Stamping out red tape long coming
‘Corporations’ reportorial and other regulatory requirements provide vital information and insights to policymakers, regulators, law enforcers, businesses, investors, and other stakeholders.’
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‘Corporations’ reportorial and other regulatory requirements provide vital information and insights to policymakers, regulators, law enforcers, businesses, investors, and other stakeholders.’
Red is a significant symbol to celebrate the start of the Christmas festivities all over the world. Yet, when it comes to businesses, red tape is a major obstacle to investment in the Philippines.
It is estimated that businesses spend an average of 100 days and at least 11 percent of their revenue on compliance with government regulations.
Primarily, this set a negative precedent across local businesses, which, in turn, made it difficult for them to compete in the global marketplace — not to mention its effect on dwindling foreign investment.
The Anti-Red Tape Authority or ARTA is a government agency responsible for reducing red tape in the Philippines.
It was created in 2011 by President Benigno Aquino III to make it easier for businesses to start and operate in the country.
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ARTA has made significant progress in reducing red tape in the Philippines. In 2016, the country ranked 109th out of 190 countries in the World Bank's Doing Business report. By 2020, the Philippines had climbed to 95th place.
ARTA's efforts have been praised by businesses and investors. In a 2018 survey by the Philippine Chamber of Commerce and Industry, 90 percent of respondents said that ARTA had made it easier for them to do business in the Philippines.
ARTA is still a relatively young agency, and there is still more work to be done. However, it has made significant progress in reducing red tape and making the Philippines a more business-friendly environment.
Notably, in the local capital market, the Securities and Exchange Commission or SEC made it easier for corporations to comply with their reportorial requirements by integrating certain reportorial requirements with the registration process and providing for the automatic enrollment of newly registered corporations in the Commission's online submission portal.
Last 18 December, the Commission issued SEC Memorandum Circular 23, Series of 2023, which provides for the Integration of newly registered corporations' compliance with SEC Memorandum Circular 28, Series of 2020 or MC 28 and SEC Memorandum Circular No. 1, Series of 2021 or MC 1 with the SEC Electronic Simplified Processing of Application for Registration of Company or eSPARC and the SEC Electronic Filing and Submission Tool or eFAST.
Corporations' reportorial and other regulatory requirements provide vital information and insights to policymakers, regulators, law enforcers, businesses, investors, and other stakeholders," SEC Chairperson Emilio Aquino said.
"In this light, we are making it easier for corporations to comply with these requirements, as well as for stakeholders to access and use them to inform their decisions and actions," he added.
MC 28 requires every corporation, association, partnership and person under the commission's jurisdiction and supervision to create and designate an official email address and cellphone number.
Meanwhile, MC 1, which provided the guidelines in preventing the misuse of corporations for illicit activities through measures designed to promote Transparency of Beneficial Ownership, requires incorporators to disclose with the SEC the person/s on whose behalf the registration of the corporation was applied for.
Nominee incorporators or applications for registration, as well as the nominee directors or trustees and nominee shareholders of the corporation, must likewise disclose to the Commission their respective nominators or principals.
The submission of such information forms part of the Commission's efforts to guard against the misuse of the corporate vehicle against money laundering and terrorist financing activities by having access to adequate, accurate, and timely information on beneficial ownership and control of corporations.
Streamlined registration
With the new measures in place, new corporations will no longer have to submit separate reports for their official and alternate email addresses and mobile phone numbers required under MC 28, as well as information on their beneficial owners under MC 1.
They will be required to provide such information during the registration process either through eSPARC or through its subsystem, One-Day Submission and E-registration of Companies or OneSEC.
Previously, new corporations were mandated to comply with MC 28 by submitting documents through the online MC 28 portal within 30 days of receipt of their certificate of registration, license, or authority.
They also had to comply with MC 1 separately within 30 days of receipt of their incorporation papers.
Those with pending applications before the effectivity of MC 23 may opt to revert their pending applications and resubmit them with their MC 28 and MC 1 compliance.
Automatic enrollment in eFAST
In addition, new corporations shall now be automatically enrolled in eFAST, the Commission's online system for submission of reportorial requirements.
New corporations shall be given temporary login credentials for their eFAST company accounts through the email addresses they have provided during the registration process.
Following the launch of eFAST in 2021, all registered corporations have been required to submit their annual reportorial requirements such as the General Information Sheet and annual financial statements using eFAST.
Corporations previously had to undergo a separate enrollment process for their company accounts and authorized filer accounts before they could submit their reports using eFAST.
The SEC has continuously improved its processes to ensure the ease of forming a corporation and complying with regulatory requirements.
In 2021, the Commission launched eSPARC, allowing new businesses to complete their registration process in three days, down from 34 days consisting of 16 steps previously. The process could be even faster through OneSEC, where one applicant has posted a record of one minute and 14 seconds from the start of the application to the receipt of a digital Certificate of Incorporation.
In the same year, the Commission launched eFAST to allow corporations to submit their reports completely online. With eFAST, corporations no longer must submit hard copies of their reports to the SEC.
With these improvements, eSPARC has recently been hailed as one of the best company registration systems in the world by the Corporate Registers Forum, a global organization of corporate registries, in a conference held in Malta in October.
Aquino was also recognized as the first Public Sector Innovator in the 2023 Mansmith Innovation Awards by research consultancy Mansmith and Fielders Inc., and as CEO of the Year in the Future Enterprise Awards 2022 Philippines by IDC Philippines, among others, for the digital transformation of the Commission's services.
Creating a culture of transparency and accountability in the government are also important to instill confidence in businesses that their rights will be protected.
Likewise, it will make it easier for businesses to start and operate, which will create jobs and boost economic growth. It will also make the Philippines more attractive to foreign investors, which will bring in much-needed capital.
