Over 20,000 firms risk losing business registration

MANILA, Philippines — More than 20,000 corporations are in danger of having their certificates of incorporation revoked for failing to comply with reportorial requirements, the Securities and Exchange Commission (SEC) has warned over the weekend.

SEC chairperson Emilio Aquino said delinquent corporations affect the health of the corporate sector.

“Corporations’ timely submission of their AFS, GIS, and other reportorial requirements is vital in maintaining a healthy and vibrant corporate sector, as this helps us identify active versus inactive corporations, enhance and organize the Commission’s digital database, and protect the public from fraud,” Aquino said.

In a notice dated Oct. 18, the SEC released a list of 22,403 ordinary corporations which stand to lose their certificates of incorporation after failure to submit their general information sheet (GIS) within five years from the date of their incorporation.

The requirement to submit reportorial requirements is pursuant to the Revised Corporation Code of the Philippines or Republic Act 11232.

Section 177 of the RCC provides that every corporation, domestic or foreign, doing business in the Philippines shall submit to the SEC its GIS and annual financial statements (AFS), among other reportorial requirements.

These requirements must be submitted annually and within such a period as may be prescribed by corporate regulators.

The RCC also requires a one person corporation to submit its AFS and a report containing explanations or comments by the president on every qualification, reservation, or adverse remark or disclaimer made by the auditor in the latter’s report.

Furthermore, a one person corporation must also submit a disclosure of all self-dealings and related party transactions entered into between the one person corporation and the single stockholder and other reports as the SEC may require.

The Oct. 18 notice is hinged on Section 21 of the RCC, which states that if a corporation does not formally organize and commence its business within five years from the date of its incorporation, its certificate of incorporation shall be deemed revoked as of the day following the end of the five-year period.

In a separate notice, the SEC also released a list of 298,335 ordinary corporations, which have failed to submit their GIS for three times consecutively or intermittently within a five-year period.

Section 177 of the RCC provides that the SEC may place a corporation under delinquent status should they fail to submit their reportorial requirements three times within a period of five years.

Failure to comply with reportorial requirements will subject the erring company to penalties ranging from monetary penalties, placement under delinquency status, and suspension and revocation of certificate of incorporation, as provided under the RCC.

Delinquent corporations, however, may still avail themselves of amnesty until Nov. 6. They have until December 4 to submit their requirements.

“We reiterate our reminder to corporations to avail of the SEC Amnesty Program now, to avoid getting their certificates of incorporation revoked, or to avoid being placed under delinquent status,” Aquino said.

Corporations that fail to avail of the amnesty will likewise incur higher fines, as the SEC will be implementing an updated scale of fines and penalties for reportorial requirements starting on Nov. 7.

Basic penalties for the late and non-filing of reports are set to increase by as high as 1,900 percent.