The Securities and Exchange Commission (SEC) is urging companies to be more diligent in complying with their reportorial requirements instead of complaining about the huge increase in fines and penalties recently imposed by the commission after a lengthy amnesty period.
“We’re not happy penalizing them at all. It’s an exercise of good corporate governance, submitting your financial statements, (and) general information sheet to your regulators, complying with orders of the SEC. That’s good corporate governance,” said SEC Chairperson Emilio B. Aquino.
He noted that, “There’s a very low compliance level for us. Before it’s 20 percent and (recently) we were able to hit more than 50 percent. Now at 66 percent. We hope they’re going to increase it. If we can go for 100 percent why not?”
“That is for everyone. A lot of our businesses are not even preparing their financial statements that is why they are not submitting. The language of business is your financials, accounting. If you don’t, get to account, how can you even manage? That is why their compliance is very critical,” added Aquino.
In late March, the SEC issued Memorandum Circular No. 6, Series of 2024, which formally imposes higher fines and penalties for the late and non-filing of reportorial requirements by companies starting, April 1. This is the first time the SEC has raised fines and penalties in 22 years.
Under the new schedule of fines, domestic stock corporations and one person corporations (OPC) and with retained earnings of not more than P100,000 will incur a basic penalty of P5,000 for the late filing of their general information sheet (GIS) or annual financial statements (AFS), plus P1,000 for every month of continuing violation.
The same penalty applies to domestic non-stock corporations with a fund balance or equity of not more than P100,000.
Meanwhile, non-filing of GIS or AFS by OPCs and domestic stock and non-stock corporations with retained earnings and fund balance/equity, respectively, of not more than P100,000 will incur a basic penalty of P10,000, plus P1,000 per month of continuing violation.
“Foreign stock corporations with accumulated income/fund balance/members’ equity of less than P100,000 will incur a fine of P10,000 plus P 6,000 late penalty, if their report is filed after 30 days, or P12,000 penalty, if filed after 60 days,” the SEC said.
The base penalty for foreign non-stock corporations with less than P100,000 accumulated income/fund balance/members’ equity is at P5,000, plus P 6,000 penalty if filed after 30 days, or with an additional P12,000 penalty if filed after 60 days.
A fine of P10,000, plus a penalty of P12,000, shall be imposed for the non-filing of reports by both foreign stock and non-stock corporations with accumulated income/fund balance/members’ equity of less than P100,000.
The SEC at the same time said that companies that fail to provide create and designate an e-mail account address and cellphone number for transaction with its office under SEC Memorandum Circular (MC) No. 28-2020 will also be fined P20,000, double the previous rate of P10,000.
The SEC said that an OPC and stock or non-stock domestic corporation is considered late in filing if its report is filed after the due date, but still within a year after the prescribed deadline for filing.
If the report is filed more than one year from the prescribed period, the penalty shall be the base fine for non-filing, and the computation of the monthly penalty shall not exceed 12 months.
“For stock and non-stock foreign corporations, late filing means a report was filed after 30 days from the anniversary date of the issuance of the SEC license for GIS or from the prescribed deadline for AFS,” the SEC said.
Should a filing be made after 60 days, fines shall be based on the base fine of for non-filing, and the computation of the monthly penalty shall not exceed 12 months.