On 11 May 2021, the Philippines became a signatory to the ASEAN Collective Investment Scheme ("CIS") Framework, joining the original member countries: Malaysia, Singapore and Thailand. With the Philippines now a member of the CIS Framework, qualified investment companies in the country shall be allowed to offer funds, such as unit trust funds or mutual funds, to retail investors in the other signatory countries in the Southeast Asian bloc, and vice versa.
This initiative is included in the broader regional capital markets integration plan endorsed by the ASEAN Finance Ministers. First established in 2014, the CIS Framework aims to streamline the facilitation of cross-border investments, fund distribution as well as the domestic approval of the signatory countries by the harmonisation of the rules and criteria for qualified asset management firms, fund managers and mutual funds. It also provides for better investment protection that intends to encourage new and diverse prospects in product access and border fund distributions among the member countries.
The Securities and Exchange Commission (SEC) of the Philippines has recently issued draft guidelines on the implementation of the CIS Framework. The draft guidelines state that to be authorised as a CIS, the investment company must be duly incorporated under Republic Act ("RA") No. 2629 or the Investment Company Act, and RA No. 8799 or the Securities Regulation Code in order to issue shares to the public. Investment companies from the Philippines are proscribed from offering units and shall only be allowed to offer shares cross-border.
Moreover, foreign CIS constituted in any member jurisdiction may be offered in the Philippines once shown that it is a qualifying CIS and permitted to be offered to the public in the jurisdiction where it originates.
Ultimately, the initiative’s simplified process of cross-border product access and fund distribution targets the cooperation and connectivity of the countries in the ASEAN region.
