[ADVISORY] Updated Fines and Penalties on the Late Submission and Non-Submission of AFS, GIS, and Non-Compliance with SEC MC 28

In an advisory released by the Securities and Exchange Commission (SEC) on March 27, 2024, SEC MC No. 6 announced the updated fines and penalties for late and non-submission of Audited Financial Statements (AFS) and General Information Sheet (GIS) as well as non-compliance with SEC MC 28 that was released in 2020.

According to SEC MC 28, corporations, partnerships, associations, and individuals must create and designate an email address account and cellphone number for SEC transactions.

Below are the directives of SEC MC No. 6:

• As per Section 179 (o) and (p) of Republic Act (RA) No. 11232, also known as the Revised Corporation Code of the Philippines (RCC), the SEC is granted the power and authority to do the following:
  • formulate and enforce standards, guidelines, policies, rules, and regulations to carry out the provisions of the RCC; and
  • exercise such other powers provided by law or those which may be necessary or incidental to carry out the powers expressly granted.
• Section 158 of the RCC bestows the SEC the power to give fines varying from ₱5,000 to ₱2,000,000, with a daily fine limit of ₱1,000 for persistent violations, but not exceeding ₱2,000,000 under any circumstances.
• The Commission, through SEC MC 2 of 2023 and its updates, provided amnesty for late or missing GIS and AFS submissions, as well as non-compliance with SEC MC 28, giving corporations a better opportunity to meet their documentation and reporting obligations under the RCC.
• The Commission actively encouraged non-compliant corporations to apply for amnesty under SEC MC 2 through various channels to avoid hefty penalties once the revised scale of fines and penalties is implemented.
• The amended final deadline for amnesty applications under SEC MC 2 was December 31, 2023.
• The Commission is striving to meet requirements to remove the Philippines from the Financial Action Task Force’s gray list by improving access to accurate beneficial ownership information. This involves streamlining processes and encouraging regular GIS submissions from corporations.
• The Commission has maintained the same fines and penalties schedule for non-compliance with reportorial requirements since July 2002.
• An exposure draft of the Revised Fines and Penalties on Submission of Reportorial Requirements (AFS & GIS) was posted on the SEC website on April 26, 2023, inviting public feedback until May 26, 2023, to enhance transparency and public awareness.

The Commission will enforce the following revised fines and penalties for all regulated entities:

• For One Person, Stock, and Non-Stock Domestic Corporations
• For Stock and Non-Stock Foreign Corporations

Avoid Fines and Penalties by Properly Complying with the SEC

You may check the full advisory for the reportorial requirements and the date of registration and period of filing on the SEC memorandum.

If you need assistance in ensuring compliance with the SEC, our team of legal compliance experts can help you in processing and filing your documents with the agency.