SEC puts foundations under one rulebook

The Securities and Exchange Commission (SEC) wants to consolidate foundations under one rulebook, cutting through a maze of scattered requirements while giving the regulator a clearer view of how the sector operates and uses its funds.

In a statement on Wednesday, the SEC said it issued draft omnibus rules and guidelines on 29 September that would consolidate requirements currently spread across different laws, regulations, memorandum circulars, and other Commission issuances.

The proposed overhaul is expected to ease compliance for foundations that currently navigate multiple sets of rules for their organizational, reporting and continuing obligations.

“Through a single framework, the proposed Rules provide foundations with a single, current reference for their organizational, reportorial, and continuing compliance obligations, including the necessary forms, templates, instructions, and procedures,” the SEC said.

The rules would apply to all foundations registered with or applying for registration with the SEC.

Under the proposal, applicants must be organized as non-stock, non-profit corporations, carry the word “Foundation” in their corporate name and maintain at least P1 million in paid-up capitalization.

The SEC is also seeking to simplify paperwork by replacing the older multi-document reporting requirement under the Revised Rule 68 of the Securities Regulation Code with three Simplified Non-Stock, Non-Profit Organization (NSPO) forms.

The forms would use simpler reporting items and instructions while requiring disclosures on operations, governance, programs, projects and financial utilization.

Foundations with total assets or liabilities exceeding P3 million would still be required to submit audited financial statements. Those at or below the threshold may submit unaudited financial statements signed under oath by designated officers.

The proposal also consolidates deadlines for other filings. Membership books must be registered with the SEC within 30 days of incorporation, while general information sheets must be filed within 30 days after the annual meeting, or by 30 January of the following year if no meeting is held.

Simpler paperwork, however, does not mean lighter accountability.

Failure to file the required NSPO forms would carry a P5,000 fine for each year of non-compliance, while late filing would draw a P2,500 annual penalty.

The SEC is accepting public comments on the draft rules until 15 October.