Philippine Securities and Exchange Commission exempts certain equity-exposed funds from the 20% single business group limit and waives penalties for past breaches

The Philippine Securities and Exchange Commission issued Memorandum Circular No. 2, Series of 2025, relaxing the single business group (SBG) investment limit for equity funds, balanced funds, and multi-asset funds with actual exposure to equity securities where the fund has no actual investment in financial derivatives. These funds are exempt from the SBG limit and will instead be subject to the single entity or issuer investment limitation under Rule 6.8(b) of the implementing rules and regulations of the Investment Company Act, until further notice. Under the prior framework in Memorandum Circular No. 15, Series of 2020, investment companies were prohibited from investing in aggregate more than 20% of net assets in certain instruments issued by any SBG, with additional constraints on exposures to over-the-counter financial derivatives with non-investment grade or unrated counterparties. Other investment limits and restrictions under existing SEC rules continue to apply to all investment companies. The SEC also confirmed it will not impose fines and penalties for any breach of the SBG limit by the covered funds between 15 May 2020 and 27 March 2025, while breaches of the Rule 6.8(b) single entity/issuer limit will be subject to fines and penalties. Investment companies seeking to offer funds cross-border to other ASEAN member jurisdictions as Qualifying Collective Investment Schemes must still comply with the 20% SBG limit under the ASEAN Standards of Qualifying Collective Investment Schemes.