Guidelines on cross-border investments being finalized

MANILA, Philippines — The Securities and Exchange Commission (SEC) is finalizing the guidelines that will facilitate the offering of collective investment schemes (CIS) in the Southeast Asian region.

The move is part of the country’s efforts to deepen capital market connectivity in the region.

Established in 2014, the ASEAN CIS framework allows fund managers operating in a member jurisdiction to offer CIS such as unit trust funds or mutual funds to retail investors in other member jurisdictions under a streamlined authorization process.

According to the SEC, the guidelines will operationalize the supplemental memorandum of understanding signed by the SEC together with the Securities Commission Malaysia, the Monetary Authority of Singapore and Securities and Exchange Commission of Thailand for the admission of the Philippines to the ASEAN CIS Framework.

Specifically, the guidelines being finalized by the SEC will apply to investment companies incorporated in the Philippines who intend to participate in the framework, as well as foreign CIS of member jurisdictions that will offer for sale units in the Philippines or other qualifying CIS as specified under the ASEAN CIS Framework.

To qualify, an investment company must first be duly incorporated in the Philippines and authorized under the Investment Company Act (ICA) or the Securities Regulation Code (SRC) and must be authorized to issue shares to the public.

Only shares will be allowed to be issued by qualified investment companies from the Philippines. Those offering both shares and units are still eligible to participate in the framework, but only shares can be offered cross-border.

Furthermore, the SEC said the investment company must be assessed by the Commission to be compliant with both local regulations and the Standards of Qualifying CIS, or the set of rules and regulations as agreed and as may be amended from time to time among member jurisdictions.

Consequently,  a foreign CIS may be offered in the Philippines under the ASEAN CIS framework if it is constituted in a member jurisdiction and is authorized to be offered to the general public of that member jurisdiction; has been assessed by its home regulator as suitable to be a qualifying CIS; and has been recognized by the SEC and is permitted to be offered in the Philippines, subject to existing requirements.

The foreign CIS must be concurrently offered in the Philippines and in its home jurisdiction, must comply with the Standards of Qualifying CIS, along with its CIS operator and trustee/fund supervisor and must comply with the disclosure requirements of the SEC.