THE Securities and Exchange Commission (SEC) said over the weekend it may revoke the certificates of incorporation of more than 320,000 companies or place them under delinquent status over their alleged failure to submit reports.
The SEC said in separate advisories that 22,403 ordinary corporations may have their certificates of incorporation revoked for failure to submit general information sheet (GIS) within five years from the date of incorporation.
It said another 298,335 firms may be placed under delinquent status for their failure to submit their GIS three times, consecutively or intermittently, within a five-year period.
All companies are required to submit the GIS—a document containing the company’s current status, including the names and addresses of its incorporators, stockholders, directors, trustees and officers.
“Corporations’ timely submission of their AFS [annual financial statement], 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 chairperson Emilio Aquino said.
Section 21 of the Revised Corporation Code (RCC) provides that if a corporation does not formally organize and commence its business within five years from the date of its incorporation, its certificate of incorporation will be deemed revoked as of the day following the end of the five-year period.
Section 177 of the RCC also 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.
The SEC advised the affected companies to avail its amnesty program which would reduce the fines and penalties they needed to pay for the late and non-filing of reports.
The amnesty program, which has been extended several times to allow company companies to comply, is slated to end on Nov. 6, 2023.
“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.
Aquino said the SEC planned to strictly enforce and implement higher penalties for non=compliance with reportorial requirements.
The SEC said the increased supervision of registered firms is aligned with standards set by international standard-setting bodies such as the Financial Action Task Force (FATF) to ensure relevant corporate information, including beneficial ownership information in the GIS, is readily available within the commission.
This also forms part of the SEC’s efforts to strengthen the effectiveness of its anti-money laundering/combatting the financing of terrorism (AML/CFT) framework to get the Philippines out of FATF’s so-called grey list, it said.