The Securities and Exchange Commission ("SEC") has completed the draft memorandum circular on:
- the Adoption of the ASEAN Sustainable and Responsible Fund Standards ("ASEAN SRFS"); and
- establishment of rules on (i) Qualification of a Local Investment Company under the ASEAN SRFS; and (ii) Recognition of a Foreign Collective Investment Scheme ("CIS") qualified under the ASEAN SRFS that seeks to offer in the Philippines under the ASEAN CIS Framework.
The draft memorandum circular was open for comments from the public from 7 to 17 March 2023.
Under the draft memorandum circular, SEC will adopt the ASEAN SRFS to apply to investment companies, including sub-funds of umbrella funds, that seek to offer locally or on a cross-border basis as an ASEAN Sustainable and Responsible Fund ("ASEAN SRF"). For an investment company to qualify as an ASEAN SRF, the investment company must: (i) be registered in the Philippines in accordance with the Investment Company Act and the Securities Regulation Code; (ii) comply with SEC Memorandum Circular No. 11 series of 2022 on the Sustainable and Responsible Investment Funds and any amendment thereto; and (iii) comply with the ASEAN SRFS. An application may be filed with SEC by submitting the SEC ASEAN SRF Form which must be signed by a majority of the board of directors of the investment company and the fund manager, together with the application fee of Php10,000 plus a 1% legal research fee.
A local investment company qualified under the ASEAN SRFS, or one which is applying to qualify as such, may also offer its shares under the ASEAN CIS Framework by additionally complying with SEC Memorandum Circular No. 9, series of 2021 ("Memorandum Circular No. 9") on the Rules on Authorisation of an Investment Company as a Qualifying CIS and Recognition of a Foreign CIS under the ASEAN CIS Framework.
On the other hand, foreign SRFs may be offered in the Philippines after it has shown: (i) compliance with Memorandum Circular No. 9; (ii) proof of qualification as an ASEAN SRF; (iii) submission of a duly accomplished SEC ASEAN SRF Form; and (iv) payment of the application fee. In addition, the name of the foreign SRF must accurately and fairly reflect the sustainability of the environmental, social and governance (ESG) factors set out in its investment objective and/or strategy. The foreign SRF must also incorporate in its prospectus (i) a notification to the public of its qualification as an ASEAN SRF, (ii) the asset allocation, (iii) a sustainable investment strategy, (iv) risks associated with its sustainable investment objectives, and (v) policies and procedures to divest existing investments that were initially compliant but subsequently became ineligible.
