SRC

AGUILAR, ANNE JOHNETTE V.

Provided in the Securities Regulation Code, which among the following definition is
incorrect?

I. " Broker " means (a) the issuer; (b) a director or officer (or any person performing
similar functions) of, or a person controlling the issuer; gives or gave him access
to material information about the issuer or the security that is not generally
available to the public; (d) A government employee, director, or officer of an
exchange, clearing agency and/or self-regulatory organization who has access to
material information about an issuer or a security that is not generally available to
the public; or (e) a person who learns such information by a communication from
any forgoing insiders.
II. “Underwriter " is a person who, acting alone or with others, takes initiative in
founding and organizing the business or enterprise of the issuer and receives
consideration therefore.
III. “Promoter " is a person who guarantees on a firm commitment and/or declared
best effort basis the distribution and sale of securities of any kind by another
company.
IV. “Insider " is a person engaged in the business of buying and selling securities for
the account of others.

A. I and II
B. III and IV
C. All of the above
D. All definition is correct

Answer: C. All of the above.

Legal Basis: It is defined in Section 3 of the SRC that.

- 3.3. "Broker" is a person engaged in the business of buying and selling securities for
the account of others.
3.8. "Insider" means (a) the issuer; (b) a director or officer (or any person performing
similar functions) of, or a person controlling the issuer; gives or gave him access to
material information about the issuer or the security that is not generally available to the
public; (d) A government employee, director, or officer of an exchange, clearing agency
and/or self-regulatory organization who has access to material information about an
issuer or a security that is not generally available to the public; or (e) a person who
learns such information by a communication from any forgoing insiders.
3.10. "Promoter" is a person who, acting alone or with others, takes initiative in founding
and organizing the business or enterprise of the issuer and receives consideration
therefor.
3.15. "Underwriter" is a person who guarantees on a firm commitment and/or declared
best effort basis the distribution and sale of securities of any kind by another company.

Application: Thus, statement I, II, III, and IV are all incorrect. Definition I defines an
 SRC
insider while definition IV defines a broker. Definition II defines a promoter while
definition III defines an underwriter.

ANILAO, ELIJAH JOYCE M.

Statement I: The Commission shall have the power to register as a self-regulatory

organization.

Statement II: An association of brokers and dealers may be registered as a securities

association.

A. Both are true

B. Both are false
C. Statement I is true; Statement II is false
D. Statement I is false; Statement II is true

Answer: A. Both statements are true.

Legal Basis: Pursuant to Securities and Regulations Code, under REGISTRATION,

RESPONSIBILITIES AND OVERSIGHT OF SELF-REGULATORY ORGANIZATIONS

39.1. The Commission shall have the power to register as a self-regulatory organization.
39.2. An association of brokers and dealers may be registered as a securities
association pursuant to Subsection 39.3 by filing with the Commission an application for
registration in such form as the Commission, by rule, may prescribe containing the rules
of the association and such other information and documents as the Commission, by
rule, may prescribe as necessary or appropriate in the public interest or for the
protection of investors.

Application: In accordance with the authority granted by subsection 39.1, the

Commission may prescribe rules and regulations which are necessary or appropriate in
the public interest or for the protection of investors to govern self-regulatory
organizations and other organizations licensed or regulated. Moreover, through filing an
application association of brokers and dealers may be consequently registers as a
securities association.

Conclusion: Therefore, it is of fact that commission where vested an authority to

register as a self-regulatory body to ensure transparency. And through application,
association of dealers and brokers may also be registered as securities association.
Thus, both statements are correct.
 SRC
AQUINO, ERIKA JOY L.

Any person or group of persons acting in

concert who intends to acquire at least 15% of any class of any equity security
of a listed corporation of any class of any equity security of a corporation shall make a
tender offer to stockholders by filling with the Commission a declaration with:

A. 30,000,000; 300; 100 assets, stockholders, and shares respectively.

B. 50,000,000; 200; 100 assets, stockholders, and shares respectively.
C. 20,000,000; 200; 100 assets, stockholders, and shares respectively.
D. 40,000,000; 200; 200 assets, stockholders, and shares respectively.

Answer: B. 50,000,000; 200; 100 assets, stockholders, and shares respectively.

Legal Basis: According to Section 19 of the Republic Act. No. 8799 otherwise known
as "The Securities Regulation Code", Tender Offers which states, Any person or group
of persons acting in concert who intends to acquire at least 15% of any class of any
equity security of a listed corporation of any class of any equity security of a corporation
with assets of at least fifty million pesos (50,000,000.00) and having two hundred(200)
or more stockholders at least one hundred shares each or who intends to acquire at
least thirty percent(30%) of such equity over a period of twelve months(12) shall make a
tender offer to stockholders by filling with the Commission a declaration to that effect;
and furnish the issuer, a statement containing such of the information required in
Section 17 of this Code as the Commission may prescribe. Such person or group of
persons shall publish all request or invitations or tender offer or requesting such tender
offers subsequent to the initial solicitation or request shall contain such information as
the Commission may prescribe, and shall be filed with the Commission and sent to the
issuer not alter than the time copies of such materials are first published or sent or given
to security holders.

Application: It can patently be seen that a person shall make a tender offer to
stockholders by filling with the Commission if a person having an asset of atleast
50,000,000 and having two 200 or more stockholders at least 100 shares each or who
intends to acquire at least thirty percent(30%) of such equity over a period of twelve
months(12) if a person is intended to acquire at least 15% of any class of any equity
security of a corporation.

Conclusion: Therefore, among of all the choices, letter B which is 50,000,000; 200;
100 assets, stockholders, and shares respectively satisfies the legal basis mentioned
above thus, is the correct answer.
 SRC
ARANILLA, CAREN JOY D.

Under the Securities Regulation Code:

Statement I: The Commissioners must be born Filipino and that Chairperson shall be at
least 40 years old and the Commissioners be at least 35 years old.

Statement II: The salary of the Chairperson and the Commissioners shall be fixed by
the President of the Philippines based on the objective classification system.
Statement III: The Commission shall hold meeting at least twice a week for the conduct
of the business or as often as necessary upon the call of the Chairperson or upon the
request of atleast one Commissioner.

A. Statement I is true.
B. Statement I and II is true.
C. Statement I, II and III is true.
D. None of the statements are true.

Answer: B. Statement I and II is true.

Legal Basis: According to the SRC, Section 4.2 The Commissioners must be natural-
born citizens of the Philippines, at
least forty (40) years of age for the Chairperson and at least thirty-five (35)
years of age for the Commissioners, of good moral character, or
unquestionable integrity, of known probity and patriotism, and with recognized
competence in social and economic disciplines: Provided, That the majority of
Commissioners, including the Chairperson, shall be members of the Philippine
Bar.
Section 4.4. The salary of the Chairperson and the Commissioners shall be fixed by
the President of the Philippines based on the objective classification system, at a sum
comparable to the members of the Monetary Board and
commensurate importance and responsibilities attached to the position
Section 4.5 The Commission shall hold meetings at least once a week for the conduct
of business or as often as may be necessary upon the call of the Chairperson
or upon the request of (3) Commissioners. The notice of the meeting shall be
given to all Commissioners and the presence of three (3) Commissioners shall
constitute a quorum. In the absence of the Chairperson, the most senior
Commissioner shall act as presiding officer of the meeting.

Application: So, statement I and II is correct. However, statement III is wrong because
what the law requires is at least once a week meeting and not at least twice. Also, the
request must be filed by at least 3 Commissioners and not by at least 1 Commissioners.

Conclusion: Therefore, in accordance to the law statement I and II is the only correct
statements.
 SRC
BASE, CRISSA MAE A.

I. Securities can be sold or offered for sale even without registration statement filed and
approved by the Commission.

II. Prior to sale of a security, information on them, in such form and with such substance
as the Commission may prescribe, shall be made available to each prospective
purchaser.

A. Statement I is true; Statement II is false.

B. Statement I is false; Statement II is true.
C. Both statements are false.
D. Both statements are true.

Answer: B. Statement I is false while statement II is true.

Legal Basis: Sec 8.1 of the SRC states that “Securities shall not be sold or offered for
sale or distribution within the Philippines, without a registration statement duly filed with
and approved by the Commission. Prior to such sale, information on the securities, in
such form and with such substance as the Commission may prescribe, shall be made
available to each prospective purchaser.”

Application: The code requires that before a security is sold or offered for sale, it shall
be registered with the Commission first. The sale of a security without complying with
the requirement makes the transaction illegal. Also before such sale is made,
information about the securities being offered should be made available to the
prospective buyer to let them decide thoroughly whether they would avail it all not and
to avoid misconceptions after the sale was made.

Conclusion: Hence, securities cannot be sold without being registered with the
commission and information about securities being offered should be made available to
the prospective buyers.

COMISO, JR., RICARDO B.

What procedure must be followed under the Securities Regulation Code to authorize the
sale or offer for sale or distribution of an investment contract?

A. It should be registered with Bureau of Internal Revenue (BIR).

B. It should be registered with Department of Trade and Industry (DTI).
C. It should be registered with Securities and Exchange Commission (SEC).
D. None of the above.

Answer: C. It should be registered with Securities and Exchange Commission (SEC).

Legal Basis: According to the Securities Regulation Code, Section 8. Requirement of

Registration of Securities.– 8.1. Securities shall not be sold or offered for sale or
 SRC
distribution within the Philippines, without a registration statement duly filed with and
approved by the Commission. Prior to such sale, information on the securities, in such
form and with such substance as the Commission may prescribe, shall be made
available to each prospective purchaser.

Application: Investment contract is one of the examples of securities as stated under

Republic Act no. 8799 that must be registered with Securities and Exchange
Commission (SEC) that protects the investors from fraudulent or manipulative practices
which creates distortion in the free market.

Conclusion: In conclusion, to authorize the sale or offer for sale or distribution of an

investment contract, it should be registered with Securities and Exchange Commision
(SEC).

DAVILA, JOHN BRAIN A.

I. A broker who is not registered in the commission cannot engage in buying and selling
of securities.

II. A dealer doesn’t need to register in the commission to engage in buying and selling
of securities

A. Both statements are true.

B. 1st statement is true; 2nd statement is false.
C. Both statements are false.
D. 1st statement is false; 2nd statement is true.

Answer: B. 1st statement is True; 2nd statement is false.

Legal Basis: According Sec. 28 under CHAPTER VIII of the Securities Regulation
Code of the Philippines, which deals with the registration of brokers, dealers, salesman
and associated person.
Subsection 28.1 No person shall engage in the business of buying or selling securities
in the Philippine as a broker or dealer, or act as a salesman, or an associated person of
any broker or dealer unless registered as such with the Commission.

Application: Both statements are about whether a Broker and Dealer can buy and sell
securities without registering it with the commission. Broker is a person who buys and
sells goods, assets or, in relation to this code, securities of others. While a Dealer is
similar to a broker because a dealer is also a person who makes deals and trades
securities. The commission requires the registration of securities before these securities
are traded in the market, both applies when the person is a broker, dealer, salesman or
associated person.

Conclusion: Therefore, as provided by subsection 28.1, the first statement is correct by

prohibiting the broker to buy and sell securities because it is not yet registered with the
commission. On the other hand, second statement is proved to be incorrect because a
dealer still needs to register the security before trading happens.
 SRC
DE LEON, THEODORE EBELLO A.

Any person aggrieved by an order of the Commission (SEC) may appeal a petition to
the Court of Appeals to review the order. This right is in accordance to the provisions of
what code or rule?

A. New Civil Code

B. Rules of Court
C. Revised Corporation Code
D. Rules of State

Answer: B. Rules of Court

Legal Basis: Section 70 of RA 8779 - Any person aggrieved by an order of the

Commission may appeal the order to the Court of Appeals by petition for review in
accordance with the pertinent provisions of the Rules of Court.

Application: As provided in the section of the Code, if there is an agreement

happened. A petition can be appealed to the Court of Appeals to review the order given
by the SEC.

Conclusion: This is in accordance to the Rules of Court thus giving veto to the Court of
Appeals over the order given by SEC.

DE ROSAS, JOHN BRIEN F.

For the publication and posting of notice of filing the issuer shall prepare and file with its
registration statement a notification of such filing which shall state that:

A. A registration statement for the sale of the subject security has been filed with the
commission
B. That the registration statement is open for inspection by interested parties during
business hours at the commission
C. That copies shall be furnished to anyone requesting them for reasonable cost
D. All of the foregoing

Answer: D. all of the foregoing

Legal Basis: according to the Rule 12.5 (b)- publication and posting notice of filing.
12.5(b).1. the issuer shall prepare and file with its registration statement a notification of
such filing which shall state that (a) a registration statement for the sale of the subject
security has been filed with the commission; (b) that the registration statement is open
for inspection by interested parties during business hours at the commission; and (c)
that copies shall be furnished to anyone requesting them for a reasonable cost. The
notice shall be signed by the Director of the department concerned or any officer
designated by the Commission.
 SRC
Application: in the registration statement is consist of the registration statement of the
sale of the subject security has been filed with the commission, that the registration
statement is open for inspection by interested parties during business hours at the
commission, and that copies shall be furnished to anyone requesting them for
reasonable cost according to the Rule 12.5. (b).1.

Conclusion: therefore I conclude that all the foregoing answers shall state the following
under the rule 12.5.(b).1.

DIALA, MARY JOY L.

I. A corporation, upon registration of warrants, may offer and issue such securities to the
public.

II. A corporation, with the exemptions from registration of options, shall not grant or offer
such securities to the public.

A. Both statements are true.

B. Both statements are false.
C. 1st statement is true; 2nd statement is false.
D. 1st statement is false; 2nd statement is true.

Answer: C. 1st statement is true; 2nd statement is false.

Legal Basis: As provided under Subsection 12.1 of the Republic Act No. 8799 also
known as "The Securities Regulation and Code", all securities required to be registered
under Subsection 8. 1 shall be registered through the filing by the issuer in the main
office of the Commission, of a sworn registration statement with the respect to such
securities, in such form and containing such information and document as the
Commission prescribe. The registration statement shall include any prospectus required
or permitted to be delivered under Subsections 8.2, 8.3, and 8.4.

Under Rule 12.1.3.1.2.1 of 2015 Implementing Rules and Regulations of the Securities
Regulation Code, upon registration of its warrants under Sections 8 and 12 of the Code
and SRC Rules 8.1 and 12.1, a corporation may offer and issue such securities to the
public. In Rule 12.1.3.2.1, no corporation shall grant or offer any Option to the public
unless it is registered in accordance with Sections 8 and 12 of the Code and Rules 8.1
and 12.1, except when the security is exempt from registration under Sections 9 and 10
of the Code or under these Rules.

Application: Public offering and issuing of securities by the corporation can be done if
these securities are registered except those securities and transactions that are
exempted from registration under Section 9 and 10 respectively. As to the rule in SRC,
Warrants must be registered in order for corporation to offer and issue them to the
public whilst, Options can be exempted from registration thus, corporation can grant and
offer them immediately to the public.

Conclusion: Hence, corporation can offer and issue these securities if they are
 SRC
registered except for securities like Options which can be exempted from registration.
As guided by the rule, the first statement is true while the second statement is false.

EBREO, ERICA B.

The requirement of registration under Subsection 8.1 shall not as a general rule apply to
any of the following classes of securities except:

I. I.Any security issued by a bank except its own shares of stock.

II. II.Any security issued or guaranteed by the Government of the Philippines, or by
any political subdivision or agency thereof, or by any person controlled or
supervised by, and acting as an instrumentality of said Government.
III. The sale of capital stock of a corporation to its own stockholders exclusively,
where no commission or other remuneration is paid or given directly or indirectly
in connection with the sale of such capital stock.
IV. IV.Certificates issued by a receiver or by a trustee in bankruptcy duly approved
by the proper adjudicatory body.

A. I,II, and III

B. I,III, and IV,
C. I,II, and IV
D. All of the Above

Answer: C. I,II, and IV

Legal Basis: According to Section 9 of Security Regulation Code, “The requirement of

registration under Subsection 8.1 shall not as a general rule apply to any of the
following classes of securities: (a) Any security issued or guaranteed by the
Government of the Philippines, or by any political subdivision or agency thereof, or by
any person controlled or supervised by, and acting as an instrumentality of said
Government. (b) Any security issued or guaranteed by the government of any country
with which the Philippines maintains diplomatic relations, or by any state, province or
political subdivision thereof on the basis of reciprocity: Provided, That the Commission
may require compliance with the form and content for disclosures the Commission may
prescribe. (c) Certificates issued by a receiver or by a trustee in bankruptcy duly
approved by the proper adjudicatory body. (d) Any security or its derivatives the sale or
transfer of which, by law, is under the supervision and regulation of the Office of the
Insurance Commission, Housing and Land Use Rule Regulatory Board, or the Bureau
of Internal Revenue. (e) Any security issued by a bank except its own shares of stock.”

Application: All the given facts falls under exemption of securities except, selling of
capital stock of a corporation to its own stockholders exclusively, where no commission
or other remuneration is paid or given directly or indirectly in connection with the sale of
such capital stock., is not included in the exemption of securities, because this falls
under exemption of transactions

Conclusion:
 SRC
Conclusion: Therefore, III is not included, only I,II, and IV are the only valid exemptions
of security, supported by the legal basis under Section 9 .

ECHEVARRIA, WINCEL MAE E.

The Commission may reject a registration statement and refuse registration of the
security or revoke the affectivity of a registration statement and the registration of the
security there-under if the issuer has been found to commit any of the following, except
when:

A. 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.
B. Has made true and correct representation of material facts in any
prospectus concerning the issuer and its securities.
C. 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.
D. Has been or is engaged or is about to engage in fraudulent transactions.

Answer: B. has made true and correct representation of material facts in any
prospectus concerning the issuer and its securities.

Legal Basis: According to Section 13 of Republic Act No. 8799 of The Securities and
Regulation Code, the Commission may reject a registration statement and refuse
registration of the security there-under, or revoke the affectivity of a registration
statement and the registration of the security there-under after the due notice and
hearing by issuing an order to such effect, setting forth its finding in respect thereto, if it
finds that:
(a) The issuer:
(i) Has been judicially declared insolvent;
(ii) 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
(iii) Has been or is engaged or is about to engage in fraudulent transactions;
(iv) Has made any false or misleading representation of material facts in any prospectus
concerning the issuer or its securities;
(v) 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.

Application: In the facts presented, the question being asked was the rejection and
revocation of securities and all of the given statements are included in the above section
except for letter B. which shows that the issuer complied with all the necessary
requirements with correct and true information. Thus it concludes that it cannot be
 SRC
rejected or revoked by the Commission.

Conclusion: Therefore, as proven by the facts presented under Section 13 of The

Securities and Regulation Code, the commission may reject all of the given statements
except for letter which properly complied with the requirements.

FORMAREJO, CHRISTINE S.

If you are planning to enter into commodity future contracts what will you do to make it
possible when it is not allowed?

A. It should be in accordance with the rules, regulations and orders the

Commission may prescribe to the public interest.
B. It should be in accordance to the policy, republic act and other governing rules
the Commission requires.
C. It must be in good faith on behalf of the other person.
D. It should be in accordance to the general rule as prescribed by the Commission
Ammended last 2018.

Answer: A. It should be in accordance with the rules, regulations and orders the
Commission may prescribe to the public interest.

Legal Basis: Section 11. Commodity Futures Contracts. - No person shall offer, sell or
enter into commodity futures contracts except in accordance with the rules, regulations
and orders the Commission may prescribe in the public interest. The Commission shall
promulgate rules and regulations involving commodity futures contracts to protect
investors to ensure the development of a fair and transparent commodities market.

Application: Pursuant to the article above an exception is provided in order to enter

into commodity future contracts, that a person should be in accordance with the rules,
regulations and orders the Commission may prescribe to the public interest that the
commission will promulgate

Conclusion: Therefore it is possible to enter into commodity future contracts only as

prescribe in the said security code.
 SRC
GARBIDA, JANE CARLA  C.

An independent director means a person who, apart from his fees and shareholdings, is
independent of management and free from any business or other relationship which
could, or could reasonably be perceived to, materially interfere with his exercise of
independent judgment in carrying out his responsibilities as a director in any covered
company. Who among the following can fulfill the position of an independent director?

A. A director of the corporation’s related company who owns only five

percent (5%) of the shares.
B. A person who is acting as a nominee of one of the substantial
shareholders of a related company.
C. A person that has not been employed in any executive capacity by
the covered company, any of its related companies and/or by any of
its substantial shareholders within the last two (2) years.
D. A person that engages in any transaction with the covered company
and/or with any of its related companies and/or with any of its substantial
shareholders, whether by himself and/or with other persons and/or
through a firm of which he is a partner and/or a company of which he is a
director or substantial shareholder.

Answer: C. A person that has not been employed in any executive capacity by the
covered company, any of its related companies and/or by any of its substantial
shareholders within the last two (2) years.

Legal Basis: As listed in Rule 38 of IRR under Republic Act No. 8799 otherwise known
as The Securities Regulation Code, an Independent Director is any person who:
38.2.1. Is not a director or officer of the covered company or of its related companies or
any of its substantial shareholders except when the same shall be an independent
director of any of the foregoing;
38.2.2. Does not own more than two percent (2%) of the shares of the covered
company and/or its related companies or any of its substantial shareholders;
38.2.3. Is not related to any director, officer or substantial shareholder of the covered
company, any of its related companies or any of its substantial shareholders. For this
purpose, relatives include spouse, parent, child, brother, sister, and the spouse of such
child, brother or sister;
38.2.4. Is not acting as a nominee or representative of any director or substantial
shareholder of the covered company, and/or any of its related companies and/or any of
its substantial shareholders, pursuant to a Deed of Trust or under any contract or
arrangement;
38.2.5. Has not been employed in any executive capacity by the covered company, any
of its related companies and/or by any of its substantial shareholders within the last two
(2) years;
38.2.6. Is not retained, either personally or through his firm or any similar entity, as
professional adviser, by that covered company, any of its related companies and/or any
of its substantial shareholders, within the last two (2) years; or
38.2.7. Has not engaged and does not engage in any transaction with the covered
company and/or with any of its related companies and/or with any of its substantial
shareholders, whether by himself and/or with other persons and/or through a firm of
which he is a partner and/or a company of which he is a director or substantial
 SRC
shareholder, other than transactions which are conducted at arm’s length and are
immaterial.

Application: Accordingly, the statement in letter C is the option that solely accord
among all the choices provided, to the qualification of an independent director as
presented on paragraph 38.2.5 of Republic Act No. 8799

Conclusion: Thus, a person that has not been employed in any executive capacity by
the covered company, any of its related companies and/or by any of its substantial
shareholders within the last two (2) years can be an independent director.

GONO, ROUBELYN A.

The document made by or on behalf of an issuer, underwriter or dealer to sell or offer

securities for sale to the public through registration statement filed with the commission.

A. Undercertificated Security
B. Prospectus
C. Promotion Letter
D. Registration Statement

Answer: B. prospectus.

Legal Basis: Sec 3.11 of the SRC states that "Prospectus is the document made by or
on behalf of an issuer, underwriter or dealer to sell or offer securities for sale to the
public through registration statement filed with the commission."

Application: This document describes an enterprise that can be readily distributed to

prospective buyers to sell or offer securities through registration statement in behalf of
the dealer.

Conclusion: The answer is prospectus.

HUERTAZUELA, ARA B.

The following are the reasons why Commission should promulgate rules and
regulations involving commodity futures contracts. Which one is not included?

A. To protect investors
B. To ensure the development of the fair market.
C. To ensure the transparent commodities market.
D. To protect the president.
 SRC
Answer: D. To protect the president

Legal Basis: According to Section 11 of the Securities Regulation Code, "No person
shall offer, sell or enter into commodity futures contracts except in accordance with the
rules, regulations and orders the Commission may prescribe in the public interest. The
commission shall promulgate rules and regulations involving commodity futures
contracts to protect investors, to ensure the development of a fair and transparent
commodities market."

Application: In the choices above, the first three choices such as to protect the
investors, to ensure the development of the fair value as well as the transparent
commodities market are the reasons why the Commission needs to promulgate rules
and regulations in accordance to commodity future contracts. It is evident that the last
choice which is "to protect the president" is not included.

Conclusion: Therefore, to protect the president is not included in the reasons why the
Commission promulgate rules and regulations involving commodity futures contracts.

LINGCORAN, JAIRA KYLA M.

The following information pertains to the rules of Proxy solicitations except:

A. Proxies must be in writing, signed by the stockholder or his duly authorized

representative.
B. The validity and effectively of proxies last only for a period longer than five years.
C. No proxy shall be valid only for the meeting for which it is intended.
D. A broker may give any proxy consent or any authorization to a person
other than the customer without written authorization of such customer.

Answer: D. A broker may give any proxy consent or any authorization to a person other
than the customer without written authorization of such customer.

Legal Basis: It is stated in Section 20 of the Securities and Regulation Code that,
“Proxies must be issued and proxy solicitation must be made in accordance with rules
and regulations to be issued by the Commission;
20.2. Proxies must be in writing, signed by the stockholder or his duly authorized
representative and file before the scheduled meeting with the corporate secretary.
20.3. Unless otherwise provided in the proxy, it shall be valid only for the meeting for
which it is intended. No proxy shall be valid only for the meeting for which it is intended.
No proxy shall be valid and effective for a period longer than five (5) years at one time.
20.4. No broker or dealer shall give any proxy, consent or any authorization, in respect
of any security carried for the account of the customer, to a person other than the
customer, without written authorization of such customer.”

Application: Accordingly, based on the presented legal basis above, it can be seen
that the first three statements are in line with what Section 20 of the SRC says. It is true
that proxies must be in writing and thus writing must be signed by the stockholder or his
 SRC
authorized representative. Also, the validity and effectivity of proxies is for a period
longer than 5 years. On the other hand, it is also true that no proxy shall be valid only
for the meeting for which it is intended. However, statement D is contrary to the law
since it was written that a broker or dealer shall not give any proxy a consent or any
authorization to a person other than the customer without written authorization of the
latter. If such action is made, the Code is violated.

Conclusion: Therefore, letter D doesn’t pertain to the rules of Proxy Solicitations

because its statement asserts the contrary of Section 20.4 of the SRC.

MAGSOMBOL, RHEALYN R.

Which of the following transaction shows fraudulent transaction prohibited under

transaction of securities?

A. Obtain money or property by means of any untrue statement of a

material fact of any omission to state a material fact necessary in order to
make the statements made, in the light of the circumstances under which
they were made, not misleading.
B. If a natural person, the applicant satisfactorily pass a written examination as to
his proficiency and knowledge in the area of activity for which registration is
sought.
C. An issuer with a class of securities listed for trading on an Exchange.
D. The refusal to furnish information required by the Commission may be a ground
for the issuance of an order of suspension pursuant to Subsection.

Answer: A. Obtain money or property by means of any untrue statement of a

material fact of any omission to state a material fact necessary in order to make the
statements made, in the light of the circumstances under which they were made, not
misleading.

Legal Basis: According to Section 26 of the Securities Regulation Code, udulent

Transactions. – It shall be unlawful for any person,
directly or indirectly, in connection with the purchase or sale of any securities
to:
26.1. Employ any device, scheme, or artifice to defraud;
26.2. Obtain money or property by means of any untrue statement of a
material fact of any omission to state a material fact necessary in order to make the
statements made, in the light of the circumstances under which they
were made, not misleading; or
26.3. Engage in any act, transaction, practice or course of business which
operates or would operate as a fraud or deceit upon any person.

Application: Fraud a person or thing intended to deceive others, typically by

unjustifiably claiming or being credited with accomplishments or qualities. It is an act
that is intentionally intended to swindle other people. Fraud can be executed in different
 SRC
ways such as obtaining money or even property from other person by means of any
untrue statement. Also, engaging into any act that can create or operate a fraud.

Conclusion: Therefore, the answer is letter A because it pertains to obtaining money

or property by means of untrue statements.

MARAÑO, DONITA MAE  P.

The following are the powers and functions of the Commission, except:

A. Prepare, approve, amend or repeal rules, regulations and orders, and issue
opinions and provide guidance on and supervise compliance with such rules,
regulation and orders.
B. Approve, reject, suspend, revoke or require amendments to registration
statements, and registration and licensing applications.
C. Formulate policies and recommendations on issues concerning the securities
market, advise Congress and other government agencies on all aspect of the
securities market and propose legislation and amendments.
D. Have jurisdiction and supervision over all corporations, partnership or
associations whether or not they are grantees of primary franchises and/or
a license or a permit issued by the Government.

Answer: D. Because the Commission has jurisdiction over corporations, partnership or

associations only those who are grantees of primary franchises and/or license or a
permit issued by the Government.

Legal Basis: According to the Section 5 of the Securities Regulation Code," The
commission shall act with transparency and shall have the powers and functions
provided by this code, Presidential Decree No. 902-A, the Corporation Code, the
Investment Houses law, the Financing Company Act and other existing laws. Pursuant
thereto the Commission shall have, among others, the following powers and functions.
a) have jurisdiction and supervision over all corporations, partnership or associations
who are the grantees of primary franchises and/or a license or a permit issued by the
Government."

Application: In compliance with the provision of this code, Commission have various
powers and responsibilities. Its functions includes preparing, approving, amending or
repealing rules, regulations and orders.To issue opinions and provide guidance on and
supervise compliance with such rules, regulation and orders.It also have the power to
approve, reject, suspend, revoke or require amendments to registration statements, and
registration and licensing applications. Also in formulating policies and
recommendations on issues concerning the securities market, advise Congress and
other government agencies on all aspect of the securities market and propose
legislation and amendments. Provided however, that the Commission shall have
jurisdiction and supervision over all corporations, partnership or associations WHO ARE
GRANTEES of primary franchises and/or a license or a permit issued by the
Government.
 SRC
Conclusion: Therefore among all the given statements only letter D does not
constitutes the powers and functions of the Commission conferred by the code.

MENDOZA, VINCE MICHAEL L.

Any person who violates any of the provisions of this Code shall upon conviction?

A. Suffer a fine not less than P50, 000.00 nor more than P1, 000,000.00.
B. Imprisonment of less than 6 years and above.
C. Both a and b.
D. None of the above.

Answer: D. None of the above.

Legal Basis: According to Section 73, Any person who violates any of the provisions of
this Code, or the rules and regulations promulgated by the Commission under authority
thereof, or any person who, in a registration statement filed under this Code, makes any
untrue statement of a material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein not misleading, shall, upon
conviction, suffer a fine of not less than Fifty thousand pesos (P50,000.00) nor more
than Five million pesos (P5,000,000.00) or imprisonment of not less than seven (7)
years nor more than twenty-one (21) years, or both in the discretion of the court. If the
offender is a corporation, partnership or association or other juridical entity, the penalty
may in the discretion of the court be imposed upon such juridical entity and upon the
officer or officers of the corporation, partnership, association or entity responsible for the
violation, and if such officer is an alien, he shall in addition to the penalties prescribed,
be deported without further proceedings after service of sentence.

Application: Evidently in the stated provision a person may suffer a fine ranging from
fifty thousand pesos (P50,000.00) to five million pesos (P5,000,000.00) or be imprison
of not less than seven (7) years or more than twenty-one (21) years. However, in the
given choices the amount of fine range from P50,000.00 nor more than P1,000,000,00
or be imprison of 6 years and above which is not similar on the law so provided, and the
other choices only says both will be applicable.

Conclusion: Thus, the answer will be letter D stated that none of the answer which is
the true. All of the given choices except in letter D is different on the penalty the law so
provides.
 SRC
MERCADO, ANGELO T.

1st Statement: Securities can be sold or offered for sale or distribution within the
Philippines, even without filing a registration statement with the Commission.

2nd Statement: The Commission may audit the financial statements of a firm applying
for registration of its securities.

A. Both statement are true.

B. 1st statement is true; 2nd statement is false.
C. Both statement are false.
D. 1st statement is false; 2nd statement is true.

Answer: D. 1st statement is FALSE; the 2nd statement is TRUE.

Legal Basis: According to Subsection 8.1 of the Republic Act 8799, the Securities shall
not be sold or offered for sale or distribution within the Philippines, without a registration
statement duly filed with and approved by the Commission. Prior to such sale,
information on the securities, in such form and with such substance as the Commission
may prescribe, shall be made available to each prospective purchaser.

Under Subsection 8.5, it was clearly stated that the Commission may audit the financial
statements, assets and other information of firm applying for registration of its securities
whenever it deems the same necessary to insure full disclosure or to protect the interest
of the investors and the public in general.

Application: Pursuant to Subsection 8.1, a security can only be available for sale
within the Philippines after a registration statement was filed and after it has been
authorized by the Securities and Exchange Commission. And as conferred in
Subsection 8.5, when an entity is applying for the registration of its securities, the
Commission is allowed to audit the entity's financial statements.

Conclusion: Therefore, a security shall NOT be offered for sale or distribution without a
registration being filed with and approved by the Commision. Moreover, the
Commission may be allowed to audit the entity's financial statements, assets and other
information to ensure full disclosure.

PAGANA, FIONALYN F.

Any corporation with a class of equity securities listed for trading on an Exchange or
with assets in excess of P50, 000,000.00 and having 200 or more holders, at least of
200 of which are holding at least 100 shares of a class of its equity securities or which
has sold a class of equity securities to the public pursuant to an effective registration
statement in compliance with Section 12 hereof shall have how many independent
directors?
 SRC
A. At least two (2) independent directors or such independent directors shall
constitute at least twenty percent (20%) of the members of such board
whichever is the lesser.
B. At least two (2) independent directors or such independent directors shall
constitute at least twenty percent (20%) of the members of such board whichever
is higher.
C. At least two (2) independent directors or such independent directors shall
constitute at least twenty percent 2/3 of the members.
D. At least two (2) independent directors or such independent directors shall
constitute at least twenty percent (25%) of the members of such board whichever
is the lesser

Answer: A. at least two (2) independent directors or such independent directors shall
constitute at least twenty percent (20%) of the members of such board whichever is the
lesser

Legal Basis: According to section 38 of the Security Regulation Code, “Any corporation
with a class of equity securities listed for trading on an Exchange or with assets in
excess of Fifty million pesos (P50,000,000.00) and having two hundred (200) or more
holders, at least of two hundred (200) of which are holding at least one hundred (100)
shares of a class of its equity securities or which has sold a class of equity securities to
the public pursuant to an effective registration statement in compliance with Section 12
hereof shall have at least two (2) independent directors or such independent directors
shall constitute at least twenty percent (20%) of the members of such board whichever
is the lesser.”

Application: Letter B is wrong because it says that the independent director should be
at least two or at least 20% of the members of such board whichever is “higher”, the
word “higher” made the statement wrong because it should be whichever is “lower”. In
letter C and D, the “2/3” and the “25%” in the statement made it incorrect because it
should be “20%” of the members of such corporation whichever is the lesser.

Conclusion: All the foregoing choices are proven incorrect except for letter A as stated
in the Security Regulation Code; therefore it is the correct answer.

PENTINIO, ANGEL M.

The Commission is authorize, having due regard to the public interest and the
protection of investors, to promulgate rules and regulations which:

A. Validate the transfer of securities by book-entries rather than the delivery of

physical certificates.
B. Establish when a person acquires a security or an interest therein and when
delivery of a security to a purchaser occurs.
C. Establish which records constitute the best evidence of a person’s interests in a
security and the effect of any errors in electronic records of ownership.
D. All of the above.
 SRC

Answer: D. All of the above

Legal Basis: According to Section 47 of the Securities Regulation Code, Power of the
Commission With Respect to Securities Ownership. – The Commission is authorize,
having due regard to the public interest and
the protection of investors, to promulgate rules and regulations which:
47.1. Validate the transfer of securities by book-entries rather than the delivery of
physical certificates;
47.2. Establish when a person acquires a security or an interest therein and when
delivery of a security to a purchaser occurs;
47.3. Establish which records constitute the best evidence of a person’s interests in a
security and the effect of any errors in electronic records of
ownership;
47.4. Codify the rights of investors who choose to hold their securities indirectly through
a registered clearing agency and/ or other securities
intermediaries;
47.5. Codify the duties of securities intermediaries (including clearing agencies) who
hold securities on behalf of investors; and
47.6 Give first priority to any claims of a registered clearing agency against a participant
arising from a failure by the participant to meet its obligations under
the clearing agency’s rules in respect of the clearing and settlement of transactions in
securities, in a dissolution of the participant, and any such rules and regulation shall
bind the issuers of the securities, investors in the securities, any third parties with
interests in the securities, and the creditors of a participant of a registered clearing
agency.

Application: As stated in the Section 47, the choices A, B, and C, provided above
appear on the list of the said section.

Conclusion: Therefore, all of the choices mentioned above are the power of the
commission with respect to securities ownership.

RED, TRISHA MAE D.

I. Each self-regulatory organization shall submit to the Commission for prior approval
any proposed rule or amendment thereto, together with a concise statement to the
reason and effect of the proposed amendment.

II. Within ninety (90) days after submission of a proposed amendment, the Commission
shall, by order, approve the proposed amendment. Otherwise the same may be made
effective by the self-regulatory organization.

A. Statement I and II are true.

B. Statement I and II are false.
C. Statement I is true while statement II is false.
 SRC
D. Statement I is false while statement II is true.

Answer: C. statement I is true while statement II is false.

Legal Basis: In accordance with Section 40.3 of Securities Regulation Code, (a) Each
self-regulatory organization shall submit to the Commission for prior approval any
proposed rule or amendment thereto, together with a concise statement of the reason
and effect of the proposed amendment
(b) Within sixty (60) days after submission of a proposed amendment, the Commission
shall, by order, approve the proposed amendment. Otherwise, the same may be made
effective by the self-regulatory organization.
(c) In the event of an emergency requiring action for the protection of investors, the
maintenance of fair and orderly markets, or the safeguarding of securities and funds, a
self-regulatory organization may put a proposed amendment into effect summarily;
Provided however, That the copy of the same shall be immediately submitted to the
Commission.

Application: In statement II, it is stated that within 90 days after the submission of a
proposed amendment, that is absolutely wrong. In Section 40.3 of Securities Regulation
Code letter B, it is within 60 days and 90 days is inappropriate.

Conclusion: Thus, only statement I is stating the fact while the statement II is falsity.

RESTITUTO, EVE JEREMY Q.

The Commission shall hold a meeting at least once a week for the conduct of business
or as often as the Chairperson deems it necessary to hold one or upon the request of 3
Commissioners. To whom shall the notice of the meeting be sent to and what is the
quorum requirement?

A. Sent to all the Commissioners and the presence of 5 Commissioners

B. Sent to selected Commissioners and the presence of 3 Commissioners
C. Sent to the senior Commissioners and the presence of them shall constitute a
quorum
D. Sent to all the Commissioners and the presence of 3 Commissioners

Answer: D. Sent to all the Commissioners and the presence of 3 Commissioners

Legal Basis: According to Section 4.5, Chapter II of the Securities Regulations Code,
the Commission shall hold meetings at least once a week for the conduct
of business or as often as may be necessary upon the call of the Chairperson or upon
the request of (3) Commissioners. The notice of the meeting shall be given to all
Commissioners and the presence of three (3) Commissioners shall constitute a quorum.

Application: Meetings are held because of a specific agenda to be voted for and/or
talked about by the Commissioners. As stated in the SRC Section 4.5, the quorum
 SRC
requirement for a meeting is the presence of 3 Commissioners out of all the
Commissioners which the notice has been sent to. These quorums are required in
meetings to a transact business. This requirement protects the organization by
preventing a very small number of members from taking action on behalf of the entire
organization.

Conclusion: Therefore, as provided in the SRC, the Commission shall hold meetings
weekly or whenever the Chairperson calls for one or upon the request of 3
Commissioners, wherein the notice shall be sent to all the Commissioners and upon the
presence of 3 Commissioners it already constitutes a proper quorum.

SAGARINO, SANDRA I.

An independent director shall have the following qualifications, except:

A. He shall have at least one (1) share of stock of the corporation.

B. He shall be at least a college graduate or he shall have been engaged or
exposed to the business of the corporation for at least five (5) years.
C. He shall possess integrity/probity.
D. His beneficial security ownership must exceeds two percent 2% of the
outstanding capital stock of the company where he is such director.

Answer: D. His beneficial security ownership must exceed two percent 2% of the
outstanding capital stock of the company where he is such director.

Legal Basis: According to Republic Act 8799 otherwise known as the Securities
Regulation Code Rule 38—Qualifications and Disqualifications of an independent
director are as follows:
38.6.1. An independent director shall have the following qualifications:
38.6.1.1. He shall have at least one (1) share of stock of the corporation;
38.6.1.2. He shall be at least a college graduate or he shall have been engaged or
exposed to the business of the corporation for at least five (5) years;
38.6.1 .3. He shall possess integrity/probity; and
38.6.1.4. He shall be assiduous.

Application: Looking at the choices listed above, obviously, only the statement in letter
D does not conform to the qualifications that the SRC provided. On the other hand,
statement D is in fact a disqualification provided that a person whose beneficial security
ownership exceeds 2% of the outstanding capital stock of the company where he is
such director is not allowed by the SRC to be an independent director.

Conclusion: Consequently, the stipulation given on letter D which states that ‘His
beneficial security ownership must exceed two percent 2% of the outstanding capital
stock of the company where he is such director’ is not a qualification of an independent
director.
 SRC
URSOLINO, JOHNPOL B.

In case of Regulation of Option Trading, No member of an Exchange shall, directly or

indirectly endorse or guarantee the performance in relation to any security registered on
a securities exchange which is these terms shall not include any registered warrant,
right or convertible security, Except.

A. Call
B. Straddle
C. Expel
D. Privilege

Answer: C. "Expel"

Legal Basis: According to REPUBLIC ACT NO. 8799 known as SECURITIES

REGULATION CODE,. CHAPTER VII Prohibitions on Fraud, Manipulation and Insider
Trading. SEC. 25. Regulation of Option Trading. – No member of an Exchange shall,
directly or indirectly endorse or guarantee the performance of any put, call, straddle,
option or privilege in relation to any security registered on a securities exchange.

The terms “put”, “call”, “straddle”, “option”, or “privilege” shall not include any registered
warrant, right or convertible security

Application: Using the Section 25 of Securities Regulation Code of the Philippines, the
terms Call, Straddle, and Privilege are stated in the Section which shall not include in
any registration of warrant, right or convertible securities, thus, the term “expel” doesn’t
include/mentioned in the section.

Conclusion: Therefore, I conclude that in accordance with the mentioned sections of

the Securities Regulation Code of the Philippines that the term “expel” made wrong
among the choices

VELASCO, JUAN PAULO MARIE S.

Within one hundred thirty-five (135) days, after the end of the issuer’s fiscal year,
or such other time as the Commission may prescribe, an annual report which
shall include, among others:
I. Balance Sheet
II. Profit and Loss Statement
III. Statement of Cash Flows

Which of the following are required by the SRC to be submitted within 135 days after
the end of the issuer's fiscal year?

A. Item I and II only

B. Item I and III only
C. Item II only
D. All of the following are required.
 SRC
Answer: D. All of the following required.

Legal Basis: As stated in sec 17(a) of the Securities Regulation Code, within 135 days,
after the end of the issuer's fiscal year, or such other time as the Comission nay
prescribe, an annual report which shall include, among others, a balance sheet, profit
and loss statement, and statement of cash flows for such last fiscal year, certified public
accountant, and a management discussion and analysis of results of operation.

Conclusion: Using the information above all stated items in the question are required
by the commission. Therefore the answer to my question is D.

VILLADIEGO, JIZELLE J.

Which of the following describes an independent director?

A. An independent director is a shareholder other than an employee and officer of

the corporation
B. An independent director is a person engaged in any transaction with covered
company and/or with any of its related companies and/or with any of its
substantial shareholders.
C. An independent director own more than two percent of the shares of the
covered company and/or its related companies or any of its substantial
shareholders.
D. An independent director is a person other than an officer or employee of
the corporation, its parents and subsidiaries, or any other individual
having a relationship with the corporation, which would interfere with the
exercise of independent judgment in carrying out the responsibilities of
a director.

Answer: D, an independent director is a person other than an officer or employee of the

corporation, its parents and subsidiaries, or any other individual having a relationship
with the corporation, which would interfere with the exercise of independent judgment in
carrying out the responsibilities of a director.

Legal Basis: As stated in the Securities and Regulation Code, Section 38; Independent
Directors. – Any corporation with a class of equity securities listed for trading on an
Exchange or with assets in excess of Fifty million pesos (P50,000,000.00) and having
two hundred (200) or more holders, at least of two hundred (200) of which are holding at
least one hundred (100) shares of a class of its equity securities or which has sold a
class of equity securities to the public pursuant to an effective registration statement in
compliance with Section 12 hereof shall have at least two (2) independent directors or
such independent directors shall constitute at least twenty percent (20%) of the
members of such board whichever is the lesser. For this purpose, an "independent
director" shall mean a person other than an officer or employee of the corporation, its
parent or subsidiaries, or any other individual having a relationship with the corporation,
which would interfere with the exercise of independent judgment in carrying out the
responsibilities of a director.
 SRC
Application: Accordingly, an independent director means a person who is not an
officer or employee of related companies or its covered company. Apart from his fees
and shareholdings, he is free from any business or other relationship and/or is
independent of management which would interfere with the exercise of independent
judgment in carrying out the responsibilities of a director.

Conclusion: Therefore, an independent director is not an officer or employee of any of

its related and/or covered company that would obstruct him in exercising his
independent judgment in carrying out the responsibilities of being a director.