NINETEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
First Regular Session
)
SENATE 
S. No. 226
Ri v i ©rante
.;':/0DffKr of ll)i'
•22 JUL-7 P5S5
l^F.CEiVED BY:
Introduced by Senator MARK A. VILLAR
AN ACT
ESTABLISHING THE SMALL AND MEDIUM ENTERPRISES STOCK
EXCHANGE
EXPLANATORY NOTE
Small and Medium Enterprises (SMEs) are the engines of the country's economic 
growth and development. They provide essential products and services and generate 
needed employment in our developing economy.
However, the growth and momentum of SMEs are hobbled by capital 
constraints. SMEs experience difficulties in obtaining finance to fund their capitalization 
or expansion requirements.
It is for these reasons that this bill is filed to assist SMEs in obtaining their 
financing requirements from the developing capital market in the country.
Listing with the stock exchange is one way for small businesses to get capital 
to fund growth and expansion. Further, tapping the SME sector will help expand the 
investor base in the country.
A Small and Medium Enterprises Stock Exchange (SMEX) can be the equities 
market of growing businesses that may still not meet the capitalization requirements 
for public listing by the Philippine Stock Exchange (PSE). Public listing in the SMEX may


well provide SMEs with a cheap and steady pool of funds for their business 
requirements.
Creation of the SMEX will also provide SMEs their benchmarks for business 
accomplishments, in making them aware of the processes and demands of making 
their enterprises "investment-ready."
The SMEX at the same time will broaden and deepen the capital markets by 
providing both foreign and local investors another window of investment opportunity. 
This has been the experience of the United States when they set up the National 
Association of Securities Dealers Automated Quotations (NASDAQ) stock market for 
growing companies, which has been the market for the public listing of phenomenal 
companies such as Intel and Microsoft.
In sum, alternative equities markets like the SMEX can provide crucial 
institutional support to SMEs, while at the same time lay the groundwork for more 
investment opportunities in the country today.
For these. Immediate approval of this bill is recommended.
MARK A. VILLAR
Senator


NINETEENTH CONGRESS OF THE 
)
REPUBLIC OF THE PHIUPPINES 
)
First Regular Session 
)
SENATE
S. No. 226
• I ^4 Uk.U
•22 JUL-7 P5 56
RtCEIVliD Bf:
Introduced by Senator MARK A. VILLAR
AN ACT
ESTABLISHING THE SMALL AND MEDIUM ENTERPRISES STOCK
EXCHANGE
Be ft enacted by the Senate and House of Representatives of the Philippines in 
Congress assembled:
1 
Section 1. Short Title. - This Act shall be known as the "Small and Medium
2 
Enterprises Stock Exchange Act of 2022."
3 
Sec 2. Declaration of Policy. - It is the declared policy of the State to
4 
recognize the indispensable role of the private sector, encourage private enterprise,
5 
and provide incentives to needed investments. In compliance with this policy, the
6 
State shall encourage the establishment of small and medium enterprises, develop
7 
an effective and efficient stock exchange for small and medium enterprises, provide
8 
for increased access to financing for small and medium enterprises in order to
9 
facilitate funds necessary for their expansion, and stimulate investors and private
10 
firms, both local and foreign, to Invest in small and medium enterprises.
11 
Sec 3. Definition of Terms. - The following definitions shall apply to this Act:
12 
a.) Small Enterprise refers to any business of whatever nature whose
13 
net capital amounts to 3,000,001-15,000,000 million pesos;


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b. ) Medium Enterprise refers to any business of whatever nature
whose net capital amounts to 15,000,001-100,000,000 million 
pesos;
c. ) 
100,000,001-300,000,000 million pesos (for the Small and Medium
Stock Exchange Primary Board)
19 
Sec 4. Creation of the Small and Medium Enterprises Stock Exchange, -the
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Small and Medium Enterprises Stock Exchange (SMEX) is hereby established, which
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shall be a stock market catering to small and medium enterprises. The SMEX shall be
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primarily self-regulatory but shall be under the supervision of the Office of the
23 
President for purposes of policy coordination.
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Sec 5. Board of Governors. - To carry out the purposes of this Act, a Board of
25 
Governors (the Board) Is hereby created, which shall be organized within sixty (60)
26 
days after the approval of this Act. It shall operate as an independent entity, but
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shall be attached to the Office of the President for budgetary purposes. The
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operations and activities of the SMEX shall be managed and controlled by the Board,
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which shall be composed of the Governor of the Bangko Sentral ng Pilipinas, a
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Securities and Exchange Commission (SEC) representative, a Philippine Stock
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Exchange representative, and five (5) members from the SMEX.
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The five members from the SMEX shall include one stockbroker or securities dealer
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coming from the registered brokers or securities dealers of the SMEX.
34 
Sec 6. Transaction of Business. - Only registered members shall transact
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business on the floors of the SMEX and such members shall deal or otherwise
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transact business only with registered brokers or securities dealers of the exchange.
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Sec 7. Implementing Rules and Regulations. - The Board, In consultation with
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the Philippine Stock Exchange, Securities and Exchange Commission, Board of
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Investments and representatives from the small and medium- sized business sector
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shall promulgate and adopt a Code of By-Laws which shall, among others, contain


41 
the organizational structure; the rules and regulations on the listing and Issuance of
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securities; the code of ethics for all members of the exchange, including grounds for
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disciplinary sanctions or suspension and expulsion of any member, and standards to
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ensure strict adherence thereto. This shall be done within ninety (90) days from the
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effectivity of this Act.
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Sec 8. Appropriation, - The amount necessary to carry out the provisions of
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this Act is hereby authorized to be appropriated in the General Appropriations Act of
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the fiscal year following its enactment Into law and thereafter.
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Sec 9. Accountabiiity. - To ensure accountability of the Board and the SMEX,
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all funds of and held in trust by the SMEX from the National Government, pursuant
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to the provisions of this Act, shall be audited by the Commission on Audit and all
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disbursements shall be made In accordance with existing auditing rules and
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regulations.
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Sec 10. Transitory Provision. - After a period of five years, the SMEX shall be
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privatized in order to ensure the efficient and effective functioning of the stock.
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exchange.
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Sec 11. Separabiiity Ciause. - If any portion or provision of this Act is
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declared unconstitutional, the remainder of this Act or any provision not affected
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thereby shall remain In force and effect.
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Sec 12. Repeaiing Clause. - Any law, presidential decree or issuance,
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executive order, letter of instruction, rule or regulation inconsistent with the
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provisions of this Act is hereby repealed or modified accordingly.
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Sec 13. Effectivity. - This Act shall take effect fifteen (15) days following its
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complete publication in a newspaper of general circulation.
Approved,