SEC threatens to revoke licenses of erring firms

The Securities and Exchange Commission has directed corporations that failed to submit reportorial requirements for the past six consecutive years to settle their deficiencies by end-September this year or face the revocation of their registration.

The SEC has called on these delinquent corporations to appear before the agency’s Company Registration and Monitoring Department (CRMD) within 30 days from date of publication of order to show cause why their certificates of registration should not be revoked.

In particular, the SEC directed corporations registered from 1985 to 1991 that failed to submit the required reports to explain within the 30-day period why their licenses should not be cancelled.

Under the Corporation Code, all corporations are required to submit annual reports such as the general information sheet and financial statements.

CRMD director Benito Cataran said a huge number of corporations have failed to submit these reports over the past six years.

If after the lapse of the 30-day period and the delinquent corporations have not updated their files as well as settled the corresponding fine, their certificates of registration shall be deemed revoked, Cataran said.

The move is part of the SEC’s hardline efforts to weed out delinquent corporations and ensure strict compliance with the corporate watchdog’s reportorial requirements.

The SEC has come up with a new scale of fines to compel corporations to submit periodic reports on time, disclose accurate information, and file the necessary registration statement before any sale of securities is made to the public.

Based on the revised scale of penalties, corporations which file late or incomplete annual financial reports and information statements will be charged a P100,000 fine or one-tenth of one percent of the consolidated net income/revenue, whichever is higher. For second, third and fourth offense, the penalty increases to P200,000, P600,000, P1.2 million, respectively.

A P75,000 fine meanwhile, is levied on firms that fail to submit quarterly reports on time while a P50,000 penalty is imposed on entities that neglect the SEC’s requirement on disclosure of current reports which include statements of beneficial ownership.

Listed corporations which fail to observe minimum internal controls and record keeping system, and to elect independent directors will be fined P100,000 for the first violation.

Under the previous set-up, the SEC charged a basic fine of P100,000 for corporations that fail to submit annual reports, tender offer reports, proxy statement, and information sheets on time.