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This article was originally published on January 11, 2021 and has been updated to reflect recent legal developments.
The following post does not create a lawyer-client relationship between Alburo Alburo and Associates Law Offices (or any of its lawyers) and the reader. It is still best for you to engage the services of a lawyer or you may directly contact and consult Alburo Alburo and Associates Law Offices to address your specific legal concerns, if there is any.
Also, the matters contained in the following were written in accordance with the law, rules, and jurisprudence prevailing at the time of writing and posting, and do not include any future developments on the subject matter under discussion.
AT A GLANCE:
Section 13.1 of Republic Act No. 8799 or the Securities Regulation Code provides that the SEC may reject a registration statement and refuse registration of the security thereunder, or revoke the effectivity of a registration statement and the registration of the security thereunder after due notice and hearing by issuing an order to such effect, setting forth its findings in respect thereto, if it finds that the issuer the issuer falls under any of the grounds for rejection or revocation of registration as provided under the Securities Regulation Code.
Filing for the registration of securities with the Securities and Exchange Commission (SEC) is a mandatory step before securities may be offered or sold to the public. However, such filing does not guarantee approval. When applying for registration, there is always the possibility that the SEC may reject the registration if the application fails to comply with the requirements under the law.
Moreover, even after a registration has already been granted, the SEC retains the authority to revoke the registration should it later discover violations of law, material misrepresentations, or other grounds provided under existing securities regulations.
Rejection or Refusal of Registration
Section 13.1 of Republic Act No. 8799 or the Securities Regulation Code, The Commission may reject a registration statement and refuse registration of the security thereunder, or revoke the effectivity of a registration statement and the registration of the security thereunder after due notice and hearing by issuing an order to such effect, setting forth its findings in respect thereto, if it finds that:
- (a) The issuer:
- Has been judicially declared insolvent;
- Has violated any of the provision of this Code, the rules promulgate pursuant thereto, or any order of the Commission of which the issuer has notice in connection with the offering for which a registration statement has been filed;
- Has been or is engaged or is about to engage in fraudulent transactions;
- Has made any false or misleading representation of material facts in any prospectus concerning the issuer or its securities;
- Has failed to comply with any requirements that the Commission may impose as a condition for registration of the security for which the registration statement has been filed; or
- The registration statement is on its face incomplete or inaccurate in any material respect or includes any untrue statements of a material fact required to be stated therein or necessary to make the statement therein not misleading; or
- The issuer, any officer, director or controlling person performing similar functions, or any under writer has been convicted, by a competent judicial or administrative body, upon plea of guilty, or otherwise, of an offense involving moral turpitude and /or fraud or is enjoined or restrained by the Commission or other competent or administrative body for violations of securities, commodities, and other related laws.
Under Section 13.2 of the Securities Regulation Code, the Commission may compel the production of all the books and papers of such issuer, and may administer oaths to, and examine the officers of such the issuer or any other person connected therewith as to its business and affairs.
In case any issuer shall refuse to permit an examination to be made by the Commission, its refusal shall be grounds for the refusal or revocation of the registration of its securities.(Section 13.3 of the Securities Regulation Code)
Further, If the Commission deems its necessary, it may issue an order suspending the offer and sale of the securities pending any investigation. The order shall state the grounds for taking such action, but such order of suspension, although binding upon the persons notified thereof, shall be deemed confidential, and shall not be published. Upon the issuance of the suspension order, no further offer or sale of such security shall be made until the same is lifted or set aside by the Commission. Otherwise, such sale shall be void.(Section 13.4 of the Securities Regulation Code)
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Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries regarding legal services, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/ 09175772207/ 09778050020.
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