The Securities and Exchange Commission (SEC) said it relaxed the investment limits for equity, balanced and multi-asset funds exposed to equity securities.
The SEC issued Memorandum Circular No. 2 on March 28, 2025, exempting these funds from the single business group (SBG) investment limit imposed by MC No. 15, Series of 2020.
The 2020 rule defined an SBG as a company, its subsidiaries, parent company and ultimate parent company and capped investment in such groups at 20 percent of a fund’s net assets.
The new memorandum states that funds without financial derivative investments are exempt from the SBG limit. Instead, they will be subject to the single entity or issuer investment limitation under Rule 6.8(b) of the Investment Company Act’s implementing rules and regulations.
The SEC said it would not impose fines for breaches of the SBG limit between May 15, 2020 and March 27, 2025. However, breaches of the single entity/issuer limit will be subject to penalties.
All investment companies, including those affected by the new rule, remain subject to other existing investment limits and restrictions.
Funds seeking to offer their schemes across ASEAN member jurisdictions as qualifying collective investment schemes should still comply with the 20-percent SBG limit under ASEAN standards.
