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Rules on Investments [Manual of Regulations on Foreign Exchange Transactions (FX Manual), as amended]

A.  Inward Investments and Other Investments by Non-residents

1.  Only inward investments registered with the Bangko Sentral ng Pilipinas (BSP) are entitled to full repatriation of capital and remittance of dividends/profits using foreign exchange (FX) sourced/purchased from authorized agent banks (AABs) 1 and/or their subsidiary/affiliate foreign exchange corporations (AAB-forex corps).

For purposes of registration, investments may be in the form of:

    1. Direct investments in Philippine firms or enterprises

    2. Portfolio investments as follows:

      1. Peso-denominated securities issued onshore by the National Government and other public sector entities;

      2. Securities of resident enterprises listed at the Philippine Stock Exchange (PSE);

      3. Peso time deposits with an AAB with a maturity of at least ninety (90) days; and

      4. Other peso-denominated debt instruments issued onshore by private resident firms (such as bonds/notes, bills payables, non-participating preferred shares) and not covered by Section 23 of the FX Manual.

    3. Other investments: Non-residents’ investments in non-residents’ equity securities listed at the PSE

2. Items (1.a) and (1.b.iv) above shall be registered directly with the BSP while the registration of other portfolio investments (items 1.b.i to 1.b.iii and item 1.c) may be made thru a local custodian bank [an AAB or an offshore banking unit (OBU)]. All applications for registration of foreign direct investments (item 1.a) shall be filed with the BSP within one (1) year from the date of inward remittance/actual transfer of assets to the Philippines.2

3. Inward remittance of FX funding foreign direct investments (item 1.a) need not be converted to pesos while inward remittance of FX funding portfolio investments (item 1.b) requires conversion to pesos.

4. A Bangko Sentral Registration Document (BSRD) is issued for each investment directly registered with the BSP.

For investments registered by custodian banks on behalf of the BSP, the following rules shall govern:

  1. A BSRD shall be issued by a custodian bank to a non-resident for all his investments in peso-denominated government securities, PSE-listed securities of residents, and peso time deposits.

    A separate BSRD (with the suffix “NR” in the registration number) shall be issued by a custodian bank to a non-resident exclusively for all his investments in PSE-listed equity securities issued by non-residents. 

    Registered investments shall be reported by the custodian bank to the BSP, through the International Operations Department (IOD), within two (2) banking days from transaction date under the prescribed report form/s.

  2. All changes in composition of investments shall be reflected in the same BSRD. 

  3. For registration purposes, the following shall be annotated on the appropriate BSRD:

    1. Additional investments funded by inward remittances of FX as well as those involving upliftment/transfer to PSE of shares issued by non-residents and previously listed in an international exchange; and

    2. Changes in the composition of registered investments that do not involve inward remittance of FX, such as stock dividends, stock splits, or reverse stock splits.

  4. The duplicate copy of the BSRD issued by custodian banks, together with the requisite supporting documents enumerated in Appendix 10 of the FX Manual, shall be submitted to the BSP-IOD within two (2) banking days from date of registration for post audit purposes. The original BSRD shall remain in the custody of the issuing custodian bank.

5. Documentary requirements for BSP registration of foreign investments are as follows:

 

I. For applications for registration to be filed directly with the BSP

Application for registration3 shall be filed directly with the BSP together with the following supporting documents:

Type of Investments

Documentary Requirements

1. Foreign Direct Investments4

 

  1. For Cash Investment
  1. Certificate of inward remittance (CIR) of FX through an AAB in the prescribed format (Sample CIR and Guide/Instructions for Filling-Out CIR Form attached as Appendix 10.1 and Appendix 10.2, respectively to the FX Manual)

    Note: Conversion to pesos of the FX funding the investment is not required for registration of foreign direct investment; and

  2. Sworn certification of the officer of the investee firm concerned attesting to the number of shares and amount paid for the investment [Suggested formats are in Appendix 10.3A (for Stock Corporations) and Appendix 10.3B (for Branches/Representative Offices/Regional Headquarters/ Regional Operating Headquarters) of the FX Manual]; and

  3. For investee firms that are corporations/partnerships: Photocopy of the Certificate of Registration with the Philippine SEC, Articles of Incorporation/Partnership  and amendments thereto (if any), together with latest General Information Sheet stamped received by SEC, if any.

    For investee firms that are sole proprietorships: Photocopy of Registration certification from Department of Trade and Industry (DTI)

 

  1. For Investment in Kind
  1. Shipping documents;

  2. Bureau of Customs Import Entry and Internal Revenue Declaration (IEIRD); and

  3. Sworn certification of the officer of the investee firm concerned attesting to the number of shares and amount paid for the investment [Suggested formats are in Appendix 10.3A (for Stock Corporations) and Appendix 10.3B (for Branches/Representative Offices/Regional Headquarters/ Regional Operating Headquarters) of the FX Manual].

 

  1. For investment in financial institutions which are governed and regulated by the BSP

Clearance from the Supervision and Examination Sector of the BSP shall be required in addition to the documentary requirements for investments in cash or in kind.

 

  1. Investment in Condominium Units
  1. Copy of duly accomplished original CIR of FX;

  2. Condominium Certificate of Title in the name of the foreign investor, or copy of the Deed of Absolute Sale/Contract to Sell the condominium unit to the foreign investor; and

  3. Certification from the owner/developer/administrator/ property manager of the condominium attesting to compliance with the foreign ownership limitation under existing Philippine laws.

 

  1. Registration as foreign investments of capitalized oil, gas, geothermal energy exploration/development expenditures
  1. Government-approved service contract/other contract; and

  2. Copy of the Department of Energy (DOE)/National Power Corporation (NPC) letter-validation of expenditures showing, among others, the distribution of validated expenditures among the partners under the service contract/other contract.

 

  1. Investments funded by foreign loan/s and other payables converted into equity

 

  1. Original CIR of FX through an AAB in the prescribed format (Appendix 10.1 of the FX Manual) for foreign loans not registered with the BSP; or

  2. Copy of BSP registration for foreign loans registered with the BSP;

  3. Sworn certification from investee firm’s authorized officer attesting to the number of shares and amount paid for the investment remittable outward and that such are funded from foreign loans/payables converted to equity;

  4. Deed of Assignment of foreign loan or other payables;

  5. Latest audited financial statements of investee firm; and

  6. Articles of Incorporation of the investee firm

 

  1. Stock and/or property dividends accruing on BSP-registered investments in non-PSE-listed firms
  1. Copy of BSRD; and

  2. Sworn certification signed by the investee firm’s authorized officer on the declaration of the stock and/or property dividend, to include relevant excerpts of the covering: (i) Stockholders’ and Board Resolutions for stock dividends; and (ii) Board Resolution for property dividends.

 

  1. Stock splits/reverse stock splits on
    BSP-registered investments in
    non-PSE-listed firms

 

  1. Copy of BSRD; and

  2. Sworn certification signed by the investee firm’s authorized officer declaring the stock split/reverse stock split, to include relevant excerpts of the covering Stockholders’ and Board Resolutions

 

2. Investments in Other Peso-denominated Debt Instruments

 

  1. Investments in other peso-denominated debt instruments issued onshore by private resident firms (such as bonds/notes, bills payables, non-participating preferred shares), and not covered by Section 23 of the FX Manual

 

  1. Original CIR of FX and its conversion to pesos through an AAB in the prescribed form (Appendix 10.1 of the FX Manual); and

  2. Contract/Certificate of investment

 

  1. Investments in  bonds/notes issued by private domestic firms that were purchased from local banks
  1. Original CIR of FX and its conversion to pesos through an AAB in the prescribed form (Appendix 10.1 of the FX Manual); and

  2. Contract/Certificate of investment

  3. Copies of bonds/notes; and

  4. Purchase Price Letter/Agreement

 

  1. Foreign investments in non-participating preferred shares
  1. Original CIR of FX and its conversion to pesos through an AAB in the prescribed form (Appendix 10.1 of the FX Manual); and

  2. Contract/Certificate of investment

  3. Purchase invoice, or subscription agreement and/or proof of listing in the local stock exchange for new/additional issues/stock rights


3. Investment in bonds/notes converted into equity shares in PSE-listed companies

 

Investment in bonds/notes converted into equity shares in PSE-listed companies

  1. Original CIR of FX issued by an AAB in the prescribed format (Appendix 10.1 of the FX Manual) for proceeds of foreign loans not registered with the BSP; or Copy of BSP registration for foreign loans registered with the BSP;

  2. Bond/Note Offering Circular for bonds/notes not registered with the BSP;

  3. Sworn certification from investee firm’s authorized officer attesting to the number of shares issued and amount paid for the investment and that such are funded from foreign loans/payables converted to equity;

  4. Notice of Bond Conversion from the Agent showing the amount of bonds converted, equivalent number of shares, conversion price and conversion date;

  5. Latest audited financial statements of investee firm; and

  6. Articles of Incorporation of the investee firm and latest General Information Sheet submitted to SEC.

 

4. Reinvestment of peso divestment/sales proceeds or dividends/profits/earnings of duly registered investments

 

  1. For divestment/sales proceeds

 

  1. Original BSRD;

  2. Sworn certification signed by the original investee firm’s authorized officer attesting to the divestment/sale by the foreign investor; and

  3. Proof of divestment/sale for direct investment/s; or

  4. Matured contract/certificate of investment/proof of redemption for money market instruments

 

  1. For dividends/profits/ earnings

 

  1. Copy of BSRD; and

  2. Sworn certification signed by the investee firm’s authorized officer declaring the dividends or distribution of profits, to include relevant excerpts of the covering Board Resolution; or

  3. Proof of interest/coupon payments for investment/s in money market instruments

 

5. BSP-registered investments sold/transferred to another foreign investor if payment is made offshore in FX

 

BSP-registered investments sold/transferred to another foreign investor if payment is made offshore in FX

  1. Original BSRD;

  2. Sworn certification from the authorized officer of the investee firm, attesting to the transfer/assignment of the investments from the selling foreign investor to the buyer, in the books of the investee firm; and

  3. Deed of Sale/Assignment

 

 

II. For applications for registration to be filed with Custodian Banks

      Application for registration with custodian banks shall be supported by the following documents:

Type of Investments

 

Documentary Requirements

  1. Investments in peso-denominated government securities (GS)
  1. Accredited dealer’s Confirmation of Sale (COS);

  2. Original CIR of FX and its conversion to pesos through an AAB in the prescribed format (Appendix 10.1 of the FX Manual); and

  3. “Authority to Disclose Information” in the prescribed format (Appendix 10.4 of the FX Manual).

 

  1. Investments in PSE-listed securities of residents

 

  1. For new/additional investments:
  1. Purchase invoice, or subscription agreement and/or proof of listing in the local stock exchange for new/additional issues/stock rights; and
  2. Original CIR of FX and its conversion to pesos through an AAB in the prescribed format (Appendix 10.1 of the FX Manual).
  3. For annotation on the BSRD of stock dividends which accrued to registered investments:

    PSE Notice (Circular for Brokers) announcing the stock dividend declaration
  1. For annotation on the BSRD of stock splits/reverse stock splits:

    PSE Notice (Circular for Brokers) announcing the stock split/reverse stock split

 

  1. Investments in peso time deposits with tenor of at least 90 days

 

  1. Certification of peso time deposit;

  2. Original CIR of FX and its conversion to pesos through an AAB in the prescribed format (Appendix 10.1); and

  3. “Authority to Disclose Information” in the prescribed format (Appendix 10.4).

 

  1. Non-resident investments in equities issued by non-residents previously listed in an international exchange and subsequently uplifted/transferred
    to PSE

 

  1. Proof of transfer of shares [e.g., certificate of lodgement with the Philippine Depository and Trust Corp. (PDTC)] with details, including the following: number of shares transferred and par value of securities;

  2. For annotation on the BSRD of stock dividends which accrued to registered investments:

    PSE Notice (Circular for Brokers) announcing the stock dividends

  3. For annotation on the BSRD of stock splits/reverse stock splits:

    PSE Notice (Circular for Brokers) announcing the stock split/reverse stock split

 

  1. Non-resident investments in PSE-listed equity securities issued by non-residents

 

  1. Original CIR of FX showing conversion to pesos through an AAB in the prescribed form (Appendix 10.1 of the FX Manual); and

  2. Purchase invoice or Subscription agreement and/or proof of listing at the PSE for new/additional issues/stock rights.

  3. For annotation on the BSRD of stock dividends which accrued to registered investments:

    PSE Notice (Circular for Brokers) announcing the stock dividends

  4. For annotation on the BSRD of stock splits/reverse stock splits:

    PSE Notice (Circular for Brokers) announcing the stock split/reverse stock split

 

  1. Reinvestment of peso divestment/sales proceeds or dividends/profits/ earnings of duly registered investments

 

For divestment/sales proceeds:

  1. Original BSRD-Letter Advice; and

  2. Proof of redemption of GS; or Broker’s sales invoice; or Matured certificate of peso time deposit, as applicable

For dividends/profits/earnings:

  1. Original BSRD-Letter Advice; and

  2. PSE Notice (Circular for Brokers) announcing the issuance of cash dividend for PSE-listed securities; or proof of interest/coupon payments for investment/s in GS and peso time deposits

 

 

B. Investments by Residents

  1. General policy–

    1. Residents may invest in instruments enumerated in items B.2 and B.3 hereof without prior BSP approval funded by:  

      1. their foreign currency deposit account/s (whether offshore or onshore); and/or

      2. FX purchased from AABs or AAB-forex corps up to USD60 million or its equivalent in other foreign currency per investor per year, or per fund per year for qualified investors (QIs).

    1. Investments by residents (except AABs) funded with FX purchased from AABs or AAB-forex corps in excess of the USD60 million limit per investor per year shall require prior approval by the BSP: Provided, That the purchase of FX for investments by managed or trusteed accounts (other than pooled funds) shall be considered as part of the FX purchases by the principal or trustor of such accounts for determining compliance with the limit.

    2. QIs may apply with the BSP for a higher annual investment limit. For this purpose, QIs shall be limited to the following: insurance and
      pre-need companies; collective/pooled funds, whether in a corporate or contractual structure, such as mutual funds, Unit Investment Trust Funds (UITFs) and variable insurance; public or private pension or retirement or provident funds and such other entities and funds as the BSP may determine as QIs on the basis of such factors as financial sophistication, size and regularity of financial transactions, net worth and size of assets being managed. The application of collective/pooled funds and pension, retirement and provident funds for a higher annual investment limit may be effected through its governing board or through its trustee. 

    3. Investments of banks shall be subject to existing prudential regulations of the BSP and other applicable laws, rules and regulations.

    4. FX received by residents as dividends/earnings or divestment proceeds from investments under Items 2 and 3 below below (Section 44 of the FX Manual) need not be inwardly remitted and sold for pesos.

    5. All FX purchases for investments by residents shall be directly remitted to the account (whether offshore or onshore) of the intended beneficiary (e.g., non-resident investee firm, fund manager, broker/dealer, and/or non-resident parent company/subsidiary).

    6. AABs and AAB-forex corps shall submit a monthly report (Annex V of the FX Manual) to the BSP-IOD on the sale of FX for investments enumerated in Items 2 and 3 below, within the required deadline.

    7. Applications to purchase FX for investments (Annex A of the FX Manual) enumerated under Items 2 and 3 below shall be supported by documents prescribed under Item C.4 of Appendix 1 of the FX Manual. FX purchases shall be consolidated for purposes of determining compliance with the allowable limit prescribed in Item 1.a.ii.
  1. Outward investments by residents – 
    1. Debt and equity securities issued offshore by non-residents, including depositary receipts

    2. Offshore foreign currency-denominated mutual funds and UITFs

    3. Foreign currency-denominated intercompany loans to offshore parent companies/subsidiaries of residents with an original tenor of at least one (1) year

    4. Investments in real property abroad, including condominium units
  1. Other investments by residents –

    1. Bonds/notes of the Republic of the Philippines or other Philippine resident entities issued offshore, including peso-denominated bonds/ notes requiring settlement in foreign currency.

    2. Instruments held for sale/trading by banks operating in the Philippines, namely: (i) bond/notes under item 3.a hereof; and
      (ii) debt securities issued by non-residents and payable in foreign currency, provided the required license/approval/clearance/other requirements of the SEC and other government agencies have been obtained/complied with.  The AAB selling the securities shall also be the FX selling bank.

    3. Equity securities issued by residents and listed abroad.

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1  AABs shall refer to all categories of banks [except Offshore Banking Units (OBUs)] duly licensed by the BSP. It is understood that each category of bank should function within the operational parameters defined by existing laws/regulations for the specific bank category to which they respectively belong.

2  Applications for registration of foreign direct investments already recorded in the investee firm’s books may be filed with the BSP-IOD up to 18 April 2015, regardless of date of inward remittance of FX/actual transfer of assets to the Philippines. After this date, the one (1) year prescriptive period for filing of applications for registration of foreign direct investments shall apply.

3 Annex W of the FX Manual

4 Foreign direct investments required by law to be registered with the Securities and Exchange Commission (SEC) or the Bureau of Trade Regulation and Consumer Protection of the Department of Trade and Industry shall be extended a Bangko Sentral Registration Document (BSRD) upon endorsement by either agency and submission of required documents.

 

 
 
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