Manalungsung, Kyrell D.

BSAc 2 September 20, 2020

Securities Regulations Code - Activity 1

I.

a.) Lotte Chilsung Beverages will be required to make a tender offer for equity shares of Pepsi-Cola
Products Philippines in an amount of 2.13 billion. But before making a tender offer, it should be prior to
the sale and the Lotte Chilsung Beverages should already have their full financial capacity.

b.) To make the acquisition valid, Lotte Chilsung Beverages has to disclose the requirements with
respect to the tender offers. Then dissemination of tender offers can then be in a long form or summary
publication in 2 newspapers of general circulation in the Philippines, once a week for 2 consecutive
weeks.

c.) If the minority shareholders are opposed to the impending takeover of Lotte Chilsung
Beverages, those shareholders can exercise their appraisal right to Pepsi-Cola Company if ever the same
wished to leave the company.

II.

a.) Proxy Solicitation

Proxy solicitation refers to a request that a corporate shareholder authorize another person to
cast the shareholders vote at a corporate meeting. Prior to each meeting, a public company solicits a
proxy from each of its shareholders by providing a proxy statement and a proxy card (or voting
instructions). Proxies should be in writing, signed by the stockholder or his duly authorized
representative and must be filed before the scheduled meeting with the corporate secretary.

b.) Limitations of Proxy

 No proxy shall be valid and effective for a period longer than 5 years at one time.
 The representative cannot vote for more than one meeting because as a general rule, a
particular proxy shall be valid only for one meeting for which it is intended.
 No broker or dealer shall give any proxy, consent or any authorization, in respect of any security
carried for the account of the customer, to a person other than the customer, without written
authorization of such customer.
 The proxy executed by the broker shall be accompanied by a certification under oath stating
that before the proxy was given to the broker, he had duly obtained the written consent of
the persons in whose account the shares are held.
 No proxy shall confer authority to vote for any person to any office for which a bona fide
nominee is not named in the information statement or any material attached to it.
 the proxy can only vote for the one written in the proxy form or if none, he can only vote for
the one who is in the list prior to solicitation of proxy.

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 III.

a.) Insider Trading

A term that broadly refers to unlawful trading in securities by persons who possess material
nonpublic information about the company whose securities they buy or sell, or about the market for
such securities.
It is when a person is taking advantage of his/her position or relationship to the company where
the same will be obtaining material information that is not yet available to the public. With that
knowledge of such material information, the person will take advantage of it by either unloading his/her
excess shares or by acquiring shares of others.

b.) Instances when the same is considered as Fraudulent

 The purchase or sale of any securities to employ any device, scheme, or artifice to defraud.
 Example of this is when a company creates false information that can cause panic to the
shareholders and the general public.
 The purchase or sale of any securities to obtain money or property by means of any untrue
statement of a material fact of any omission to state a material fact necessary in order to make
the statements made, in the light of the circumstances under which they were made, not
misleading.
 The operations are made by the corporation itself, rather than the shareholders. An
example of this is when a certain corporation is doing operations between its members
rather than its shareholders and its customers. This is to pretend to the public that the
company is still doing well.
 The purchase or sale of any securities to engage in any act, transaction, practice, or any course
of business which operates or would operate as a fraud or deceit upon any person.
 This is all about the creation of an impression of an active transaction of a particular equity
share.

c.) Instances when there is No Duty for the Insider to Disclose

 The Insider Proves that the information was not gained from such relationship
 This can be because of the insider's own research based on publicly available documents.
 If the Party selling or buying from the insider (or his agent) is identified, the insider proves:
I. That he disclosed the information to the other party, or
II. That he had reason to believe that the other party otherwise is also in possession of
the information.
 These are instances where the insider has already disclosed the information to the buyer
prior to their transaction or when the information is likewise known to the person
buying/selling the security.

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 It shall be unlawful for any insider to communicate material non-public information about the
issuer of the security to any person who, by virtue of the communication becomes an insider.
 Even if the insider has obtained the information because of his/her connection or
relationship with the company and the same is considered as non-public information, then
there is no need to make such disclosure.