SEC Adopts The ASEAN Sustainable And Responsible Fund Standards And Establishes Rules On Recognition Of Foreign Collective Investment Schemes

• Law Firm: SyCip Salazar Hernandez & Gatmaitan
• Subject Matter: Finance and Banking, Compliance, Fund Finance
• Author: -1 SyCip Salazar Hernandez & Gatmaitan
• Published date: 05 June 2023

On April 13, 2023, the Securities and Exchange Commission ("SEC") issued Memorandum Circular No. 4, Series of 2023 ("MC 4-23") to adopt the ASEAN Sustainable and Responsible Fund Standards ("ASEAN SRFS") and establish rules on the qualifications of local investment companies under the ASEAN SRFS and the recognition of foreign investment collective schemes qualified under the ASEAN SRFS that seek to offer in the Philippines under the ASEAN Collective Investment Scheme ("CIS") framework ("ASEAN CIS Framework").

MC 4-23 took effect on April 27, 2023, after its publication in two newspapers of general circulation in the Philippines.

MC 4-23 applies to (i) investment companies, including sub-funds of an umbrella fund, and fund managers that seek to qualify under the ASEAN SRFS and want to either offer locally or on a cross-border basis under the ASEAN CIS Framework, and (ii) CIS Operators and Foreign SRFs that seek to offer in the Philippines under the ASEAN CIS Framework.

General

1. What is the ASEAN CIS Framework?

The ASEAN CIS Framework is an initiative of the ASEAN Capital Market Forum ("ACMF") which allows fund managers operating in ASEAN member jurisdictions to offer CIS, such as unit trust funds or mutual funds, constituted and authorized in that jurisdiction, in other member jurisdictions under a streamlined authorisation process. This process is covered under the Memorandum of Understanding on the Streamlined Authorisation Framework for Cross-border Public Offers of ASEAN Collective Investment Schemes, as supplemented ("MOU").

2. What is the ACMF?

The ACMF is composed of a group of capital market regulators from Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, Singapore, Thailand, Vietnam, and the Philippines.

3. Which ASEAN member jurisdictions have adopted the ASEAN CIS Framework?

As of the date of this bulletin, there are four signatories to the MOU: Securities Commission Malaysia, Monetary Authority of Singapore, the Securities and Exchange Commission of Thailand, and the Securities and Exchange Commission of the Philippines (the jurisdictions of the ACMF members that are signatories to the MOU are collectively referred to as "Member Jurisdictions").

4. What is the ASEAN SRFS?

The ASEAN SRFS was developed by the ACMF, in line with the growing importance of sustainable finance in ASEAN and the actionable recommendations in the Roadmap for ASEAN Sustainable Capital Markets, to provide the minimum disclosure and reporting requirements for CIS that seek to qualify under the ASEAN SRFS and to address the need for a comparable, uniform and transparent disclosure of information to mitigate the risk of, among others, greenwashing (the process of conveying a false impression or misleading information about how a company's products are environmentally sound¹).

Philippine Investment Companies

5. What kinds of Philippine entities may qualify under the ASEAN SRFS?

Investment companies (in general terms, this means any issuer which is or holds itself out as being engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting, or trading in securities), including any sub-fund of an umbrella fund...