By Revin Mikhael D. Ochave, Reporter
THE SECURITIES and Exchange Commission (SEC) has launched an incentive program that allows noncompliant and delinquent corporations to settle fines and penalties at “significantly” lower rates.
Applications for the Enhanced Compliance Incentive Plan (ECIP) can be submitted to the regulator until Nov. 30, the SEC said in an e-mailed statement.
The SEC issued Memorandum Circular (MC) No. 13 on the ECIP, which allows corporations that did not submit annual reports on time “to restore their good standing” by settling fines and penalties.
The new plan comes after more than 81,700 companies availed of the SEC Amnesty Program and complied with reportorial requirements in 2023.
“After the SEC amnesty program, the commission has strictly imposed higher revised fines and penalties to encourage strict and habitual compliance with reportorial obligations and good corporate housekeeping,” SEC Chairperson Emilio B. Aquino said.
“With the launch of ECIP, we are affording corporations under our supervision another opportunity to remedy their violations, at lower fees, and restore their good standing,” he added.
The ECIP covers unassessed and uncollected fines and penalties for violations such as the late and non-filing of general information sheet (GIS) for the latest and prior years, as well as the late and non-filing of annual financial statement (AFS).
It also applies to corporations that have failed to designate and submit their official and alternative e-mail addresses and mobile phone numbers as required under MC No. 28.
Under the ECIP, noncompliant and delinquent corporations could settle their unassessed or unpaid fines and penalties for P20,000. This rate will apply only if the corporation or entity will submit the latest reportorial requirement due and comply with MC No. 28.
Noncompliant corporations refer to those that have not submitted their GIS and AFS intermittently or consecutively in previous years.
Corporations are deemed delinquent if they fail to file their AFS or GIS three times, consecutively or intermittently, within a five-year period.
The ECIP also covers suspended and revoked corporations, including those with pending petitions for the lifting of the suspension or revocation order issued against them. They only need to settle 50% of the assessed fines and pay a petition fee of P3,060.
Entities that are excluded from the ECIP include corporations whose securities are listed on the Philippine Stock Exchange (PSE); whose securities are registered but not listed on the PSE; considered as public companies; with intra-corporate dispute; with disputed GIS; with expired corporate term; and those covered under Section 17.2 of Republic Act No. 8799 or the Securities Regulation Code.
However, the SEC cautioned that payment of the ECIP fee does not mean that corporations are automatically “compliant” since they still need to submit supporting documents.
Noncompliant and delinquent corporations need to submit their latest AFS, as well as their official and alternate e-mail addresses.
For suspended or revoked corporations, they should submit a petition to lift the order of suspension/revocation of certificate of registration, the latest due AFS and GIS, secretary’s certificate of no intra-corporate controversy, latest mayor’s or business permit, certificate of Bureau of Internal Revenue registration, as well as comply with MC 28.
“Should an applicant-corporation fail to submit the complete set of requirements within the prescribed period, the ECIP fees, as well as the initial petition fee of P3,060 applicable to suspended and revoked corporations, shall be forfeited,” the SEC said.
Interested corporations can apply for the ECIP through the SEC’s Electronic Filing and Submission Tool (eFAST).
“This would be effective if more companies comply. It also helps on the direction of maintaining good standing and improving reputation to the investing public since compliance signals good business practices,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message after being asked for comment.
COL Financial Group, Inc. Chief Equity Strategist April Lynn Lee-Tan said in a Viber message that the ECIP could help boost compliance among corporations.
However, Ms. Tan said that the process would be difficult for small companies that are interested in availing of the ECIP, citing the number of supporting documents that should be submitted.
“One of the potential problems with this is that the companies will still take steps to avail of the incentive, in which some may encounter challenges,” she said.
“All companies have requirements to file documents with the SEC. It is a hassle to get these for some companies, especially the small ones. If I’m a small company, I still have to hire a lawyer and an auditor,” she added.
