ARE preneed plans regarded as securities previous to the promulgation of Republic Act (RA) 8799, or “The Securities Regulation Code” (SRC) and RA 9829, or the “Pre-Need Code of the Philippines”? In a recent opinion, the Securities and Exchange Commission (SEC), through its Office of the General Counsel, spoke back inside the affirmative.
Batas Pambansa Bilang 178, or “The Revised Securities Act of 1982” (RSA) is the governing regulation that considers preneed plans as securities, previous to the promulgation of these codes.
Section 2(a) of the RSA affords, in part, that preneed plans are recognized as securities: “Securities shall consist of xxx pre-want plans, pension plans, life plans, joint undertaking contracts, and comparable contracts and investments, plus profits, however an appreciation of capital, as well as leisure of particular privileges and services.”
On the opposite hand, Section three.1 of the SRC defines securities as “shares, participation or hobbies in a enterprise or in a industrial employer or profit-making venture, and evidenced by using a certificates, contract [or] units, whether written or digital in person.”
That code additionally defines what are blanketed as securities: “(a) Shares of stocks, bonds, debentures, notes, evidences of indebtedness, asset-subsidized securities; (b) Investment contracts, certificate of hobby or participation in a profit sharing settlement, certifies of deposit for a destiny subscription; (c) Fractional undivided pursuits in oil, fuel or different mineral rights; (d) Derivatives like option and warrants; (e) Certificates of assignments, certificates of participation, believe certificates, voting consider certificate or similar gadgets; (f) Proprietary or nonproprietary membership certificates in groups; and (g) Other instruments as may additionally within the destiny be determined by using the Commission.”
The commission also opined that even though preneed plans, which encompass pension and lifestyles plans, are not specifically noted as securities below the SRC, the identical does no longer necessarily take them out from the definition of securities. The phrase “includes” previous the enumeration of securities below Section 3.1 of the SRC genuinely suggests that it’s miles a non-exhaustive listing. As long as preneed plans qualify as shares, participation or hobbies in a corporation, industrial organisation or profit-making assignment, it could be appeared as securities.
In addition, Section three.Nine of the SRC confirms that preneed plans also are taken into consideration as securities: “Pre-need plans are contracts which provide for the performance of destiny services of or the charge of destiny monetary issues on the time real need, for which planholders pay in cash or installment at stated prices, without or with hobby or coverage coverage and includes existence, pension, education, interment, and other plans which the Commission may also every so often approve.”
Thus, it’s far beneath Section three.Nine of the SRC that preneed plans are defined and mentioned as one of the securities being regulated with the aid of the SEC for the reason of regulating a socially conscious free market that ensures full and truthful disclosure of securities.
Rule 16.1-1 of the antique SRC Implementing Rules and Regulations of 2000 bolsters the reality that the rules and associated fee circulars governing preneed organizations and humans worried in the sale and distribution of preneed plans issued beneath the RSA shall stay in impact till new regulations are followed.
Even if Section three.Nine of the SRC does now not exist, a preneed plan nonetheless satisfies all of the elements of an investment agreement underneath the Howey Test and is, therefore, a security. In a preneed plan or agreement, the planholder will pay the preneed corporation a certain quantity to reply for a determined destiny need Trendin Graphs broker scam), of that is better than the amount he earlier paid.
Securities, which aren’t especially stated within the enumeration provided below the SRC, rely as nontraditional securities. Accordingly, the commission had protected preneed plans as one of the nontraditional securities then regulated and supervised by the defunct Non-Traditional Securities and Instruments Department.
Be recommended, but, that preneed businesses are now under the number one and one of a kind supervision and law of the Insurance Commission (IC), following the effectivity of the Pre-Need Code in 2009.
Section 6 of this code empowers the IC to, amongst others, approve, amend, renew or deny any license, registration or certificate issued under the code; approve, amend or repeal rules, regulations and orders, and trouble evaluations and provide steering on and supervise compliance with such guidelines, regulations and orders; and formulate policies and guidelines on troubles concerning the preneed industry, along with proposed law.
On Jan. 26, 2010, the IC, via Circular Letter four-2010, diagnosed and taken into consideration effective all present licenses of income counselors and preferred dealers issued by means of the SEC previous to the efficiency of the Pre-Need Code.
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