SEC to raise penalty for late reports by up to 1,900%
The Securities and Exchange Commission (SEC) is set to raise basic penalties on the late and non-filing of reports by as high as 1,900 percent to compel corporations to comply with their reportorial requirements on time.
The SEC will release a new scale of fines and penalties for the late and non-filing of the General Information Sheet (GIS) and Annual Financial Statement (AFS), as well as non-compliance with SEC Memorandum Circular No. 28, Series of 2020 (MC 28), by corporations and associations.
The submission of reportorial requirements is required under Republic Act No. 11232, or the Revised Corporation Code.
“With the stricter penalties, we hope corporations will be more mindful of submitting their annual reports on time, as these are vital in ensuring the efficient functioning of the Philippine corporate sector,” SEC Chairperson Emilio B. Aquino said.
He added that, “faithful compliance allows the SEC to manage our corporate database better and determine which companies are active or not, in turn allowing us to purge inactive corporations and protect the public from fraudulent entities.”
Under the proposed rates, domestic stock corporations with retained earnings of not more than P100,000 will incur a basic penalty of P5,000 for the late filing of their GIS or AFS, plus P1,000 for every month of continuing violation. This represents a 900 percent increase from the current rate of P500.
The same P5,000 penalty applies to domestic non-stock corporations with a fund balance or equity of not more than P100,000, a 1,900 percent jump from the current penalty of P250.
Meanwhile, non-filing of GIS or AFS by domestic stock corporations and non-stock corporations with retained earnings and fund balance/equity, respectively, of not more than P100,000 will be slapped with a basic penalty of P10,000, plus P1,000 per month of continuing violation.
The penalty for non-compliance with MC 28 will be set at P20,000, double the current rate of P10,000.
After its amnesty program, the Commission will proceed with the full implementation of the new rates.
To avoid the higher penalties, the SEC is encouraging non-compliant and suspended or revoked corporations to take advantage of the amnesty program available until September 30.
The amnesty program, issued through SEC Memorandum Circular No. 2, Series of 2023, comes in the form of a reduction of fees which corporations can apply for through their Electronic Filing and Submission Tool (eFAST) accounts.
Non-compliant corporations who avail of the amnesty will pay only P5,000 for their late or non-filed reports, regardless of the number of years they failed to comply.
On the other hand, suspended or revoked corporations will be allowed to pay only half of the actual penalties they incurred, plus a petition to lift order of revocation fee of P3,060.
Non-compliant domestic stock corporations with retained earnings of not more than P100,000 stand to save at least P25,000 should they avail the amnesty. This is based on the fees for the late filing of GIS and AFS, as well as non-compliance with MC 28, equivalent to P30,000, versus the P5,000 amnesty.