The Securities and Exchange Commission (SEC) has eased compliance rules for micro enterprises, exempting more small businesses from submitting audited financial statements as part of their regular reporting.
Under Memorandum Circular No. 4, Series of 2026, stock and nonstock corporations with total assets or liabilities of up to ₱3 million are no longer required to file audited financial statements. Previously, the exemption applied only to firms with assets or liabilities below ₱600,000.
The SEC said the move is a form of regulatory forbearance aimed at recognizing the limited resources of micro enterprises and reducing the cost of compliance. Instead of audited reports, covered firms may now submit certified financial statements, provided these are accompanied by a sworn statement of management responsibility.
SEC chairman Francis E. Lim said the reform allows small businesses to redirect time and money toward growing their operations, while still maintaining accountability. Management will remain fully responsible for the accuracy and completeness of the financial statements submitted.
The higher threshold will apply to financial statements for fiscal years ending on or after December 31, 2025. Earlier fiscal years will continue to follow the old threshold.
To ensure oversight, the statement of management responsibility must be signed under oath by key officers, including the chairman, president or chief executive officer, and treasurer or chief financial officer, or by the president and treasurer in the case of one person corporations.
The exemption does not cover corporations classified under Groups A, B, and C of the Securities Regulation Code, including publicly listed companies, large financial institutions, and entities with significant public interest obligations.
The SEC said the policy strikes a balance between easing regulatory burdens on the smallest firms and preserving safeguards for investors and the public.
