Delinquent PH corporations face termination of operations

MANILA  -The Securities and Exchange Commission (SEC) is preparing to cancel the papers of thousands of corporations as it intensifies a crackdown on firms that have failed to submit the required annual financial statements (AFS) and general information sheets (GIS).

The SEC issued a notice on Oct. 12 warning 22,403 corporations that their certificates of incorporation would be revoked following the non-submission of the GIS within five years from when they were established. Under Section 21 of the Revised Corporation Code of the Philippines (RCC), incorporation documents of companies that fail to comply “shall be deemed revoked as of the day following the end of the five-year period.”

Moreover, the SEC also warned 298,335 corporations that failed to submit their GIS for three times consecutively or intermittently within a five-year period. Section 177 of the RCC provides that the SEC may place a corporation under delinquent status should they fail to submit their reportorial requirements three times, consecutively or intermittently, within a period of five years.

“Corporations’ timely submission of their AFS, GIS, and other reportorial requirements is vital in maintaining a healthy and vibrant corporate sector, as this helps us identify active versus inactive corporations, enhance and organize the Commission’s digital database, and protect the public from fraud,” SEC Chair Emilio B. Aquino said in a statement on Friday.

The increased supervision was in line with standards set by international bodies such as the Financial Action Task Force “to ensure relevant corporate information, including beneficial ownership information in the GIS, is readily available within the Commission.”

“We reiterate our reminder to corporations to avail of the SEC Amnesty Program now, to avoid getting their certificates of incorporation revoked, or to avoid being placed under delinquent status,” Aquino said.

The amnesty deadline was extended anew to Nov. 6 this year, while the submission of the requirements was moved to Dec. 4.

Corporations that fail to avail of the amnesty will likewise incur higher fines. The SEC will be implementing an updated scale of fines and penalties for reportorial requirements on Nov. 7, with basic penalties for the late and nonfiling of reports set to increase by as high as 1,900 percent, according to the corporate regulator.