With heat index forecasts at 40 to 50 degrees Celsius daily, surviving the month means not only beating the heat, but also beating deadlines. Crunch time for filings with the Bureau of Internal Revenue and the Securities and Exchange Commission (SEC) may have overlapped, leaving everyone trying to catch their breath. Like a welcome reprieve, the SEC has heard everyone’s plea for more time and leniency.
In March, the SEC issued Memorandum Circular (MC) No. 2, series of 2023 (MC 2-2023) granting corporations and other regulated entities the opportunity to apply for amnesty for non-compliance with mandatory documentary and reportorial requirements and with MC No. 28, series of 2020 (MC 28-2020) or the submission of the official e-mail addresses and mobile phone numbers, whose original deadline was April 30.
As April came to a close, SEC-regulated entities were in a rush to cross out their names from the list of non-compliant entities. It is a rare chance to clean the slate, so to speak, of accumulating fines and penalties for late or non-filing of General Information Sheets (GIS) and Audited Financial Statements (AFS) for prior years, and non-compliance with MC 28-2020.
Last week, on April 28, the SEC issued MC No. 6, Series of 2023 (MC 6-2023), amending MC 2-2023, and extending the deadline of amnesty applications for another two months, until June 30. Companies availing of the amnesty will also now be given 90 calendar days, instead of 45 days, from the date of payment of the fixed amnesty amount to submit their latest due AFS.
Given the final and irrevocable nature of the amnesty to be granted, failure to comply with the required submissions within the 90-day period after payment would be taken as a waiver to proceed with the amnesty procedure, and the payment already made is to be forfeited in favor of the SEC.
While the SEC uploaded a searchable list of companies eligible for amnesty, the search will only generate the SEC registration number, company name, and a status remark (e.g., non-compliant, delinquent/suspended, revoked). The specific lacking documentation or insufficient submission must be internally determined by the company, or they can reach out to the SEC Company Registration and Monitoring Department (CRMD) via phone or e-mail. Considering the volume of requests and queries received by the CRMD on a daily basis, some delays are to be expected in their response; it would be wise to plan ahead.
Companies are reminded that the SEC is re-evaluating the current scale of fines and penalties. Together with the amnesty, the objective is to review and clean up the submissions of all regulated entities, enhance and organize the SEC’s database, encourage compliance, and deter violations of laws and current regulations. This will give all parties concerned more reason to avail of the amnesty while there is still time and not to wait for the looming deadline.
On April 26, the SEC posted on its website the draft MC on the proposed updated fines and penalties for the late and non-submission of AFS, GIS and non-compliance with MC 28-2020 and solicited the public’s written comments until May 26. The revised scale of fines and penalties is set to be implemented effective July 1.
According to the SEC, it will adopt the following changes:
1. Increase of 20% from the base penalty for each offense;
2. Monthly fine in the amount of P1,000 in addition to the base penalty for continuing violation until the reporting requirement is submitted;
3. The SEC may classify the corporation as delinquent in case of failure to submit the reporting requirements three times, consecutively or intermittently, within a period of five years;
4. The SEC may revoke registration starting on the 4th offense; and
5. For foreign corporations, if the delay exceeds 30 days from the prescribed filing period, it will be considered non-compliance/non-filing.
The SEC also made a clear distinction between “non-filing” and “late filing” to allow for a fair and commensurate range of penalties for both. “Non-filing of the report” means continuous failure to submit a report on the due date, and even after the next reporting deadline. “Late filing” means submission of the report after the due date but still within the year of the prescribed deadline.
Hand in hand with the working public, the SEC hopes to continually nurture a healthy and vibrant corporate sector. In nature, the rainbow comes after the rain, but the reverse will happen in this case as the rainbow (or amnesty period) is available until June 30, and the higher penalties will start to strike on the following day. There is little hope for another extension, so do not wait for harsher fines and penalties before taking action. Thus, I urge companies to be prudent — do not delay, avail of the SEC amnesty today.
The views or opinions expressed in this article are solely those of the author and do not necessarily represent those of Isla Lipana & Co. The content is for general information purposes only, and should not be used as a substitute for specific advice.
Cyril B. Pestilos is a manager at the Tax Services department of Isla Lipana & Co., the Philippine member firm of the PwC network.
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cyril.b.pestilos@pwc.com