of 1% of 1/10 of 1% of 3/10 of 1% of of 1% of INVESTMENT COMPANIES Consolidated Consolidated Consolidated Consolidated Net Net Income / Net Income / Net Income / Income / Revenue, Revenue, Revenue, Revenue, whichever is whichever is whichever is whichever is higher. higher. higher. higher, and suspension of registration Section 12 UNAUTHORIZED 50,000 100,000 300,000 900,000 CHANGES IN INVESTMENT POLICY (Imposable on responsible directors and officers)

Section 14 UNAUTHORIZED 50,000 100,000 300,000 900,000 and five CONTRACTS OF (5) years ADVISERS AND UNDERWRITERS disqualification as (Imposable on an investment responsible directors and officers) adviser even with a written contract. Sections VIOLATION OF 50,000 or 100,000 or 300,000 or 600,000 or 6/10 22 and 23; REQUIREMENTS 0.5/10 of 1% of 1/10 of 1% of 3/10 of 1% of of 1% of ICA Rule ON DISTRIBUTION, Consolidated Consolidated Consolidated Consolidated Net 35-1 (e) REDEMPTION, AND Net Income / Net Income / Net Income / Income / REPURCHASE OF Revenue, Revenue, Revenue, Revenue, SECURITIES whichever is whichever is whichever is whichever is higher. higher. higher. higher and suspension of registration Section 26 EXCESSIVE 50,000 or 100,000 or 300,000 or 600,000 or 6/10 PERIODIC PAYMENT PLAN 0.5/10 of 1% of 1/10 of 1% of 3/10 of 1% of of 1% of Consolidated Consolidated Consolidated Consolidated Net Net Income / Net Income / Net Income / Income / Revenue, Revenue, Revenue, Revenue, whichever is whichever is whichever is whichever is higher. higher. higher. higher and suspension of registration Sections FAILURE TO P50.000 or P100,000 or P300.000 or P600,000 or 6/10 3/10 of 1%-of of 1% of 25, 27 & SUBMIT REQUIRED 0.5/10 of 1% of 1/10 of 1% of Consolidated Net Income / Consolidated Net 30; REPORTS UNDER Consolidated Consolidated Income / Revenue, Revenue, THESE SECTIONS Net Income / Net Income / whichever is whichever is ICA Rule AND/OR TO Revenue, Revenue, higher higher and suspension of 35-1(e)(3) PUBLISH DAILY whichever is whichever is registration PRICES higher. higher. Section 32 MIS- 100,000 or 200,000 or 600,000 or 1,200,000 or REPRESENTATION 1/10 of 1% of 2/10 of 1% of S Consolidated Consolidated 6/10 of 1% of 12/10 of 1% of Net Income / Net Income / Consolidated Consolidated Net Revenue, Revenue, whichever is whichever is Net Income / Income / higher. higher. Revenue, Revenue, whichever is whichever is higher. higher and suspension of

registration ICA Rule VIOLATION OF 100,000 or 200,000 or 600,000 or 1,200,000 or 35-1 (d) RECITED 1/10 of 1% of 2/10 of 1% of Consolidated Consolidated 6/10 of 1% of 12/10 of 1% of INVESTMENT Net Income / Net Income / OBJECTIVES, Consolidated Consolidated Net POLICIES AND Revenue, Revenue, RESTRICTIONS whichever is whichever is Net Income / Income / higher. higher. Revenue, Revenue, whichever is whichever is higher. higher and suspension of registration ICA Rule NON-DEPOSIT OF 10,000 per 20,000 per 60,000 per 240,000 per transaction or transaction or transaction or transaction or 35-1 (c) SALES PROCEEDS 1/10 of 1% of 2/10 of 1% of 6/10 of 1% of 24/10 of 1% of the aggregate the aggregate the aggregate the aggregate (2) TO A CUSTODIAN issuance, issuance, issuance, issuance, BANK whichever is whichever is whichever is whichever is higher, and higher. higher. higher. suspension of registration ICA Rule REDEMPTION OF 50,000 or 100,000 or 300,000 or P600,000 or 6/10 35-1 (c) ORIGINAL 0.5/10 of 1% of 1/10 of 1% of 3/10 of 1% of of 1% of (3) CAPITAL FOR LESS Consolidated Consolidated Consolidated Consolidated Net THAN 12 MONTHS Net Income / Net Income / Net Income / Income / Revenue, Revenue, Revenue, Revenue, whichever is whichever is whichever is whichever is higher. higher. higher. higher and suspension of registration ICA Rule LATE FILING OF 50,000 or 100,000 or 300,000 or P600.000 or 6/10 35-1 (i)(2) MONTHLY 0.5/10 of 1% of 1/10 of 1% of 3/10 of 1% of of 1% of SALES/REDEMPTIO Consolidated Consolidated Consolidated Consolidated Net N REPORT Net Income / Net Income / Net Income / Income / Revenue, Revenue, Revenue, Revenue, whichever is whichever is whichever is whichever is higher. higher. higher. higher and suspension of registration

ICA Rule FAILURE TO 50,000 per 100,000 per 300,000 per P600.000 or 6/10 35-1 (e) EFFECT transaction or transaction or transaction or of 1% of (3) REDEMPTION 0.5/10 of 1% of 1/10 of 1% of 3/10 of 1% of Consolidated Net REQUEST WITHIN Consolidated Consolidated Consolidated Income / 7 BANKING DAYS Net Income / Net Income / Net Income / Revenue, Revenue, Revenue, Revenue, whichever is whichever is whichever is whichever is higher and higher. higher. higher. suspension ot registration The imposition of the foregoing penalties shall be without prejudice to other administrative sanctions or to the filing of criminal charges against the person/s responsible for the violation. This Circular shall take effect fifteen (15) days from publication in a newspaper of general circulation in the Philippines. Signed on behalf of the Commission on February 19 . 2003, Mandaluyong City, Philippines. (Original Signed) LILIA R. BAUTISTA Chairperson