Micro businesses no longer have to shoulder the cost of audited financial statements, a move that could free up resources for growth and ease the burden of red tape.

Citing Memorandum Circular No. 4, Series of 2026, issued on January 20, the Securities and Exchange Commission (SEC) said Wednesday it has revised the rules under Revised Rule 68 of the Securities Regulation Code. 

Under the new threshold, both stock and nonstock corporations with total assets or liabilities of up to P3 million are now exempt from submitting audited financial statements, up from the previous P600,000 limit.

“This reform recognizes the realities faced by micro enterprises, which often operate with very limited resources. By allowing the submission of certified financial statements in lieu of audited ones, we are making compliance more proportionate, allowing them to redirect their resources to growing their business,” SEC Chairperson Francis Lim said.

“At the same time, the new threshold preserves accountability by requiring management to formally assume responsibility for the accuracy and integrity of their financial statements, ensuring that regulatory oversight remains firmly in place,” he added.

The higher threshold kicks in for fiscal years ending on or after 31 December 2025. Companies with fiscal years ending before this date will follow the old rules.

Companies that fall below the audit threshold must submit financial statements with a Statement of Management’s Responsibility (SMR). 

Stock and nonstock corporations must have their SMR signed under oath by the chairman or board, president or CEO, and treasurer or CFO, all authorized by the board. For one-person corporations, only the president and treasurer must sign.

Signatories are fully responsible for the accuracy and truthfulness of the statements. Misleading or incomplete submissions can trigger penalties under the Securities Regulation Code and the Revised Corporation Code, though the SEC can still require audits when needed to protect investors or public interest.

The new threshold doesn’t apply to large or publicly significant firms.

The SEC classifies entities into three groups based on size and function. 

Group A comprises public companies with at least P50 million in assets and 200 or more shareholders, as well as listed issuers and stock exchanges. 

Group B covers investment houses, brokers, and selected registered issuers.

Meanwhile, Group C includes financing companies, lending firms above specified asset thresholds, and foundations holding fund balances exceeding P25 million.