; HOUSE "F REPRESENTATIVES
‘ RECEINVEY

DATE
Republic of the Philippines Te COM
HOUSE OF REPRESENTATIVES GY: i

Quezon City, Metro Manila |

' RATION UNIT
SEVENTEENTH CON! ig aa edi
First Regular Session | SL-S V3 INOEX SERVICE

3102000

House Bill No.

Introduced by DIWA Party-list Representative Emmeline Y. Aglipay ~ Villar

EXPLANATORY NOTE

Small and medium enterprises ate the workhorses of our economy. Based on 2014 figures
provided by the Philippine Statistics Authority (PSA), there are 946,988 establishments in the
Philippines. OF these, 99.6% (942,925) are micro, small, and medium enterprises.’ These
enterprises in turn employ approximately 70% of our total labor force.

From these statistics alone, it is clear why supporting such enterprises must be a priority of the
State, By far the largest obstacle faced by these enterprises is a lack of capital -- the growth and
momentum of smalier enterprises arc hobbled by capital constraints. Unlike large companies,
these enterprises experience more difficulties in obtaining finance to fund their capitalization or
expansion requirements. One effective means of doing so is through listing in the stock
exchange, as an initial public offering can bring in a substantial influx of capital. In 2014, the
Development Bank of the Philippines (DBP) signed an agreement with the Philippine Stock
Exchange Ine. (PSE) to spur the listing of small and medium enterprises (SMEs) in the local
bourse,

This bill, filed as a counterpart of Senate Bill No. 720 with the support of its author, Senator
Cynthia Villar, goes a step further by facilitating the creation of a Small and Medium Enterprises
Stock Exchange (SMEX) which will serve as the equities market of SMEs. The SMEX will
simultaneously broaden and deepen the capital markets by providing both foreign and local
investors another opportunity for investment, With the passage of this bill, everyone benefits

Arete ® Kilts
EMMELINE Y. AGLIPAY - VILLAR
Representative, DIWA Partyelist

hitpi//vww.stl gov.ph/éti/index.ehp/resources/sme-resources/sme-stetisties
* hetpif/4varw phlistar.com/business/2014/05/18/1324333/dbp-pse-sign-deal-spur-sme-listing



Republic of the Philippines
HOUSE OF REPRESENTATIVE
Quezon City, Metro Manila

PNTEENTH CONGRESS
First Regular Session

House Bill NoB 102

Introduced by DIWA Party-list Representative Emmeline Y. Aglips

y ~ Villar

AN AC

STABLISHING THE

TALL AND MEDIUM ENT
EXCHANGE

RPRISES STOCK

Be it enacted by the Senate and House of Representatives of the Republic of the Philippines in Congress
asseinbled:

Section 1, Title. - Tis Act shall be known as the "Small and Medium Lauerprises Stock
Exchange (SMEX) Act of 2016."

Section 2. Declaration of Policy. - Itis the declared policy of the State to recognize the
indispensable role of the private sector, encourage private enterprise, and provide incentives
to needed investments.

In compliance with this policy, the State shall
(a) Encourage the establishment of small and medium enterprises,

(b) Develop an effective and efficient stock exchange for small and medium
enterprises

(c) Provide for increased access to financing for small and medium enterprises in
order to facilitate funds necessary for their expansion; and

(d) Stimulate investors and private firms, both local and foreign, to invest in small
and medium enterprises

Section 3, Establishment of the Small and Medium Enterprises Stock Exchange (SMEX).-
‘There is hereby established a Small and Medium Enterprises Stock Exchange, (hereinafter
referred to as the "SMEX"), which shall be a stock market catering to small and medium
enterprises. The SMEX shall be primarily self-regulatory but shall be under the supervision
of the Office of the President for purposes of policy coordination

For purposes of this Act, the small and medium enterprises shall be those defined as such
under Republic Act 9501 or the Magna Carta for MSMEs,

Section 4. Board of Governors.- To carry out the purposes of this Act, there is hereby
created a Board of Governors, which shall be organized within sixty days after the approval
of this Act. It shall operate as an indepencent entity but shall be attached to the Office of the
President for budgetary purposes. The operations and activities of the SMEX shall be
managed and controlled by the Board of Governors (hereinafter referred to as the "Board"

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composed of the Governor of the BangkoSentralngPilipinas, the Securities and Exchange
Commission (SEC) representative, the Philippine Stock Exchange representative, and five
members from the SMEX.

‘The five members from the SMEX shall be selected from the officers of the Board, which
shall include one stockbroker or securities dealer coming from the registered brokers or
securities dealers of the SMEX,

Section 5. Transaction of Business. - Only registered members shall transact business on the
floors of the SMEX and such members shall deal or otherwise transact business only with
registered brokers or securities dealers of the exchange

Section 6, Issuance of Implementing Rules and Regulations. - The Board, in consultation
with the Philippine Stock Exchange, Securities and Exchange Commission, Board of
Investments and representatives from the small and medium-sized business sector, shall
promulgate and adopt a Code of By-Laws which shall contain, among others: the
organizational structure, the rules and regulations on the listing and issuance of securities:
and. the code of ethies for all members of the exchange. including grounds for disciplinary
sanctions or suspension and expulsion of any member, and standards to ensure strict
adherence thereto

Section 7. Appropriation. - The amount necessary to carry out the provisions of this Act is
hereby authorized to be appropriated in the General Appropriations Act of the fiscal year
following its enactment into law and thereafier

Section 8, Accountability. - To ensure accountability of the Board and the SMEX, all funds.
of and held in trust by the SMEX from the National Government, pursuant to the provisions
of this Act, shall be audited by the Commission on Audit and all disbursements shall be made
in accordance with existing auditing rules and regulations.

Section 9. Transition, - After a period of five years, the SMEX may be privatized in order to
ensure the efficient and effective functioning of the stock exchange

Section 10. Separability Clause. - If any provision of this Act shall be held invalid, the
reminder of the Act not otherwise affected thereby shall remain in full force and effect.

Section 11, Repealing Clause. - All laws, executive orders, decrees, rules and regulations, or
part thereof, contrary to or inconsistent with the provisions of this Act are hereby repealed or
modified accordingly

Section 12. Effectivity, - This Act shall take effect fifteen days after its publication in the
Official Gazette or at least two national newspapers of general circulation

Approved

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