Legal Updates

The Securities and Exchange Commission (“SEC”) has issued two (2) significant circulars that advance its ongoing efforts to modernize securities regulation and strengthen sustainable finance in the Philippines.

SEC Memorandum Circular No. 11, Series of 2025 sets out further guidelines on Exempt Transactions under Section 10 of the Securities and Regulation Code (“SRC”), while SEC Memorandum Circular No. 13, Series of 2025 introduces for the first time the Guidelines on Philippine Green Equity, designed to make visible and encourage the growth of equity investments supporting environmentally and socially sustainable initiatives.

Published in September 2025, the circulars form part of the SEC’s continuing effort to provide clearer regulatory guidance, ease compliance for issuers, and enhance access to the Philippine capital market while aligning local practices with global standards of transparency and sustainable growth.

I. SEC Memorandum Circular No. 11, Series of 2025: Further Guidelines on Exempt Transactions

Under the SRC, securities offered or sold to the public are generally required to be registered with the SEC. However, Section 10 of the SRC provides that certain transactions are exempt from registration when the nature, scope, or circumstances of the offer do not warrant the full application of the registration requirements, such as limited or private offerings, sales to qualified buyers, and other transactions that pose minimal public risk. In addition to the specifically enumerated exemptions, the SEC is likewise empowered to exempt other transactions when it determines that registration is not necessary in the public interest or for the protection of investors, as in cases involving a small offering amount or a limited public distribution.

To further refine the implementation of Section of the SRC and provide consistent guidance to issuers and market participants, the SEC issued Memorandum Circular No. 11, Series of 2025 (“SEC-MC No. 11”), which prescribes updated procedures and requirements for applications for Exempt Transactions under Sections 10.1 and 10.2 of the 2015 Implementing Rules and Regulations of the SRC (“SRC-IRR”).

Optional Application for Confirmation of Exempt Transactions under Section 10.1

SEC-MC No. 11 introduces a new provision expressly allowing issuers availing of any exemption under Section 10.1 of the SRC to file an optional application for confirmation of exemption with the SEC. Previously, the filing of such application was required under Rule 10.1.5.1 of the SRC-IRR as a condition for securing confirmation of exemption, but the said provision has now been deleted.

With the amendment, the filing of confirmation is made discretionary, allowing issuers to rely on the exemption without prior confirmation while retaining the option to obtain it for documentation or compliance purposes.

Mandatory Application for Confirmation of Exempt Transactions under Section 10.2

SEC-MC No. 11 makes further amendments under Rule 10.2 of the SRC-IRR to clarify the procedure for transactions that may be exempted by the SEC under its discretionary authority.

The amendment now expressly requires the filing of an Application for Confirmation of Exempt Transactions with the Markets and Securities Regulation Department (“MSRD”) of the SEC, subject to a filing fee equivalent to one-tenth (1/10) of one percent (1%) of the maximum aggregate price or issued value of the securities. In case of any change in the price of securities at the time of grant, the Corporate Secretary of the issuer is required to submit a sworn undertaking to pay the corresponding additional filing fee.

The same process and fee structure also apply to issuers who opt to file for Optional Confirmation of Exempt Transactions under Section 10.1.

General Rules on Exempt Transactions and Application for Confirmation of Exempt Transactions

Considering the amendments introduced by SEC-MC No. 11, Rules 10.1 to 10.3 of the SRC-IRR which governs exempt transactions and applications for confirmation have been renumbered and reorganized. Among the most notable changes is the provision on subsequent sales of securities sold under exempt transactions, which now expressly prohibits their later offer or sale to the public without prior registration, unless the subsequent transaction likewise qualifies as exempt.

II. SEC Memorandum Circular No. 13, Series of 2025: Guidelines on Philippine Green Equity 

On 23 September 2025, the SEC released Memorandum Circular No. 13, Series of 2025 (“SEC-MC No. 13”), establishing the Guidelines on Philippine Green Equity, the country’s first regulatory framework for equity offerings dedicated to financing environmentally sustainable projects.

The circular seeks to encourage issuers to integrate sustainability objectives into their capital-raising activities and to prove investors with credible opportunities to fund projects with measurable environmental benefits. This is implemented through the designation of an official Philippine Green Equity label within the stock market, intended to enhance the visibility and attractiveness of companies that actively engage in green activities.

Criteria for Green Equity

Participation in the Philippine Green Equity framework is currently voluntary, and the Green Equity Label is conferred only upon companies that fully meet the qualification standards prescribed under Sections 4 to 7 of SEC-MC No. 13, as follows:

1. Revenue: More than 50% of the revenue of the company, as reported in the latest audited annual financial statements, must be derived from Green Activities;
2. Investments: More than 50% of the investments (sum of capital expenditure and operating expenditure) of the company, as reported in the latest audited annual financial statements, must be channeled towards Green Activities;
3. Fossil Fuel Limitation: Revenues of the company derived from fossil fuel must be limited to less than 5%; and
4. Taxonomy Alignment: The company’s activities must meet the eligibility criteria of the SFTG (a document to be issued by the inter-agency body to be created pursuant to SEC-MC NO. 13, which will provide guidance on the classification of economic activities as environmentally and socially sustainable) or ATSF (multi-tiered framework designed to be an inclusive and credible classification system for sustainable activities in ASEAN).

In this regard, Green Activities refer to economic activities classified as Green under the SFTG or ATSF, as applicable. Compliance with all these requirements is mandatory, and failure to meet any one of the prescribed criteria shall disqualify the company from obtaining or maintaining the Green Equity label.

Engagement of an External Reviewer

SEC-MC No. 13 requires that a company’s compliance with the criteria for Green Equity be verified by an independent external reviewer using a recognized assessment methodology. The reviewer must have demonstrated expertise and a credible track record in sustainable finance and environmental, social and governance practices assessment and must disclose its credentials, methodology, and scope of review in its report.

The resulting assessment report must also be made publicly accessible through a website designated by the company.

Application Process

A company seeking to obtain the Philippine Green Equity label must submit a formal application to the SEC, providing information on its Green Activities as prescribed by SEC-MC No. 13. A company applying for the Green Equity label must expressly indicate its intention to designate its shares as such prior to their offering, or, if already outstanding, before referring to them as Green Equity, through a formal letter addressed to the SEC. The application, together with the required documents, shall be submitted to electronically to the MSRD, as follows:

         a. Formal Letter of Application requesting the Green Equity label;

         b. Assessment Report  from a qualified third-party reviewer or sustainability reviewer, detailing alignment with the Green Equity criteria and taxonomy alignment;

         c. Contract or any formal engagement document signed by the third-party reviewer, confirming their appointment to prepare the  assessment report and including a reference or link to the reviewer’s published methodology;

         d. Latest Audited Financial Statements; and

         e. Any other documents, explanations, or information as may be required by the Commission to demonstrate compliance with Green Equity Label criteria.

The SEC will evaluate the submission and notify the applicant of its decision within forty-five (45) calendar days from receipt of complete documents. Once approved, the company is authorized to refer to its listed shares as bearing the Philippine Green Equity Label.

Continuing Compliance and Assessment

Companies granted the Philippine Green Equity Label are required to submit to the Philippine Stock Exchange (“PSE”) an annual compliance report demonstrating continued adherence to the qualification criteria and other requirements under SEC-MC No. 13. They must likewise promptly notify the PSE of any material or non-material changes in the information previously submitted, including updates on the activities in which the company is engaged or invested, and any other relevant developments that may affect the company’s eligibility or ongoing compliance with the Philippine Green Equity Label.

This article is only for informational and educational purposes.  It is not intended as a legal advice or opinion. For assistance and legal queries, please contact general@srmo-law.com.