11,600 firms face sanctions — SEC

The Securities and Exchange Commission (SEC) has warned 11,677 corporations to avail themselves of its Enhanced Compliance Incentive Plan (ECIP) or risk the suspension of their corporate registration for failing to meet reportorial requirements.

SEC published a list of corporations being evaluated for possible suspension of their certificates of incorporation due to their failure to submit annual financial statements (AFS) and general information sheets (GIS) for eight consecutive years, from 2015 to 2022.

As per the Revised Corporation Code of the Philippines (RCC), all registered corporations are required to submit their AFS and GIS annually.

The RCC also provides that the SEC may classify corporations as “delinquent” if they fail to file these reports three times within five years, either consecutively or intermittently. Delinquent corporations have two years to comply, after which their registration will be revoked.

The SEC reiterated its authority under the RCC, Presidential Decree 902-A, and the Securities Regulation Code to suspend or revoke a corporation’s registration for failure to comply with legal requirements.

Apply for ECIP

To address widespread non-compliance, the SEC is encouraging delinquent corporations to apply for the ECIP. The program offers significantly reduced penalties for corporations that settle their obligations.

The deadline for ECIP applications, initially set for November 30, has been extended to 31 December. Non-compliant corporations can pay a flat rate of P20,000 to settle their fines and penalties.

Corporations with suspended or revoked certificates of incorporation can pay 50 percent of their assessed penalties plus a P3,060 petition fee to lift the suspension or revocation.

Eligible corporations must submit their Expression of Interest through the SEC’s Electronic Filing and Submission Tool and complete pending AFS and GIS filings by the end of the month. Additional documents may be required for suspended or revoked entities.

Corporations that have already availed of the ECIP are exempt from further notices. The SEC will finalize the list of suspended corporations after the program ends.

Non-compliant corporations may also face steep fines under the new penalty rates implemented through SEC MC 6, Series of 2024, which raised fines by 900 percent to 1,900 percent compared to previous rates.

Corporations that completely fail to file their AFS and GIS now face even harsher penalties.

A similar stock corporation with retained earnings of up to P100,000 will pay P10,000 per report plus P1,000 for each month of delay, amounting to a total penalty of P44,000.