The Securities and Exchange Commission has drafted new guidelines governing mutual funds in a bid to align the current rules with global standards and practices.
The SEC said the drafting of the 2016 implementing rules and regulations of the Investment Company Act aims to register open-end investment, or mutual fund, companies, and make them comply with certain standards, including regular public disclosure of financial condition.
The SEC is also authorized to regulate fund managers and other parties involved in the operation of mutual fund companies.
The SEC stressed the need to align the current rules with global standards and practices in order to develop the Philippine capital market and help prepare mutual fund companies compete in international cross-border transactions.
Under the draft rules, a mutual fund company applying for incorporation should have a minimum subscribed paid-up capital of P50 million.
A mutual fund company planning to sell or distribute shares to the public will be required to file with the SEC a registration statement about the planned offering.
It will also be required to appoint a fund manager with an investment company adviser license.
For a fund manager to have an investment company adviser license, it should have a paid up capital of P50 million and a minimum unimpaired net worth of at least P50 million, exclusive of revaluation surplus, unrealized gain in value of non-current investments, deferred income tax and other capital adjustments as may be required by the SEC.
The fund manager’s responsibility includes managing the investment assets of the mutual fund company and keeping and maintaining records that will sufficiently explain the transactions and dispositions of the assets of the mutual fund company.
The draft rules prohibit the fund manager to purchase securities and investment assets for its own account, which may conflict with its obligation as a fund manager, and engage in a business other than managing, administering, marketing and distributing funds and securitie.
The SEC asked interested parties to submit comments and inputs on the draft rules on or before Nov. 3.
