SEC adopts Enhanced Compliance Incentive Plan for Delinquent Entities
Corporations in the Philippines are required to submit timely reportorial requirements as mandated by the Revised Corporation Code of the Philippines (RCC). Section 177 of the RCC states that Corporations may be deemed delinquent if it fails to submit these requirements three times—whether consecutively or intermittently—within a span of five years.
Sec 21 of the RCCP provides for the effects of non-use of Corporate Charter and Continuous Inoperation whereas Section 177 provides for the Reportorial Requirements of Corporations.
Sec. 177 indicates that the SEC may classify a corporation as delinquent if it fails to submit reportorial requirements for 3 consecutive or intermittent times within 5 years.
On 30 August 2024, the SEC released Memorandum Circular (MC) No. 13, series 2024 (MC 13) or the “Enhanced Compliance Incentive Plan” (ECIP). This memorandum seeks to further the objectives of the 2023 Amnesty Program, offering businesses a cost-effective way to stay compliant with regulatory requirements.
Covered Violations
- Non-Filing of the General Information Sheet (GIS) for the latest and prior years;
- Late Filing of the GIS for the latest and prior years;
- Non-filing of Financial Statements (AFS), whether audited or certified, including fines for its attachments [e.g., Certificate of Existence of Program/Activity (COEP), Non-Stock and Non-Profit Organization (NSPO) Forms] for the latest and prior years; and.
- Late filing of AFS, including fines for its attachments (e.g., COEP, NSPO Forms), for the latest and prior years.
Eligible Corporations
Stock and Non-Stock Corporations, including Branch Offices, Representative Offices, Regional Headquarters, and Regional Operating Headquarters of Foreign Companies.
Exceptions:
- Corporations whose securities are listed on the Philippines Stock Exchange (PSE);
- Corporations whose securities are registered but not listed on the PSE;
- Corporations considered as Public Companies;
- Corporations with intra-corporate disputes;
- Corporations with disputed GIS;
- Corporations with expired corporate terms; and
- Other Corporations covered under Sec. 17.2 of RA No. 8799 or the “Securities Regulation Code.
ECIP Fees for Non-Compliance
Corporations that have failed to submit their GIS and AFS, either intermittently or consecutively, in previous years, and/or have not complied with MC 28.
Violation | ECIP Fee |
1. Late and Non-Filing of GIS |
|
2. Late and Non-Filing of AFS | |
3. Non-compliance with MC28 |
These rates shall apply provided that the non-compliant corporation or entity submits the latest reportorial requirement and complies with MC 28 through the MC 28 Submission Portal.
ECIP Fees for Suspended or Revoked Certificates of Incorporation
Corporations whose Certificates of Incorporation have been suspended or revoked for failure to file their reportorial requirements for more than five years.
Violation | ECIP Fee |
1. Late and Non-Filing of GIS |
50% of assessed Fines*
*Covers violations stated in Section 1 of MC No. 13 - 2024; basis of the computation is derived from the retained earnings/fund balance of submitted FS. |
2. Late and Non-Filing of AFS | |
3. Non-compliance with MC28 | |
4. Petition fee |
|
The ECIP fee applies only to violations related to late submissions. The penalties for erroneous entries (i.e., content) in reportorial documents will be addressed separately.
MC 13 emphasizes that the payment of the ECIP fee does not automatically reinstate a corporation's status following suspension or revocation. Corporations with suspended or revoked registrations, as well as Financing Companies (FCs) and Lending Companies (LCs) with Certificates of Authority (CAs), must still file a Petition to Lift the Order of Suspension/Revocation of their Certificate of Registration and submit the supporting documents detailed in the subsequent sections of the Circular.
Forvis Mazars Corporate Secretarial Services
Following up with the legal and regulatory frameworks in the Philippines can be a tedious task to manage. At Mazars, we can take care of every aspect of your corporate secretarial requirements in every jurisdiction in which you operate. We take pride in the knowledge that by helping you stay compliant; we play a part in helping you flourish. The advice and support of our dedicated professionals will ensure you can meet and exceed your compliance obligations.
Our corporate secretarial teams can manage all your compliance milestones, allowing your team to focus on their core duties. Our professionals can help you meet regulatory, legal and entity governance obligations and ensure complete compliance for your company so that you can allocate your resources to more productive tasks.
We believe that companies that can keep up with their statutory compliance obligations often benefit from improved performance and can better control procedures and processes in their business. Secretarial support can be critical to reducing risks and limiting exposure to the costs of compliance default, such as fines, prosecution, or director disqualifications.
For more details on how we can assist, you may reach out to Atty Joanne L. Ranada, Principal for Corporate Services of Forvis Mazars in the Philippines via email at joanne.ranada@mazars.ph. Our corporate secretarial teams can manage all your compliance milestones, allowing your team to focus on their core duties. Our professionals can help you meet regulatory, legal and entity governance obligations and ensure complete compliance for your company so that you can allocate your resources to more productive tasks.