SECURITIES AND EXCHANGE COMMISSION

 

The Securities and Exchange Commission (SEC) issued the following:

SEC OGC Opinion No. 17-03 dated 04 April 2017. A foreign corporation proposed to provide an online platform in the Philippines that will offer various content and services such as an online community and an online gaming system. The online platform is an internet-based system and will allow persons located in the Philippines to create an account in order to participate in the online community and to purchase content from and/or use the online platform services. The foreign corporation will have no physical presence in the Philippines. Its servers are located outside the Philippines. In addition to offering and selling online platform services to persons located in the Philippines, the foreign corporation will also undertake following activities:

• Accepting online payments using the online platfomr in any currency;
• Marketing or advertising the online platform in the Philippines; and 
• Hiring independent contractors for marketing or advertising its products and selling of prepaid cards in relation to its online gaming services.

The SEC opined that the proposed activities that the foreign corporation will undertake will be considered as "doing business" in the Philippines. The SEC applied the Twin Characterization Test and the Sliding Scale Test in this case.

 

SEC OGC Opinion No. 17-05 dated 08 June 2017. The SEC ruled that should a company be offering online English tutorial class/diving class as a formal training course or program for a fee and be issuing Certificates of Training or Diplomas for Program Completion, it is engaged in formal technical vocational education or training activities and is considered as an educational institution. Further, all educational institutions are subject to the 40% foreign ownership limitation. The exceptions are educational institutions established by religious orders and mission boards, and those established for foreign diplomatic personnel and their dependents and for other foreign temporary residents. If the educational institution does not fall within the exceptions under this rule, its ownership, control and administration cannot be undertaken 100% by foreign nationals.

 

SEC OGC Opinion No. 17-06 dated 24 July 2017. The SEC provided the requirements and processes for equity restructuring for the increase of par value. The SEC considered the following scenarios:

Scenario A. Increase the par value while maintaining the number of shares

1. Reverse stock split. - A reverse stock split is the reduction of shares by increasing the par value thereof. This will involve amendment of the Articles of Incorporation (AOI) for reclassification / conversion of shares.
2. Increase the authorized capital stock (ACS) - The corporation may increase its ACS through amendment of its AOI and the submission of the SEC documentary requirements for increase of ACS.

The SEC noted that the two separate applications, with their respective documentary requirements, must be filed with the SEC for this Scenario. These applications may be filed simultaneoulsy and will likewise be processed by the SEC simultaneously. Thus, the corporation need not wait for the approval of the reverse stock split before it can apply for the ACS increase provided all the requirements for both applications are complied with.

Scenario B. Increase the par value while maintaining the amount of ACS

Increasing the par value while maintaining the corporations's ACS will result in the reduction of shares. In this case, the corporation may undertake a reverse stock split by amending its AOI, as indicated in Scenario A, item 1 above.