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Enforcing compliance: SEC suspends 117,885 corporate registrations

by Eileen Mencias

The Securities and Exchange Commission (SEC) has suspended the corporate registration of 117,885 corporations for their failure to meet reportorial requirements.

These corporations have not submitted their annual reports for more than five years, as well as those that have ceased operations for the same duration after commencing business.

The move underscores the SEC’s commitment to uphold the standards set by Republic Act No. 11232, or the Revised Corporation Code of the Philippines (RCC), which mandates corporations to submit essential documents including annual financial statements and general information sheets.

This move is rooted in the provisions of the RCC, specifically Section 177, which allows the SEC to declare corporations delinquent for failing to file the required reports three times, consecutively or intermittently, within a five-year span.

Additionally, Section 21 of the RCC empowers the SEC to take action against corporations that have been inoperative for at least five consecutive years.

Presidential Decree 902-A, the Securities Regulation Code (Republic Act No. 8799), and Section 179 of the RCC enable the SEC to suspend or revoke the franchise or certificate of incorporation of non-compliant entities following a thorough notice and hearing process.

Affected corporations have been granted a 30-day window from the announcement of the suspension order to seek remedies and possibly restore their compliance status, as per the existing legal framework and regulations enforced by the SEC.

This development follows the conclusion of the SEC Amnesty Program, which, from March to December 2023, offered a pathway for non-compliant and penalized corporations to rectify their standing with reduced penalties.

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