SEC revokes registration of 240,000 corporations

The Securities and Exchange Commission (SEC) has revoked the registration certificates of about 240,000 corporations for their failure to comply with the agency’s reportorial requirements.

These companies were registered between 1936 to 1995. They had failed to file financial statements and general information sheets for the past several years and had also refused to pay the corresponding fines for violations committed.

A basic fine of P100,000 is imposed on all SEC-registered corporations that fail to submit annual reports, tender offer reports, proxy statement, and information sheets on time. A P100 penalty will be levied by the SEC for everyday of delay.

The move to revoke the certificates of registration of these firms was spurred by their failure to appear before the SEC’s Company Registration and Monitoring Department (CRMD) on the scheduled hearings. The hearings were called to give the errant firms the opportunity to explain their side and justify why their certificate of registration should not be revoked for non-submission of reports.

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

As early as March, the SEC has started publishing show cause orders to delinquent companies as part of efforts to weed out firms that have been habitually violating reportorial requirements.

Under the show cause orders, corporations are given 30 days from the date of publication to appear before the CRMD’s Law and Regulation Division, update their files and settle the corresponding fines or penalties.

In 2002 alone, the SEC revoked the registration of 27,982 delinquent and inactive corporations.