SEC to issue new guidelines on reportorial penalties

MANILA, Philippines — The Securities and Exchange Commission (SEC) will soon issue new guidelines that will impose higher penalties on companies for non-compliance with reportorial requirements.

These proposed fines and penalties are around 90 percent higher than the existing scale, the SEC said.

Under the proposed guidelines to be issued by the SEC, the late filing of reportorial requirements by domestic stock and non-stock corporations with retained earnings of less than P100,000 shall be at a base amount of P5,000 for the first offense, which will increase up to P9,000 for the fifth offense. There will also be a P1,000 monthly fine for every month of the continuing violation.

On the other hand, the SEC said “non-filing of reportorial requirements by both stock and non-stock corporations with retained earnings of less than P100,000 will incur fines amounting to P10,000 for the first offense up to P18,000 for the fifth offense alongside an additional monthly fine of P1,000 per month of the continuing violation.”

Last April, the SEC released for public comment the draft memorandum circular that contained the proposed scales of fines and penalties for late and non-submission of a corporation’s reportorial requirements.

Against this backdrop, the SEC urged delinquent corporations and associations to participate in its amnesty program which will run until the end of September.

Registration with the SEC marks the first step toward legitimately setting up a corporation in the Philippines, SEC chairperson Emilio Aquino said.

“The SEC Amnesty Program is a chance for corporations and associations to get a fresh start in their compliance with reportorial requirements, so they continue to enjoy the benefits and privileges of being a registered corporation,” he said.

Corporations, he said, duties and responsibilities in order to maintain a good standing with the SEC, including compliance with reportorial requirements provided under Republic Act 11232, or the Revised Corporation Code of the Philippines (RCC).

Over the years, the SEC said numerous companies have fallen behind in submitting their annual reports. Such non-compliance has led to many companies incurring hefty fines and penalties, with some having their registrations suspended or revoked for continued failure to comply.

Non-compliant and suspended or revoked corporations lose the benefits and privileges tied to being a duly registered business with the SEC, effectively affecting overall activity in the corporate sector.

To encourage compliance, the SEC, through memorandum circular no. 2, Series of 2023, launched an amnesty program that gives corporations a chance at a clean slate.

Thus, non-compliant and suspended or revoked corporations that failed to file their general information sheet (GIS), annual financial statement (AFS), and compliance with SEC memorandum circular no. 28, Series of 2020, can settle their fines and penalties at a lower cost, while regaining their good standing with the SEC, the agency said.

Under the amnesty program, non-compliant corporations need only to pay P5,000 for failure to submit their GIS, AFS, or MC 28 report, regardless of the number of years of non-submission. Suspended or revoked corporations will pay only half of their total fines and penalties, plus the petition to lift the order of suspension/revocation fee of P3,060, subject to the submission of additional documents.

Some companies have already completed their amnesty applications and reclaimed their good standing and/or corporate registration with the SEC.