SEC Releases Draft Guidelines to Clarify Exempt Transactions Under the Securities Regulation Code

The Securities and Exchange Commission (SEC) has released draft guidelines aimed at providing clarity on exempt transactions under the Securities Regulation Code (SRC). This move is part of the commission's efforts to simplify business operations and establish clear guidelines for potential players in the capital market. The draft memorandum circular revises and consolidates existing rules and regulations, offering a comprehensive framework for companies to navigate the requirements for exempt transactions. Under the proposed guidelines, companies claiming exemption under Section 10.1 of the SRC must file SEC Form 10.1 within 10 calendar days prior to the offer or sale of securities, while those seeking confirmation of exemption must also submit an application.

Key Takeaways:

• The SEC draft guidelines aim to simplify exempt transactions under the Securities Regulation Code (SRC) and improve ease of doing business.
• Section 10.1 of the SRC lists securities exempt from the general registration requirement, while Section 10.2 grants the SEC power to exempt other transactions not listed in Section 10.1.
• To apply for exemption, companies must file SEC Form 10.1, checking Notice of Exemption, without an application for confirmation, or check Application for Confirmation of Exempt Transaction for such purpose.
• Companies seeking confirmation of exemption under Section 10.1 must file SEC Form 10.1 within 10 calendar days prior to the offer or sale of securities.
• No filing fee is required for the Notice of Exemption, while a fee equivalent to one-tenth of one percent of the maximum aggregate price or issued value of securities is required for the Application for Confirmation of Exempt Transaction.
• Subsequent rules and memorandum circulars have provided varying directives on securing or confirming exemptions to the registration requirement.

Statistics:

• Companies claiming exemption under Section 10.1 must file SEC Form 10.1 within 10 calendar days: 10 days
• Companies seeking confirmation of exemption under Section 10.1 must file SEC Form 10.1 within 10 calendar days: 10 days
• Filing fee for Application for Confirmation of Exempt Transaction: 0.1% of maximum aggregate price or issued value of securities
• Response to the need for prospective guidance on exemptions: consistent with the policy of the commission to improve ease of doing business, facilitate access to the capital market and provide predictability in government transactions

Sources:

• Securities and Exchange Commission draft Memorandum Circular on Exempt Transactions Under the Securities Regulation Code (SRC) as part of efforts to improve ease of doing business and provide clear guidance to potential capital market players (provided text with no date)