Circular No. 1199: Divestment of Equity Investments

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BANGi<O SENTRAL NG PILIPiNAS
Subject:
The Monetary Board. in its Resolution No. 805 dated 11 July 2024. approved the amendments to the Manual of Regulations for Banks (MORB) on divest merit of equity investments which are not allowed under applicable laws or which do not comply with applicable regulations
Section I. Section 379 of the MORB is hereby amended to read, as follows:
Divest merit of Equity Investments
CIRCULAR No.
OFFICE OF THE GOVERNOR
Series of 2024
379 SANCTIONS
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CorpOzr^ CtOn . EqUi. t}' 5. rites tineTLtS WILL Ch do not coinpi. y W, . t:h appLi. cabLe regal. attons shaLL be divested w, .chi. rL a pertod not exceed, .rig SL>: (6) months from receipt of not, .ce ^Torn the Bangko SentraL. Divestmerit may be made for the whol. e transacti. on or, LEI case o:6 dLvi. SLbLe transacti. ons, on the portton w:Ii. ch does riot coinpLy w:. CLI appl. i. cabLe reguLati. ons . The following sanctions shall be imposed forequityinvestments whi. ch are riot aLLowed under app:. ice. bLe Laws or which do riot coinpLy with appL:. cabLe LeguLaCi. ons w:. thout prejtidi. ce to the ,. inpostti. on of other enforcement actions under Secti. on 002 (e. g. , for aeLay i. zi di. vestment):
a. First offense
Divest merit of the investment within the required ti. meL, .ne set ^orcti ,. n th, .s secci. on and reprimand on officer/director who recommended/approved the investment. b. Subsequent offense - reg-I*. Iat+SI^-57e!-Divest merit of the investment within the required ti. meLi. ne set north i. n Chi. s Sect:. on, and Ei. ne i. zi amount as inav be deterini. aed bv the Noneta. IF, Board to be approp3:,. ate, but
i. a no case Co exceed 93. . 0 ini. LL, .on ^or each Layestmer:t.
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2. to be imposed on the execucive offLcez:s and members of the Repr:. inarid; and Fine of P20.000 for each investment made board approved the investment I^e-1. -investment. The f, .ne she. 1.3. and to be shouldered personally by the officer/director: Provided That if the subsequent offense is an investment in a non-allied enterprise, the fine shall be P40,000. F1. bank whi. cti has been di. ::ecced to atvest spec:. Etc equ:. ty trite stments which do not coinp}y wi. ch sop:. i. cabLe I:eguLati. ons SIIaLI subm:. t ttie ^oL Low:. rig to the appropriate super, ':. SLng Lintt/department of the Bangko SentraL for Levi. ew: (I. ) it, i. Chi. a fi. fteen (35) calendar davs i:Loin recei. DC of notice from the Bangko Senti:aL , a dives CinenC PLan duly approved by the Board o^ Directors, together w, .tti Board resoLuti. on or Secretary ' s Certificate appzov:. rig the same -illi. ch shotiLd contain, at: a intr!:. mum, the act, .vi. Ci. es , persons responsi. bLe , and t, .meL, .ne ; and (2) ,, i. thi. n fi. ve (5) calendar days ^Loin end on qtzarcer, a progress or status report/s o:5 the said di. vestment plan. For mon:. coring purposes, the satd status reports shaJ:. be rioted by Clie bank' s Board, as documented ,. n a Board LeseJ. uti. or: or Secretarv' s Cert, . :;i. cate . , 11:120 recoi:Linended/appZO, ed who recommended/ tile Or

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Section 2. Section 374 of the MORB is hereby amended to read, as follows:
3741NVESTMENTS IN VENTURE CAPITAL CORPORATIONS Xxx The guidelines in determining compliance with ceilings on equity investments in a VCC are shown in Appendix 843. pre^ Gen Equity investments of venture of capital corporations. x
Section 3. Appendix 83 of the MORB is hereby amended to read. as follows:
GUIDELINES IN DETERMINING COMPLIANCE WITH CEILINGS ON EQUITY INVESTMENTS (Appendix to Secs, 373,374,375.376-A and 378) XXX b. Shares of stock acquired in settlement of loans. Shares of stock of another corporation acquired in settlement of loans shall be excluded from total equity investments for purposes of determining compliance with the prescribed ceilings on equity investments under Secs. 373,374,375,376-A and 378: Provided, That confirmation of the Monetary Board shall be required in the following cases within thirty (30) days from the date of acquisition thereof:
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Prov/'ded, further That said confirmation shall be subject. among others, to the condition that such shares of stock shall be disposed of within a reasonable period not to exceed five three (53) years from the date of acquisition thereof. A bank which has been d:. rected to di. YesC soectEi. c eauttv :. a-,. esCinents shaLL subm:. t .he i:oLLowing Co the appropriate supervtsi. rig ant. t/ department o:6 the Barigko Sentz:aL ^or rev, .et, I :
(a) w, .thin fi. :ECeer! (,. 5) catenda:: days from receipt of riot, .ce from Clie Bangko Senti:aL, a divest merit pLan duLy approved by the Board of D, .,:ectors, together' tv:. th Board resoJ. uti, on or Secretary ' s Certi. fice. be approvzr!g the same whi. ch shouLd conte. i. n, at a inznLmum, the act, .vi. t, .es , pel:sons respons, .bLe, and t. Lineli. ne ; and (b) \,:. Chi. n five (5) caLendar days ^Loin end on quarter, a progress Or si=at:us report/s o2 CLIe Said d, .vestment pLan. For mon:. CO2:',. rig purposes, the satd status reports shal. L be noted by the bank' s Board, as documented i. n a Board resoLutLorz Or Secretary' s Certi. Etcate , re XXX

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Section 4. Transitory Provision. The following provision shall be
incorporated as a footnote to Section 379 of the MORB.
Banks directed to divest equity investment prior to the effectivity of this Circular but have not fully complied with such shall divest said investment within ninety (90I calendar days following the effectivity of this Circular.
Section 5. Effectivity. This Circular shall take effect fifteen (15) calendar days
following its publication either in the Official Gazette or in a newspaper of general circulation 8_ August 2024 FOR THE MONETARY BOARD:
^11:: ELI M. REMOLONA, JR.
Governor