SECURITIES AND EXCHANGE COMMISSION

Republic of the Philippines


A. Organization and role in the economy

Commonwealth Act. No. 83 dated 26 October 1936 established the Securities and Exchange Commission (SEC) to curb fraud, manipulation, and excesses in the stock market, and protect the investing public from exploitation. Since then, the government, cognizant of the key role that SEC assume in our national economy, has progressively vested it with additional powers and functions, as well as greater responsibilities. At present, it administers and enforces 25 other laws and presidential decrees, among them are as follows:

  • Corporation Code of the Philippines (May 1, 1980) amending the Corporation law or Act No. 1549 (April 1, 1906)

  • Partnership Law found in Articles 1767 to 1867 New Civil Code of the Philippines

  • RA 2629 (June 18, 1960), otherwise known as the Investment Company Act.

  • RA 5980 (August 4, 1969), otherwise known as the Financing Company Act.

  • PD 129 (February 15, 1973, otherwise known as the Investment Houses Law

  • PD 218 (June 16, 1973), prescribing incentives for the establishment of regional or area headquarters of multinational companies in the Philippines.

  • PD 678 (April 2, 1975), dealing with registration of commercial papers.

  • PD 902 - (March 11, 1976) As amended by PD's 1653, 1758 and 1799, reorganizing the SEC, broadening its powers and placing it under the administrative supervision of the Office of the President.

  • RA 7042 (June 6, 1991), otherwise known as the Foreign Investments Act of 1991, promoting foreign investments and prescribing the procedures for registration of enterprise doing business in the Philippines.

  • On February 23, 1982, Commonwealth Act No. 83 was repealed in its entirety to give way to a new statue that would enable the SEC to keep pace with the new and ore complex securities instruments, trading vehicles and strategies that have developed over the past 46 years. The Revised Securities Act (BP 178) provided, among others, for a more sophisticated disclosure mechanism of securities to be offered to the investors. The legislators further saw fit to reincorporate, by reference to BP 178 (Sections 3 and 57), all the provisions of PD's 902-A, 1758 and 1799 which, inter-alia, explicitly vested the SEC absolute jurisdiction, supervision and control over corporations, partnerships and associations. These laws were promulgated to encourage and protect investments in these entities and to oversee and regulate the operations and activities of business, since they are operated with other people's money through equity, debt and derivative instruments.

    C. SEC Departments and their functions:

    • Corporate and Legal Department (CLD)

      On the corporate front, the CLD takes charge of the registration of domestic corporations and partnerships, processing, and approving applications for corporate reorganization. It has the authority to grant or revoke licenses of foreign corporations in the Philippines and multi-national companies planning to put up regional headquarters in the country. The department also undertakes special studies on corporate problems submitted to the Commission by the transacting public and other government agencies and instrumentalities.

      On the legal front, the CLD renders opinions on legal matters affecting corporations and partnerships, conducts hearings and hand down decisions on cases brought to its attention.

    • Examiners and Appraisers Department (EAD)

      The EAD examines corporate records so that corporate transaction conform with the requirements of applicable laws. It also examiners applications for the registration of corporations, increase and decrease of capital stock, or dissolution of firms. It also investigates cases involving corporate irregularities.

      The department also conducts examination of applications for corporate consolidation and mergers, quasi-reorganizations; licensing of foreign corporations to do business locally, and the withdrawal thereof. It analyzes the yearly financial statements of corporations to determine compliance/violations of the law and SEC rules and regulations. The EAD formulates rules and opinions or questions relating to accounting principles and procedures.

    • Investments and Research Department (IRD)

      The IRD provides vital information for SEC's decision-making processes. It also gives out economic, business of financial information, either company or statistical data for investors to base their investment decisions. The IRD maintains and develops a program for statistical production of corporate and partnership data needed for economic planning and decision-making processes, and develops plans, programs and position papers on investments and monetary matters.

      The department undertakes consultative and participative action with other government agencies in national economic policy recommendations, investment incentives, sectoral and regional rationalizations, and helping Congress in its legislative efforts. It furnishes the database to multilateral and bilateral missions for the evaluation of aid/technical assistance programs to the country.

    • Money Market Operations Department (MMOD)

      The MMOD takes charge of the registration of securities before they can be sold to the public, and eventual negotiation of short-and long-term commercial papers including bonds. It also handles licensing, regulation of financing companies and investment houses and monitors their compliance with SEC rules.

      The department conducts field auditing as additional measure to adequately determine compliance with bonds and commercial papers, investment house and financing company rules and regulations. It also conducts continuous studies and researches through coordination with industries under the department's supervision and government agencies concerned in the formulation of rules and regulations affecting the said entities.

    • Supervision and Monitoring Department (SMD)

      The SMD supervises the activities of all corporations, partnerships and associations registered with the Commission in all matters pertaining to their compliance with the laws, rules and regulations administered/implemented in the SEC.

      The department also analyzes and evaluates ongoing operations or activities of aforesaid entities.

    • Prosecution and Enforcement Department (PED)

      The PED investigates possible violations of SEC laws, rules and regulations. It files and prosecutes civil or criminal cases before the Commission or other courts of justice involving violations of the statutes administered by the SEC and its rules and regulations.

      The department coordinates with and helps other government agencies in the effective prosecution of other cases where coordinated efforts are called for. It enforces all SEC laws by prosecuting erring corporations, partnerships, and associations in accordance with the pertinent rules on procedures.

    • Brokers and Exchanges Department (BED)

      The BED handles the registration, licensing, regulation and supervision of stock exchanges, commodity futures exchange, stockbrokers/dealers, pre-need plan issuers.


SECURITIES AND EXCHANGE COMMISSION ORGANIZATIONAL STRUCTURE