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The Securities and Exchange Commission (SEC) of the Philippines revokes KAPA Community Ministry International’s Certificate of Corporate Registration.
In a decision, signed by the four members of the Commission on April 3, 2019, the corporate regulator found that KAPA acted beyond its corporate powers. The agency noted that its Articles of Incorporation, states that the founders associated themselves to form a religious corporation.
However, investigations conducted by the SEC’s Enforcement and Investor Protection Department (EIPD) revealed that the subject company has been soliciting investments from the public in the form of “donation”. In return, these members-investors were promised of a lifetime 30% monthly profit.
“KAPA labels its investment solicitation activities as a “donation.” However, the promise of a 30% return to its member-donors belies that is a donation. A donation is an act of gratuity or liberality whereby a person gives to another who accepts. The primary consideration in pure donations is the liberality or plain gratuity of the donor who does expect anything out of his donation.”, the SEC clarified.
Consequently, a donation with an expected return is a form of a contract and the contractual arrangement of KAPA and its member-donors partakes of an investment.
According to the SEC, “an investment contract has been defined under the IRR of the SRC as a contract, transaction or scheme, whereby a person invests his money in a common enterprise and is led to expect profits from the effort of others.”
All the elements of an investment contract are present in KAPA’s scheme.
For instance, the money donated by a donor-investor is the investment in a common enterprise, which is KAPA. Then, he expects a 30% return per month without doing anything. The only thing he must do is wait for the monthly income.
Evidence gathered by the EIPD showed that KAPA has no secondary license to sell an investment contract. Its registration is limited only as a religious corporation. Hence, it can only act on what is essential to carry out its purpose.
Soliciting investments from its members is not necessary as a religious entity.
“Such act is indicative of KAPA’s intent to deceive the public on what it can do or is doing to the damage and prejudice of the investing public” the commission added.
The decision concludes;
“WHEREFORE, premises considered, this Petition is hereby GRANTED. The Certificate of Corporate Registrations of KAPA COMMUNITY MINISTRY INTERNATIONAL, INC. is hereby REVOKED pursuant to Section 6 (l) sub-paragraph 2 of Presidential Decree No. 902-A without prejudice to other criminal offense/s that may be filed.”