The Securities and Exchange Commission (SEC) has made it more compelling for corporations to heed its admonitions by raising its penalty schedule for corporate infractions a hefty 900 percent.
Non-compliant entities, basically those who are not only tardy but actually fail to submit the reportorial documents will now pay a basic fine of P100,000 instead of only P5,000 at present.
The basic penalty is on top of another P1,000 fine for each day of non-compliance.
Regulations require SEC registered entities to submit not only their annual financial statements but also their general information sheet or GIS which details the composition of their board of directors, capital structure, and changes in stock ownership, among others.
According to the SEC, the new penalty schedule will begin to bite beginning October this year under Memorandum Circular 28 under authority of Republic Act 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 chief 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 said.
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 penalty applies to domestic non-stock corporations with a fund balance or equity of not more than P100,000, a 19 times jump from the current penalty of P250. The 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 the circular is set at P20,000 or double the current rate of only P10,000.
After the amnesty program, the SEC will proceed with the full implementation of the new penalty schedule.
The SEC is encouraging the non-compliant and suspended or revoked corporations to take advantage of the amnesty program available until September 30.
The amnesty program comes in the form of a fee reduction that corporations may apply for through their electronic filing and submission tool (eFAST) accounts.
Non-compliant corporations who avail of the amnesty pay only P5,000 for late or non-filed reports regardless of the number of years of failed compliance. Corporations with suspended or revoked licenses are allowed to pay half of the actual penalties incurred plus a petition to lift the order of revocation fee of P3,060.
Non-compliant domestic stock corporations with retained earnings of not more than P100,000 stand to save P25,000 should they avail of the amnesty.
This is based on fees for the late filing of GIS and AFS as well as non-compliance with MC 28 equivalent to P30,000, versus only P5,000 allowed under amnesty terms.
