Memorandum of Association

The CMDC MOA

WHEREAS, the recovery and eventual growth of the national economy occupy the highest priority in government’s policy objectives and programs;

WHEREAS, in support of national economic development goals, medium-and long-term savings and investments must be given deliberate encouragement and special attention by government through more effective policy measures that will stimulate and strengthen the country’s capital market;

WHEREAS, the development of the capital market is necessary to hasten economic development by providing a financial environment which would enable medium-and long-term savings to be efficiently channeled towards investments in productive enterprises which provide goods for both the local and export markets, create jobs for an expanding labor force and increase per capita income;

WHEREAS, an extensive evaluation of the present state of the capital market needs to be conducted immediately by a competent and high-level body that will identify impediments in laws, policies and regulations affecting capital market development;

WHEREAS, changes, amendments, additions and reforms to laws, policies and regulations to remove such impediments should be recommended by the same high-level body after careful deliberations and studies without delay;

WHEREAS, the same high-level body should continuously monitor and appraise changing conditions in the capital market and should therefore be prepared to provide timely and well-studied advice and recommendations to the President, the Cabinet and the Congress in order that future economic and financial policies will be consistent with and supportive of the objectives of capital market development;

NOW, THEREFORE, WE, the undersigned representatives of several government agencies and private organizations or institutions, have agreed to associate ourselves together to form an organization to be named

CAPITAL DEVELOPMENT COUNCIL

(hereinafter called the “Council”).

AND WE HEREBY AGREE AS FOLLOWS:

I. Mandate

• The Council is hereby mandated to recommend policies for the development of the capital market, and translate such policies into concrete actions and results.

• The Council shall identify impediments to capital market development through an extensive evaluation of policies, laws, rules and regulations affecting the capital market and recommend necessary reforms, amendments, changes and modifications to eliminate such impediments.

• The Council shall endeavor to evaluate and recommend monetary and fiscal policies which complement each other and are conducive to capital market development.

• The Council shall endeavor to stimulate medium-and long-term investments into productive enterprises by addressing various issues affecting the capital market such as, but not limited to, securities trading practices, listing of securities in the stock exchanges, taxes on financial instruments, disclosure of material information, efficiency of financial transactions, creation of an efficient bond market, duplication and fragmentation in securities regulation, standardization of transaction documents, accounting and financial reporting standards and other concerns which influence investor confidence.

• The Council shall encourage the simplification of regulatory procedures to ensure the timeliness of registrations or approvals which is critical in dynamic financial markets.

• The Council shall propose necessary legislative programs, supported by its studies and analyses, for consideration of Congress. It shall suggest, for the guidance of other concerned agencies of government, relevant policy-measures that will be conducive to capital market development.

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II. Composition

The Council shall be composed of and represented by the following:

1. Department of Finance

2. Central Bank of the Philippines

3. Securities and Exchange Commission

4. Financial Executives Institute of the Philippines

5. Bankers Association of the Philippines

6. Investment Houses Association of the Philippines

7. Makati Stock Exchange

8. Manila Stock Exchange

Secretary of Finance

Governor

Chairman

Board Designate

President

President

President

President

III. Consultative Group

A. The Council shall have a Consultative Group composed of the following government agencies and institutions and private organizations, namely:

Private Sector

1. Asian Institute of Management

2. Bankers Association of the Philippines

3. Chamber of Thrift Banks

4. Financial Executives Institute of the Philippines

5. Investment Houses Association of the Philippines

6. Makati Stock Exchange

7. Management Association of the Philippines

8. Manila Stock Exchange

9. Philippine Association of Finance Companies, Inc.

10. Philippine Chamber of Commerce and Industry

11. Philippine Institute of Certified Public Accountants

12. Trust Officers Association of the Philippines

B. Each member of the Consultative Group shall appoint a duly authorized representative.

C. The Consultative Group shall be convened as the need arises and shall be adequately informed of matters under discussion and study in order for the members of the group to express their views and opinions.

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IV. Technical Committee

  The Council shall form a Technical Committee to be composed of senior representatives of the members of the Council. A member of the Technical Committee shall hold the position of Undersecretary, Associate Commissioner or Director for the public sector, and President, Executive or Senior Vice President, or Vice President for the private sector. The Technical Committee shall assist the Council through studies and research and advice the Council of its findings, action plans and recommendations for approval and implementation.

V. Other Committees

The Technical Committee shall form sub-committees to study and evaluate specific issues and concerns as may be deemed necessary. Members of the sub-committees shall be from the members of the Consultative Group or any person with necessary knowledge and expertise on specific issues and topics.

VI. Council Chairman

The person designated by the Board of Directors of FINEX shall be the Chairman of the Council, and the Secretary of Finance and the Chairman of the Securities and Exchange Commission shall act as Co-Chairmen.

VII. Secretariat

FINEX shall provide the office of the Secretariat of the Council. The Council shall be authorized to seek contributions from among themselves and various organizations and institutions to assist in defraying the cost of operating the Secretariat.

VII. Meetings

The Council shall meet as frequently as may be necessary to discharge its mandate; provided that, it shall meet at least once every quarter.

IX. Quorum

The presence of a majority of the members of the Council shall constitute a quorum, and the concurrence of a majority of the members present at a meeting at which a quorum exists shall be adequate for any decision by the Council.

X. Term

The continued existence of the Council shall be determined by the Council itself and only upon the accomplishment of its mandate.

DONE in the City of Manila, Philippines, this 15 th day of November, in the Year of Our Lord, Nineteen Hundred Ninety One.

EDWIN V. FERNANDEZ

President, Financial Executives Institute of the Philippines

OCTAVIO V. ESPIRITU

President, Bankers Association of the Philippines

EDGARDO M. DEL FONSO

President, Investment Houses Association of the Philippines

ROBERTO Z. LORAYES

President, Manila Stock Exchange

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