The Securities and Exchange Commission (SEC) announced that it is strictly enforcing its rules, reminding delinquent and inactive firms to submit the required documents for their businesses to avoid revocation of their licenses and termination from the commission.
SEC Chairperson Emilio B. Aquino said that the SEC will “strictly enforce the reportorial requirements of corporations provided under the Revised Corporation Code and other pertinent laws, rules and regulations.”
“Corporations are required to submit their annual financial statements, general information sheet, official contact details and other reports for good reasons. Among others, the pieces of information contained in these reports ensure transparency and accountability in a corporation’s dealings for the benefit of its stakeholders, particularly the investors, consumers and employees,” Aquino explained.
Last Oct. 26, the SEC issued Memorandum Circular No. 19, Series of 2023, or the “Guidelines on Declaration of Delinquent Status and Revocation of Certificate of Registration of Corporations under Sections 21 and 177 of the Revised Corporation Code.”
Among those included in the guidelines are corporations “which have failed to formally organize and commence their business within five years from the date of their incorporation; those which have commenced operations but became inoperative for at least five consecutive years; and corporations which have failed to file their reportorial requirements three times, consecutively or intermittently, within any five-year period.”
The SEC recently identified 22,403 ordinary firms that may have their certificates of incorporation revoked due to non-compliance with submission of their General Information Sheets (GIS).
Previously, the SEC also released a list of 298,335 ordinary corporations that have failed to submit their GIS three consecutive times or intermittently within five years.
Corporations that will not organize or begin its business operations within a five-year period upon receiving its certificate of incorporation will be tagged with a “revoked status.”
The status can only be nullified by filing a Petition to Lift Order of Revocation. If the petition is approved, the SEC will order the lifting of the delinquent or revoked status. However, petitions of corporations with pending intra-corporate disputes, particularly claiming ownership rights, will be accepted upon the legal resolution of the intra-corporate issue.
Meanwhile, a show cause order will be served to corporations that have been inactive for five years, and will be summoned by the commission to appeal its pending delinquent status.
Corporations with no valid reasons for their inoperation will be tagged with the delinquent status, wherein the commission will not process the firm’s “applications for amendment of articles of incorporation, amendment of license, or conversion to one person corporation, among other similar transactions.”
They will be given two years to resume operations upon receiving the Order of Delinquency. They must submit income tax returns, mayor’s or business permits, contracts, and receipts for payment of real estate tax, and other documents.
Moreover, corporations that have failed to file financial statements (FS) or their GIS three times consecutively or inconsistently within five years will be placed under the delinquent status. They will have six months “to submit, as applicable, their audited FS, GIS, director or trustee compensation report, and director or trustee appraisal or performance report, and the standards or criteria used to assess each director or trustee.”
Failure to comply with the requirements results in receiving the revoked status in the commission’s records.
To assist corporations in these processes, the SEC has an amnesty program that eligible corporations can avail of through accepting online Expression of Interest form on their SEC Electronic Filing and Submission Tool (eFAST) accounts, and paying the amnesty fee and petition fee.
Firms must submit their latest due GIS and AFS on eFAST. Suspended and revoked corporations must also submit their petitions to lift their suspension or revocation.
Additional requirements must be passed by suspended and revoked corporations, including copies of certificates of incorporation, latest mayor’s or business permits, and certificates of registration with the Bureau of Internal Revenue (BIR).
Submissions must be directed to the SEC Company Registration and Monitoring Department or to the nearest SEC Extension Office initially through email.