SEC grants incentive for corporations to comply with reportorial requirements

The Securities and Exchange Commission (SEC) has rolled out an incentive program that allows corporations, which have failed to submit their annual reports on time, to restore their good standing.

Following the success of the amnesty program it implemented last year, the Commission on August 30 issued SEC Memorandum Circular (MC) No. 13, Series of 2024, providing for the Enhanced Compliance Incentive Plan (ECIP).

“As a regulator, the SEC is committed to ensuring that entities under its supervision are compliant with all the laws, rules and regulations applicable to them,” Chairperson Emilio B. Aquino said.

“After the SEC Amnesty Program, the Commission has strictly imposed higher revised fines and penalties to encourage strict and habitual compliance with reportorial obligations and good corporate housekeeping. With the launch of ECIP, we are affording corporations under our supervision another opportunity to remedy their violations, at lower fees, and restore their good standing.”

Under ECIP, non-compliant corporations, including those placed under “delinquent” status, may settle their unassessed or unpaid fines and penalties for P20,000 only.

Meanwhile, suspended and revoked corporations, including those with pending petitions for the lifting of the suspension or revocation order issued against them, may settle only 50% of their assessed fines and pay the petition fee of P3,060.

The significantly lower rates apply to fines and penalties imposed on corporations for the following violations:

• Non-filing of General Information Sheet (GIS) for the latest and prior years;
• Late filing of GIS for the latest and prior years;
• Non-filing of Financial Statements (AFS), whether audited or certified, including fines for the non-filing of the attachments required for certain corporations, for the latest and prior years; and
• Late filing of AFS, including fines for the late filing of the attachments required for certain corporations, for the latest and prior years.

ECIP also covers violations under SEC Memorandum Circular No. 28, Series of 2020, which requires all entities registered with the Commission to designate and submit their official and alternative email addresses and mobile phone numbers.

Applications of non-compliant, suspended and revoked corporations for ECIP may be submitted starting September 2, 2024 and until November 30, 2024.

Eligible corporations

Stock and nonstock corporations, including branch offices, representative offices, regional headquarters, and regional operating headquarters of foreign companies, may avail of the ECIP, except corporations:

• whose securities are listed on the Philippine Stock Exchange (PSE);
• whose securities are registered but not listed on the PSE;
• considered as public companies;
• with intra-corporate dispute;
• with disputed GIS;
• with expired corporate term; and
• covered under Section 17.2 of Republic Act No. 8799, or the Securities Regulation Code.

Non-compliant corporations include those that have not submitted their GIS and AFS intermittently or consecutively in previous years, and/or have not complied with MC 28.

Delinquent corporations, meanwhile, are those that have failed to file their AFS or GIS for three times, consecutively or intermittently, within a period of five years, as provided under SEC Memorandum Circular No. 19, Series of 2023.

Requirements

Payment of the ECIP fee, in itself, does not automatically confer “compliant” status to availing corporations or lift the suspension and revocation of their certificates of incorporation. Applicants are required to submit the corresponding supporting documents.

For non-compliant and delinquent corporations, they must submit their latest reportorial requirements (i.e., AFS and GIS) due at the time of the application through the SEC Electronic Filing and Submission Tool (eFAST) and submit their official and alternate email addresses and mobile phone numbers through the MC28 Submission Portal.

For corporations whose certificates of incorporation have been suspended or revoked, they must submit a Petition to Lift Order of Suspension/Revocation of Certificate of Registration, along with supporting documents such as their latest due AFS and GIS, MC28 compliance, Secretary’s Certificate of No Intra-Corporate Controversy, latest mayor’s or business permit, and certificate of registration with the Bureau of Internal Revenue.

Should an applicant-corporation fail to submit the complete set of requirements within the prescribed period, the ECIP fees, as well as the initial petition fee of P3,060 applicable to suspended and revoked corporations, shall be forfeited.

Application process

To avail the benefits of ECIP, a duly authorized representative or resident agent of a corporation must file an Online Expression of Interest Form and Application for Availment of ECIP through eFAST.

After submission of the EOI, eFAST will generate a Payment Assessment Form (PAF) reflecting the fixed ECIP amount of P20,000 for non-compliant and delinquent corporations.

The non-compliant or delinquent corporation must settle the amount through the Electronic System for Payment to SEC (eSPAYSEC) which will generate an electronic official receipt.

Once the payment is settled, the non-compliant or delinquent corporation must submit its latest due AFS and the required attachments, if any, and GIS. Subsequently, a confirmation of payment will be sent to its registered email address.

Meanwhile, revoked and suspended corporations will have to accomplish the EOI on eFAST and will be directed to pay the petition fee first via eSPAYSEC.

After paying the petition fee, the revoked or suspended corporation must submit its latest due AFS and the required attachments, if any, and GIS through eFAST.

The suspended or revoked corporation must also submit the Petition to Lift Order of Suspension/Revocation, alongside the supporting documents, to the designated emails addresses depending on its principal address.

The revoked or suspended corporation must then wait for the Payment Assessment Form (PAF) indicating the 50% assessed fines and penalties, which will be sent through their registered email address, as well as for the verification of its corporate status.

Once payment is complete and the submitted documents have undergone monitoring and evaluation, the suspended or revoked corporation will receive payment confirmation and its corporation status will be updated, subject to the processing and issuance of the Lifting of Revocation and/or Order of Revival.

For a definitive guidance in availing of the Enhanced Compliance Incentive Plan, please read the full text of SEC Memorandum Circular No. 13, Series of 2024 on the SEC website.