Practice question
A corporation issues nonproprietary membership certificates representing participation in its commercial club enterprise. Its manager says that Section 3.1 covers only ownership shares, so nonproprietary certificates are necessarily outside the Code. Assume no registration exemption has been established. Which is the best response?
- Agree, because every security must confer ownership of corporate assets.
- Disagree, because Section 3.1 expressly includes nonproprietary membership certificates in corporations.
- Agree, because charging a membership fee excludes a commercial enterprise.
- Disagree, because classification alone proves that a registration offense has already occurred.
- Agree, because securities must always promise a fixed return.
Legal references
- RA 8799, Section 3.1; https://lawphil.net/statutes/repacts/ra2000/ra_8799_2000.html
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