SEC set to cancel licenses of 240,000 erring firms

Tightening its guard against delinquent corporations, the Securities and Exchange Commission is set to cancel the registration certificates of more than 240,000 firms for their failure to comply with the agency’s reportorial requirements.

The companies registered between 1936 to 1995 came under fire from the SEC for chronic violation of the rules on the submission of financial statements and general information sheets and for failure to pay the corresponding fines for the violations committed.

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.

The move to revoke the certificates of registration of these firms was spurred by their failure to appear before the SEC’s Company Registration and Monitoring Department (CRMD) on the scheduled hearings. The hearings were called to give the erring firms the opportunity to explain their side and justify why their certificate of registration should not be revoked for non-submission of reports.

Under the Corporation Code, all corporations are required to submit annual reports such as the general information sheet and financial statements.

The CRMD has started publishing show cause orders to delinquent companies as part of efforts to weed out firms that have been habitually violating reportorial requirements.

Under the show cause orders, corporations are given 30 days from the date of publication to appear before the CRMD’s Law and Regulation Division, update their files and settle the corresponding fines or penalties.

To date, less than a dozen delinquent corporations have appeared before the CRMD since the first show cause order was published in April.

CRMD director Benito Cataran said most of these delinquent corporations are schools and universities, which are still operational.

Cataran has issued a stern warning that corporations which persist in ignoring the agency’s show cause orders will have their certificate of registration revoked before the end of the year.

He said the CRMD is set to issue another show-cause order covering delinquent corporations registered between 1985 to 1995.

Last year alone, the SEC revoked the registration of 27,982 delinquent and inactive corporations.