SEC facility to analyze finances of listed firms

The Securities and Exchange Commission is setting up an automated facility to analyze the financial condition of registered entities to protect the investing public.

The facility, dubbed as the compliance monitoring and evaluation system, will enable online analytical processing of the financial performance of corporations registered with the SEC.

The facility will monitor the compliance of registered entities with government laws and regulations. It will track the extent to which corporations are complying with laws, policies, rules and regulations, including the Anti-Money Laundering Law.

It also reflects the risks involved as a result of non-compliance, the weight of the risks involved and the monetary and non-monetary sanctions for non-compliance with government regulations.

The SEC is also putting in place a rating system called SEC Mileage which will warn investors about companies that have weak fundamentals and those that rate poorly in corporate governance.

The commission is developing procedures for monitoring the compliance of corporations with their respective corporate governance manuals. It is designing a self-assessment system and disclosure process to be utilized by covered companies.

It will conduct on-site evaluation of actual corporate governance practices, vis-a-vis international best practices and the provisions of the Code of Corporate Governance.

Apart from this, the SEC is strengthening on-site compliance audits and on-site investigations to verify suspected or alleged violations of SEC rules and regulations. It will conduct joint audits with the Philippine Stock Exchange and the Bangko Sentral ng Pilipinas of dually-regulated entities to ensure an effective and efficient supervision of the financial sector.

The SEC is also intensifying the monitoring of inactive corporations in its bid to weed out delinquent corporations. As in the past, lists of delinquent corporations will continue to be published in broadsheets of general circulation. The licenses of inactive corporations will be revoked for continued non-compliance.

Efforts of the SEC’s Company Registration and Monitoring Department (CRMD) to go after companies that fail to submit general information sheets, financial statements and other reportorial requirements have already yielded positive results as the Commission was able to raise P3.3 million in revenues from the collection of fines.

CRMD director Benito Cataran said the amount represents the collection of fines for the period January to November this year, which is significantly higher than the previous level’s P482,793.

Cataran said the CRMD has made it a condition for companies with pending applications for increase in capital or any amendment to its articles of incorporation to pay the assessed fines first before any approval is granted.

This, he said, should compel corporations to comply with periodic reporting requirements to ensure that information available about them is timely and accurate.

A basic fine of P100,000 is imposed on all SEC-registered corporations that fail to submit annual reports, tender offer reports, proxy statement, and information sheets on time. A P100 penalty will be levied by the SEC for everyday of delay.

Corporations that submit late tender offer reports and annual reports for the second time will be charged a P150,000 fine and for third offense, another P200,000. As for proxy statements and information sheets, the SEC will impose a penalty of P125,000 and P150,000 for second and third offense.

All SEC-registered corporations that fail to submit quarterly reports and current reports on time will be slapped with a P50,000 penalty for the first violation and P75,000 and P100,000 for the second and third violations.

The Commission will charge a fine of P10,000 to P100,000 for late submission of statement of beneficial ownership.