Opinion No. 14-14 RE: Public Offering

SEC Building, EDSA, Greenhills, Mandaluyong City Securities and Exchange Commission Office of the General Counsel Republic of the Philippines Department of Finance

13 June 2014

SEC-OGC Opinion No. 14-14 Re: Public Offering

Valero St., Salcedo Village Makati City 1227 GABIONZA DE SANTOS & PARTNERS 20/F 139 Corporate Center

Atty. Vincent Patrick R. Cruz, and Atty. Teresa S. Villanueva-Tiansay Attention: Atty. Santiago T. Gabionza, Jr., Atty. Oliver M. Zorilla,

Gentlemen:

qualifications as to what constitutes the same. proper definition of the term "Public Offering,"" more particularly on whether there are any This is in response to your letter dated 16 May 2013, seeking for our opinion as to the

Light & Power, Inc., and Tarlac Electric Corporation. In your letter, you cited two relevant bases for your queries. First is the definition of "Public Offering under Rule 3 of the Amended Implementing Rules and Regulations ("IRR") of the Securities Regulation Code ("SRC"), and the other, an opinion of the Commission dated 8 December 1997, where the Commission considered the sale of securities to twenty (20) or more persons as selling to the public. The request is made on behalf of your clients, Angeles Electric Corporation, Iligan

offering, which will require registration with the Commission. It is your position that selling to twenty (20) or more persons constitutes public

Your queries are summarized thus:

1.Would the term "Public Offering," by and of itself, necessarily require listing and selling 2 When a particular law provides that a corporation "shall offer and sell to the public" a in the Philippine Stock Exchange or any stock exchange for that matter?

be sufficient to hold that "Public Offering through any of the modes provided for in the particular portion of its common shareholdings, without any other qualifications, would it SRC shall be deemed as compliance with such mandate?

"Public Offering" under Rule 3, Section 1(N) of the IRR is defined thus

to anyone who will buy, whether solicited or unsolicited. Any solicitation or "Public Offering" means a random or indiscriminate offering of securities in general

SEC-OGC Opinion No. 14-14 Re: Public Offering Page 2 of 3 presentation of securities for sale through any of the following modes shall be presumed to be a public offering:

1. Publication in any newspaper, magazine or printed reading material 2 Presentation in any public or commercial place; which is distributed within the Philippines or any part thereof ;

3.' Advertisement or announcement in any radio or television, or in any 4. Distribution and/or making available flyers, brochures or any offering material in a public or commercial place, or mailing the same to online or e-mail system; or prospective purchasers.

Public Offering: Under the definition provided for in the IRR, the following are the elements of a

1 There is an offering of securities for sale; and 2. The offer is made randomly or indiscriminately to anyone who will buy, whether solicited Or unsolicited.

less) in the Philippines during any twelve-month period is a transaction exempted from registration. selling to the public.1 This was codified under Section 10(k) of the SRC, which provides that the sale of securities by an issuer to fewer than twenty (20) persons (meaning, nineteen or The Commission previously opined that the sale of securities to 20 or more persons is

mere offer for sale of said securities requires the said registration and approval before the as a public sale that necessarily involves a public offer; hence, the same requires registration to, and approval by, the Commission. We reiterate that under Section 8.1 of the SRC, the same can be made.? Based on the foregoing, sale of securities to twenty (20) or more persons is considered

Hence, public offering does not involve only listing in a stock exchange. offering. By listing in an exchange, the issuer is randomly and indiscriminately offering for public offering, pursuant to the afore-quoted Rule 3, Section 1(N) of the IRR of the SRC. sale or selling securities to the public. However, listing in an exchange is not the only form of We answer your first query in the negative. Listing in an exchange is a form of public

of settled policy, render opinions on matters which are speculative and anticipatory in character. Hence, we cannot give a categorical answer to that particular query.3 However, for purposes of information only, the following may be imparted. Anent the second query, please be advised that the Commission does not, as a matter

2 Section 8.1. Securities shall not be sold or offered for sale or distribution within the Philippines. without a registration statement duly filed with and approved by the Commission. Prior to such sale. information on the securities, in such form and with such substance as the Commission may prescribe, 3 SEC Memorandum Circular No. 15, series of 2003 shall be made available to each prospective purchaser. 1 SEC Opinion dated 8 December 1997, addressed to Atty. Conchitina Gregorio Panganiban

SEC-OGC Opinion No. 14-14 Re: Public Offering Page 3 of 3

portion of its common shareholdings partakes of a minimum public ownership requirement. As to what acts will satisfy the said requirements will depend on that particular law, as well as its implementing rules and other relevant issuances thereunder. If that particular law (the primary law) does not limit "public offering" to certain modes only, and allows or permits application of the SRC, then the SRC will apply suppletorily. For more information about this matter, queries should be addressed to the proper administrative agency tasked to define compliance with that particular law. A law's provision requiring a corporation to offer and sell to the public a particular

the facts and circumstances disclosed and relevant solely to the particular issue raised therein and shall not be used in the nature of a standing rule binding upon the Commission in other inquiry and investigation, it will be disclosed that the facts relied upon are different, this cases or upon the courts whether of similar or dissimilar circumstances. If, upon further opinion shall be rendered void.4 It shall be understood, however, that the foregoing opinion is rendered based solely on

Please be guided accordingly.

Very truly yours.

CLAMOSEURREA General Counsel

4 Ibid.