IMPLEMENTING RULES AND REGULATIONS OF THE

SECURITIES REGULATION CODE

SRC Rule 1 - Title of Rules
These Rules shall be referred to as the Implementing Rules and Regulations of the
Securities Regulation Code, or SRC Rules.

SRC Rule 2 - Interpretation of Rules
Any doubt in the interpretation of these Rules shall be resolved by the Commission in a
manner which would establish a socially conscious free market that regulates itself,
encourage the widest participation of ownership in an enterprise, enhance the
democratization of wealth, promote the development of the capital market, protect
investors, ensure full and timely disclosure of material information, and/or minimize if
not eliminate insider trading and other fraudulent or manipulative devices and practices
which create distortions in the free market.

SRC Rule 3 - Definitions of Terms Used in the Rules and Regulations.
1. As used in the rules and regulations adopted by the Commission under the Code,
unless the context otherwise requires:
a. Commission means the Securities and Exchange Commission.
b. Code means the Securities Regulation Code.
c. Section refers to a section of the Code.
d. Beneficial owner or beneficial ownership means any person who, directly or
indirectly, through any contract, arrangement, understanding, relationship or
otherwise has or shares: voting power, which includes the power to vote, or to
direct the voting of, such security; and/or investment returns or power, which
includes the power to dispose of, or to direct, the disposition of such security;
provided, however, that a person shall be deemed to have an indirect beneficial
ownership interest in any security which is:
i. held by members of his immediate family sharing the same household;
ii. held by a partnership in which he is a general partner;
iii. held by a corporation of which he is a controlling shareholder; or
iv. subject to any contract, arrangement or understanding which gives him
voting power or investment power with respect to such securities; provided
however, the following persons or institutions shall not be deemed to be
beneficial owners of securities held by them for the benefit of third parties or
in customer or fiduciary accounts in the ordinary course of business, so long
as such shares were acquired by such persons or institutions without the
purpose or effect of changing or influencing control of the issuer:
A. A Broker Dealer;
B. An investment house registered under the Investment Houses Law;
C. A bank authorized to operate as such by the Bangko Sentral ng Pilipinas;
D. An insurance company subject to the supervision of the Office of the
Insurance Commission;
E. An investment company registered under the Investment Company Act;
F. A pension plan subject to regulation and supervision by the Bureau of
Internal Revenue and/or the Office of the Insurance Commission; and
G. A group in which all of the members are persons specified above.
All securities of the same class beneficially owned by a person, regardless
of the form such beneficial ownership takes, shall be aggregated in
calculating the number of shares beneficially owned by such person.
A person shall be deemed to be the beneficial owner of a security if that
person has the right to acquire beneficial ownership within thirty (30) days,
including, but not limited to, any right to acquire: through the exercise of
any option, warrant or right; through the conversion of any security;
pursuant to the power to revoke a trust, discretionary account or similar
arrangement; or pursuant to automatic termination of a trust, discretionary
account or similar arrangement.

e. Material information means information which a reasonable investor would
consider important in determining whether to buy, sell or hold securities, or in
connection with the exercise of related voting rights.
f. Control, controlling, controlled by, and under common control with, means the
possession, direct or indirect, of the power to direct or cause the direction of the
management and policies of a person, whether through the ownership of voting
securities, by contract, or otherwise.
g. Member of an Exchange means any Broker Dealer who has the right, pursuant
to Exchange rules, to trade on that Exchange.
h. Transfer agent means any person who engages on behalf of an issuer of
securities, or itself as an issuer of securities, in:
i. countersigning such securities upon issuance;
ii. monitoring the issuance of such securities with a view toward preventing
unauthorized issuance, a function commonly performed by a person called a
registrar;
iii. registering the transfer of such securities;
iv. exchange or converting such securities; and/or
v. transferring record ownership of securities by bookkeeping entry without
physical issuance of securities certificates.
i. Public company means any corporation with a class of equity securities listed on
an Exchange or with assets in excess of Fifty Million Pesos (P50,000,000.00)
and having two hundred (200) or more holders, at least two hundred (200) of
which are holding at least one hundred (100) shares of a class of its equity
securities.
j. Self Regulatory Organization or SRO means an organized Exchange, registered
clearing agency and any organization or association registered as an SRO under
Section 39 of the Code to enforce compliance with relevant provisions of the
Code and rules and regulations adopted thereunder, and mandated to make and
enforce its own rules, which have been approved by the Commission, by
their members and/or participants.
k. Rules and regulations refers to all rules and regulations adopted by the
Commission pursuant to the Code, including the forms for registration and
reports and accompanying instructions thereto.
2. Unless otherwise specifically stated, the terms used in the rules and regulations
shall have the meanings defined in the Code.
3. A rule or regulation which defines a term without express reference to the Code or
to the rules and regulations, or to a portion thereof, defines such term for all
purposes as used in both the Code and in the rules and regulations, unless the
context otherwise specifically requires.