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SEC PH Would Raise Minimum Penalties for Late, Non-Filing of Reports By Up To 1,900% and Advise Corporations to Apply for Amnesty
The Securities and Exchange Commission (SEC) is directing corporations to comply with their reportorial requirements on time, as the Commission is set to raise basic penalties on the late and non-filing of reports by as high as 1,900%.
The Commission is set to 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.
“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,” he added.
Under the proposed rates, domestic stock corporations with retained earnings of not more than PhP 100,000 will incur a basic penalty of PhP 5,000 for the late filing of their GIS or AFS, plus PhP 1,000 for every month of continuing violation. This represents a 900% increase from the current rate of PhP 500.
The same penalty applies to domestic non-stock corporations with a fund balance or equity of not more than PhP 100,000, a 1,900% jump from the current penalty of PhP 250.
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 PhP 100,000 will be slapped with a basic penalty of PhP 10,000, plus PhP 1,000 per month of continuing violation.
The penalty for non-compliance with MC 28 will be set at PhP 20,000, double the current rate of PhP 10,000.
After the amnesty program, the Commission will proceed with the full implementation of the new rates.
Amnesty Deadline Looms
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 PhP 5,000 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 PhP 3,060.
Non-compliant domestic stock corporations with retained earnings of not more than PhP 100,000 stand to save at least PhP 25,000 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 PhP 30,000, versus the PhP 5,000 amnesty.
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Hi, I'm Ralph Gregore Masalihit!
An RFP Graduate (Registered Financial Planner Institute - Philippines).
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