Published — January 11, 2021
The following post does not create a lawyer-client relationship between Alburo Alburo and Associates Law Offices (or any of its lawyers) and the reader. It is still best for you to engage the services of your own lawyer to address your legal concerns, if any.
Also, the matters contained in the following were written in accordance with the law, rules, and jurisprudence prevailing at the time of writing and posting, and do not include any future developments on the subject matter under discussion.
More on securities registration, aside from rejection and revocation here: REGISTRATION OF SECURITES
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The Securities and Exchange Commission (SEC) may refuse the registration of securities
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The registration of securities may be revoked by the SEC
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The rejection or revocation of registration statement is always after due notice and hearing
Many days you will want to give up because of rejections and failures. Passion to be an artist will help you prevail where others fail. – Jack White
In our previous article, we wrote about registration of securities. For reiteration, we mentioned that a registration statement shall be duly filed with and approved by the Securities and Exchange Commission (SEC).
Is there an instance where the SEC may reject the application for the registration of securities?
The law says:
Yes.
However, take note that the SEC may also revoke the registration statement. A registration statement is the application for the registration of securities required to be filed with the SEC. The law is clear, the SEC may reject the registration statement and refuse registration of the security, or revoke the effectivity of a registration statement and the registration of the security after due notice and hearing.
What are the instances where the registration of securities may be refused or where the effectivity of a registration statement may be revoked?
The law says:
The registration of securities may be rejected or refused, or the effectivity of a registration statement may be revoked if the SEC finds that:
- The issuer:
- Has been judicially declared insolvent;
- Has violated any of the provision of the Securities Regulations Code and its rules, or any order of the SEC of which the issuer has notice in connection with the offering for which a registration statement has been filed;
- Has been or is engaged or is about to engage in fraudulent transactions;
- Has made any false or misleading representation of material facts in any prospectus concerning the issuer or its securities;
- Has failed to comply with any requirements that the SEC may impose as a condition for registration of the security; or
- The registration statement is incomplete or inaccurate or includes any untrue statements of a material fact required to be stated or necessary to make the statement not misleading; or
- The issuer, any officer performing similar functions has been convicted of an offense involving moral turpitude and/or fraud or is enjoined or restrained for violations of securities, commodities, and other related laws.
Take note that the “issuer” refers to the originator, maker, obligor, or creator of the security. Moreover, if any issuer refuses to permit an examination to be conducted by the SEC, such refusal is also a ground for the refusal or revocation of the registration of its securities.
If the SEC deems it necessary, it may issue an order suspending the offer and sale of securities pending any investigation. Upon the issuance of the suspension order, no further offer or sale of such security shall be made until the same is lifted or set aside by the SEC. Otherwise, such sale shall be void or without effect.
May a registration statement be withdrawn by the issuer?
The law says:
Yes.
But such shall be made only with the consent of the SEC.
Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/0917-5772207.
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