SEC enhances shelf registration, extends validity to 5 years

MANILA, Philippines — The Securities and Exchange Commission (SEC) has extended the shelf registration validity period to five years from three years to provide issuers of securities with more flexibility in their offerings.

The SEC has expanded the shelf registration framework through the issuance of a memorandum circular amending Rule 8.1.2 of the 2015 implementing rules and regulations of the Securities Regulation Code (SRC) on the delayed and continuous offering and sale of securities.

Rule 8.1.2 provides for the registration of securities intended to be offered and sold in tranches in a delayed and continuous basis, which is known as shelf registration.

The shelf registration scheme, which has been implemented by the SEC since 2000, helps companies in their fundraising activities by providing flexibility and speed.

“The commission recognizes the need to enhance the shelf registration framework to provide greater flexibility and efficiency in the offering of securities through continuous or delayed tranches, while ensuring adequate disclosures, investor protection and regulatory oversight,” the SEC said.

Under the enhanced shelf registration framework, securities intended to be issued in tranches at more than one instance after the registration statement has been rendered effective by the commission may be registered for an offering to be made on a continuous or delayed basis in the future for a period not exceeding five years from the effective date of the registration statement under which they are being offered and sold.

For each subsequent tranche after the initial offering, the SEC said that the issuer should apply a permit to sell by filing documentary requirements which will be significantly less and more simplified than those submitted during the initial registration.

The SEC said the amendments under the new circular, including the extension of the shelf registration validity period to five years, will apply to all approved, valid and subsisting shelf registration statements as of the effectivity of the circular provided that the remaining validity period of such shelf registrations shall be reckoned from the effectivity date of the initial registration statement.

The enhancement of the shelf registration framework is among the reforms eyed by the SEC to make the local capital market more robust and resilient.

The SEC is looking at expanding the repo market to include trust entities, mutual funds and insurers as well as pushing for short selling and securities borrowing and lending to align with global norms and improving liquidity and price discovery.

Further, the commission is reviewing real estate investment trust rules to expand eligible assets, lengthen reinvestment period and attract broader participation.

The SEC is likewise pursuing global index inclusion of Philippine corporates by addressing gaps in liquidity, float and disclosure, while working within the ASEAN Capital Markets Forum to support cross-border offerings and regional integration.

It is also working on listing for grantees of legislative franchises and exploring the listing of commercially viable state-owned enterprises to bring new scale and diversity into the market.

SEC chairperson Francis Lim earlier said that all these reforms form part of a larger strategy to build a market that is better, more inclusive and trusted.