SEC purges 118-K firms over reports breach

Under Section 177 of the RCC, the SEC may place under delinquent status corporations found to have failed in filing their reportorial requirements for three times, consecutively or intermittently, within a period of five years

The Securities and Exchange Commission, or SEC, has suspended the registration of close to 118,000 corporations for failing to comply with reportorial requirements.

In an order dated 16 February, the SEC Company Registration and Monitoring Department suspended the certificates of incorporation of 117,885 corporations for failure to submit their annual reports for more than five years.

The list included corporations that have commenced their business but subsequently became inoperative for more than five consecutive years.

Corporations registered with the SEC are required to submit reportorial requirements such as annual financial statements and general information sheets, pursuant to Republic Act 11232, or the Revised Corporation Code of the Philippines, or RCC.

Under Section 177 of the RCC, the SEC may place under delinquent status corporations found to have failed in filing their reportorial requirements for three times, consecutively or intermittently, within a period of five years.

Delinquent status

Under Section 21 of the RCC, if a corporation commenced its business but subsequently became inoperative for a period of at least five consecutive years, the Commission may, after due notice and hearing, place the corporation under delinquent status.

The Commission may also suspend, after due notice and hearing, the franchise or certificate of incorporation of corporations, in accordance with Presidential Decree 902-A, Republic Act 8799, or the Securities Regulation Code, and Section 179 of the RCC.

The SEC has given the suspended corporations a period of 30 days from the publication of the suspension order, to avail of existing remedies under the laws, rules and regulations implemented by the Commission.

The issuance of the suspension order follows the conclusion of the SEC Amnesty Program, which ran from March to December 2023 and gave non-compliant and suspended or revoked corporations a chance to recover their good standing by paying the reduced fees.

The SEC also previously issued guidelines for the purging of corporations under delinquent status through SEC Memorandum Circular No. 19, Series of 2023, as it strictly enforces the reportorial requirements of corporations provided under the laws, rules and regulations implemented by the Commission.