SEC relaxes SBG limit for equity, balanced, and multi-asset funds

The Securities and Exchange Commission (SEC) has relaxed the single business group (SBG) investment limit for equity funds, balanced funds, and multi-asset funds that have actual exposure to equity securities following requests from fund managers.

On March 28, the SEC issued Memorandum Circular No. 2, Series of 2025, which exempts these fund types from the SBG Limit based on requests from fund managers.

This development is expected to benefit conglomerates such as the SM and Ayala Groups, as well as facilitate the planned initial public offering (IPO) of GCash.

Under MC No. 15, Series of 2020, investment companies are prohibited from investing more than 20 percent of their net assets in transferable securities issued by a single business group.

MC No. 2 states that funds without actual investments in financial derivatives will be subject to the single entity or issuer investment limitation under Rule 6.8(b) of the IRR of Republic Act No 2629, until further notice.

The SEC will not impose fines and penalties for any breach of the SBG Limit committed by covered funds from May 15, 2020 to March 27, 2025.