The Securities and Exchange Commission is making it more compelling for companies to heed the reportorial mandate by increasing the schedule of fines and penalties for late and non-filing of annual reports.
Under proposed adjusted rates, the base penalty for each offense is raised by 20 percent and the monetary penalty on a per report and annual basis.
The agency on Wednesday issued for public comment the draft guidelines on the updated scale of fines for the late and non-submission of audited financial statements and general information sheet, as well as non-compliance with SEC Memorandum Circular No. 28, Series of 2020.
The proposed adjustments follow the granting of amnesty to non-compliant and suspended and revoked corporations under SEC Memorandum Circular No. 2, Series of 2023, which gave corporations a chance to avail of lower fines and penalties for the late and non-filing of their AFS, GIS, and MC 28 report.
The scale of penalties will be based on the retained earnings for domestic stock corporations, fund balance for domestic non-stock corporations, and accumulated income for foreign stock corporations, including branches, representative offices, and regional headquarters, as well as foreign non-stock corporations.
The proposed guidelines provide a base penalty for late filing domestic stock and non-stock corporations with retained earnings of less than P100,000 of P5,000 for the first offense and up to P9,000 for the fifth offense.
The SEC will also impose a P1,000 monthly fine for every month of continuing violation.
Non-filing will incur fines amounting to P10,000 for the first offense up to P18,000 for the fifth offense both domestic stock and non-stock corporations with retained earnings of less than P100,000. Continuing violation will result in an additional fine of P1,000 per month.
The base penalty for late filing by foreign stock corporations with accumulated income of less than P100,000 is P10,000 for the first offense, up to P18,000 for the fifth offense, plus P1,000 per month of continuing violation.
The fine is lower for foreign non-stock corporations with the same accumulated income, which will incur fines worth P5,000 for the first offense up to P9,000 for the fifth offense, plus P1,000 per month of continuing violation.
The penalty for non-filing by foreign stock and non-stock corporations is P10,000 for the first offense and up to P18,000 for the fifth offense.
A fine of P20,000 is imposed on those who fail to comply with MC 28. In addition, the SEC may declare a corporation delinquent for failure to comply three times consecutively or intermittently over five years. A fourth offense warrants a revocation.
