Saturday, October 23, 2021

SEC warns against gasoline companies enticing investments from public

THE Securities and Exchange Commission (SEC) has received reports that there has been a proliferation of offering and solicitation of investments for the purpose of setting up gasoline stations or investing in already existing small gasoline companies in the guise of a franchise agreement, co-franchisee agreement, partnership agreement, co-ownership contract and/or other forms of contract that offers to the public an opportunity to invest in their company and earn profit “hassle free.”

The usual scheme of these small gasoline companies is to lure investors by advertising that they can co-own a gas station for a minimal amount of at least P300,000.

These gasoline companies usually offer subscription to the shares of stock of the company; partnership agreement, where a gas station will be co-owned by several partners, and co-franchisee contract wherein a single gas station will be franchised and owned by several co-franchisees.

In the said offers, the construction, management and operation of the gas stations will be the responsibility of the company.

The investors just have to place their money, sign the contract, then wait for the quarterly distribution of profits.

Some would even offer a guaranteed profit by claiming that the loss will be shouldered by the company.

The commission reminds the public that these kinds of contracts or investment schemes, no matter how they are called, would squarely fall under the definition of an “investment contract” and subscription of “shares of stocks.”

“Therefore, in the eyes of the law they are considered as securities under the regulatory jurisdiction of the commission,” it added.

The public solicitation of securities is mandated by Republic Act No. 8799 or the Securities Regulation Code to be registered with the commission. Thus, any issuance of unregistered securities is illegal.

“We wish to inform the public that the SEC website, through the link contains the exclusive list of registered issuers of securities with corresponding Permit to Offer and Sell Securities,” the commission said.

Investments not included in the list are deemed to be unregistered and therefore not authorized to be offered to the public, it added. (PR)


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