Rajah & Tann Regional Round-Up

your snapshot of key legal developments in Asia

Issue 3 - Jul/Aug/Sep 2023


Securities and Exchange Commission Amends Annex C of Rule 12 of Securities Regulation Code

On 19 September 2023, the Securities and Exchange Commission ("SEC") issued Memorandum Circular No. 14, series of 2023 ("SEC MC No. 14"), amending certain provisions of Annex C of Rule 12 of the Securities and Regulation Code ("SRC"). Annex C of Rule 12 of the SRC contains the non-financial disclosure requirements for the registration statements to be filed with SEC.

Prior to the amendment, a registrant company is required to, among others, (i) briefly describe its business(es) and that of its significant subsidiaries, and (ii) discuss the major risk(s) involved in each of its businesses and that of its subsidiaries, including a disclosure of the procedures undertaken to identify, assess, and manage such risks. Under SEC MC No. 14, disclosure of the procedures undertaken to identify, assess, and manage such risk(s) is no longer mandatory.

Moreover, a registrant company was previously required to (i) list and discuss the factors that make its securities offering speculative or risky, and (ii) discuss how it shall manage such risk factors. Similarly, under SEC MC No. 14, a registrant company is no longer required to discuss how it manages the risk factors listed in its registration statement.

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Financial Sector Forum Releases Proposed Philippine Sustainable Finance Taxonomy Guidelines for Public Consultation

In 2021, the Philippines Sustainable Finance Roadmap was introduced to give direction to and promote sustainable finance in the Philippines. It seeks to provide financial institutions, regulators, and other stakeholders with a framework for incorporating Environmental, Social and Governance ("ESG") factors into their corporate plans and daily operations.

In this regard, on 18 September 2023, the Financial Sector Forum, composed of the Bangko Sentral ng Pilipinas, Securities and Exchange Commission, Insurance Commission, and Philippine Deposit Insurance Corporation, released its Proposed Philippine Sustainable Finance Taxonomy Guidelines ("Proposed SFTG") for public consultation.

The Proposed SFTG aims to establish a common understanding at a high-level as to what constitutes "sustainable" economic activity, and serves as a tool to classify whether an economic activity is environmentally or socially sustainable. It aims to guide a variety of users, including companies, investors, financial institutions, regulators, and consumers, to help them make an informed decision to originate, invest, finance, purchase or monitor an asset, product, project, activity, company, or portfolio with ESG considerations.

In this connection, the country is also formulating its finance taxonomy with the primary purposes of (i) directing and increasing capital flows to economic activities that further sustainability objectives; (ii) minimising the risk of "greenwashing" or misleading or deceptive publicity to represent an environmentally responsible public image; and (iii) promoting a just transition to a sustainable economy.

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Mandatory Conduct of Competitive Selection Process for Procurement of Power Supply by Distribution Utilities Takes Effect

The Department of Energy ("DOE") has issued Department Circular No. 2023-06-0021 ("Circular") prescribing the policy for the mandatory conduct of the Competitive Selection Process ("CSP") for the procurement of power supply by Distribution Utilities ("DU") for their captive market. The streamlining of the conduct of the CSP was made to ensure the efficient, timely, and transparent procurement of power supply.

The Circular applies to all DUs, which is consistent with the mandate to supply electricity in the least costly manner subject to the collection of retail rate duly approved by the Energy Regulatory Commission ("ERC"). As a rule, all power supplied under bilateral contracts shall be procured through the CSP. However, in specific instances, the conduct of the CSP shall not be required. These instances include, among others:

  1. the provision of power supply by the National Power Corporation in off-grid areas prior to the entry of new power providers or under emergency circumstances;
  2. power supply procured by any DU exercising the Opt-In Mechanism under the Green Energy Auction Program; and
  3. supply to any DU from any generating plant embedded in its franchise area utilising renewable energy resources subject to contract capacity requirements.

As mandated by the Circular, ERC and the National Electrification Administration shall issue the guidelines for the conduct of the CSP and evaluation of power supply agreements. ERC published on 3 October 2023 the implementing guidelines on the conduct of the CSP. This will take effect in the fourth quarter of 2023.

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BSP Issues New Guidelines for UTIF Benchmarks

On 9 August 2023, the Bangko Sentral ng Pilipinas ("BSP") issued BSP Circular No. 1178, Series of 2023 ("Circular"). The Circular provides guidelines on the use of benchmarks in assessing the returns of Unit Investment Trust Funds ("UITF") to enable UITF participants to gauge the performance of their funds vis-à-vis a comparable market indices or portfolios. It aims to protect investors by providing them with more information to make sound financial decisions given that UTIF participants are now mandated to present the performance of their funds in a more transparent manner.

Under the Circular, a valid benchmark for a UTIF has the following characteristics: (i) has a clearly defined objective; (ii) appropriately reflects the market or sector it aims to represent; (iii) comprised of sufficiently diversified financial instruments that are liquid; (iv) objectively and consistently calculated; (v) is a total return benchmark; and (vi) reflects returns that are net of taxes.

If the appropriate benchmark does not satisfy items (v) and/or (vi), the trustee shall disclose this in a Key Information and Investment Disclosure Statement ("KIIDS"). The KIIDS shall contain the key features of the UITF, its performance against a benchmark, and its prospective and outstanding investments.

The Circular also provides for a one-year transitory period for trust entities to review the benchmarks of their existing funds.

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IPOPHL to Adopt Cloud Computing Strategies for IP Registration Services

The Intellectual Property Office of the Philippines ("IPOPHL"), with the support of the World Intellectual Property Organization ("WIPO"), is exploring to move its mission-critical intellectual property ("IP") registration services to the cloud in 2024 with the goal of improving its internal processes and efficiencies in data management.

The current Intellectual Property Administration System ("IPAS") of the IPOPHL, IPAS 3.x, was installed in the early days of 2012 and is now showing its age. The IPAS is a software developed and owned by WIPO. It was offered to IP offices under collaborative arrangements for its provision, hosting, and maintenance.

During WIPO's 64th General Assemblies, IPOPHL Director General Rowel S. Barba shared IPOPHL's experiences in using the current version of the IPAS, its limitations, pain points, as well as his wish list for the new IPAS 4.0 implementation. Barba revealed that WIPO has already committed to exploring how it can best support IPOPHL's new requirements as the latter transitions to the latest IPAS version. WIPO has already given IPOPHL access to navigate the IPAS 4 test version by end of July 2023, allowing IPOPHL more time to prepare for the transition.

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Proposed Guidelines for Accreditation of IPOPHL Mediators Up for Public Consultation

The Intellectual Property Office of the Philippines ("IPOPHL") has invited all stakeholders and the general public for a public consultation on the Draft Memorandum on the Accreditation of IPOPHL Mediators ("Draft Memorandum").

The Draft Memorandum seeks to amend Office Order No. 197, series of 2010 on the Guidelines for the Accreditation of IPOPHL Mediators ("Office Order"). Specifically, it seeks to amend certain provisions on the qualifications of mediators, requirements for application, selection process, accreditation, term of accreditation, and renewal of accreditation.

The Draft Memorandum requires that an accredited mediator must, among others, have at least seven years of experience in mediating cases or 10 years of legal practice involving intellectual property. For reference, the Office Order currently requires that mediators must possess at least seven years of experience in mediating cases or in legal practice involving intellectual property disputes.

The Draft Memorandum also added some requirements for accreditation in the Office Order and now requires the submission of PNP Clearance, Barangay Clearance, and an Affidavit of a Disinterested Person.

The Draft Memorandum also increases the required number of handled cases for the renewal of accreditation. Accredited mediators must mediate at least 20 cases and successfully settle at least 10 cases for their accreditation to be renewed, rather 12 and six cases respectively, under the Office Order. 

Under the Draft Memorandum, all accredited mediators shall have a term of two years, subject to renewal, instead of the one-year term provided in the Office Order.

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Please note that whilst the information in this Update is correct to the best of our knowledge and belief at the time of writing, it is only intended to provide a general guide to the subject matter and should not be treated as a substitute for specific professional advice.


Gatmaytan Yap Patacsil Gutierrez 
& Protacio (C&G Law)
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Ben Dominic R Yap
Managing Partner
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Jaime Renato B Gatmaytan
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Norma Margarita B Patacsil
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Anthony Mark A Gutierrez
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