SEC MC No. 13, Series of 2023 Guidelines on Annex C of Rule 12 of the Securities Regulation Code Interpreting the Comparative Periods Required in the Management’s Discussion and Analysis

SEC Memorandum Circular No. ____
Series of 2023
TO : ALL CONCERNED
SUBJECT : GUIDELINES ON ANNEX C OF RULE 12 OF THE SECURITIES REGULATION CODE INTERPRETING THE COMPARATIVE PERIODS REQUIRED IN THE MANAGEMENT’S DISCUSSION AND ANALYSIS ________________________________________________________________________________________________________________________ WHEREAS, Section 5 of the Securities Regulations Code (SRC) provides that the Commission has the power to provide guidance on rules, regulations and orders; WHEREAS, Annex C of SRC Rule 12 provides details for the Non-Financial Disclosure Requirements in the Registration Statements that shall be filed with the Commission; WHEREAS, the current wording of Part III, paragraph A, subparagraph 2 (a) of Annex C provides that the registrant shall discuss in its Management’s Discussion and Analysis, its financial condition, changes in financial condition and results of operations for each of the last three fiscal years; WHEREAS, the foregoing portion of Annex C gave rise to conflicting views and varying interpretations as to the number of fiscal years required to be disclosed in the Management’s Discussion and Analysis portion of the prospectus; WHEREAS, the Markets and Securities Regulation Department sought guidance from the Commission En Banc on the interpretation of the phrase “for each of the last three fiscal years” indicated in
Part III, paragraph A, subparagraph 2 (a) of Annex C. During the Commission En Banc Meeting held on
5 September 2023, the foregoing portion of Annex C was thereby interpreted; NOW THEREFORE, the following guidelines shall be implemented to clarify Part III, paragraph A, subparagraph 2 (a) of Annex C of SRC Rule 12:

1. The portion which reads: “Discuss the registrant's financial condition, changes in financial
   condition and results of operations for each of the last three fiscal years” shall mean that registrants are required to disclose two comparative periods for its last three fiscal years.
2. By way of illustration, a registrant shall provide the following disclosure comprising its two
   comparative periods in the Management’s Discussion and Analysis portion of its prospectus:
   i.e: For the year ended December 31, 2022
   Changes in Financial Condition and/or Results of Operations (Comparative balances for December 31, 2022 and December 31, 2021) Financial Statements (“FS”) line items 2022 2021 Change % of Change x % 13 Published:
   Philippine Star, 14 September 2023
   Manila Standard, 14 September 2023
   Filed with UP Law Center: 13 September 2023

Changes in Financial Condition and/or Results of Operations (Comparative balances for December 31, 2021 and December 31, 2020) FS line items 2021 2020 Change % of Change x %
3. The foregoing interpretation shall apply prospectively to registrants required to file
registration statements and/or other reportorial documents which include a disclosure of a Management’s Discussion and Analysis. This Circular shall take effect fifteen (15) days from its publication in two (2) newspapers of general circulation. Makati City, Philippines. ____ September 2023. For the Commission:
EMILIO B. AQUINO
Chairperson
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