SEC suspends registration of 118,000 corporations for non-compliance

The Securities and Exchange Commission (SEC) has taken a firm stance against non-compliance, suspending the corporate registration of close to 118,000 corporations for their failure to meet reportorial obligations.

In an order dated February 16, the SEC's Company Registration and Monitoring Department moved to suspend the certificates of incorporation of 117,885 corporations. These entities have failed to submit their annual reports for more than five years, as required by law.

Included in the list are corporations that have started their operations but subsequently ceased activities for more than five consecutive years.

Corporations registered with the SEC are mandated to fulfill reportorial requirements, including the submission of annual financial statements and general information sheets, as outlined in Republic Act No. 11232, also known as the Revised Corporation Code of the Philippines (RCC).

Under Section 177 of the RCC, the Commission has the authority to place corporations in delinquent status if they fail to file their reportorial requirements three times, either consecutively or intermittently, within a span of five years.

Furthermore, Section 21 of the RCC empowers the Commission to place corporations under delinquent status if they become inactive for a period of at least five consecutive years after commencing operations, following due notice and hearing.

In accordance with Presidential Decree 902-A, Republic Act No. 8799 (the Securities Regulation Code), and Section 179 of the RCC, the SEC may suspend the franchise or certificate of incorporation of corporations after due notice and hearing.

The suspended corporations have been given 30 days from the publication of the suspension order to avail themselves of existing remedies provided by laws, rules, and regulations implemented by the Commission.

The issuance of the suspension order follows the conclusion of the SEC Amnesty Program, conducted from March to December 2023, which offered non-compliant and suspended or revoked corporations an opportunity to regain their good standing by paying reduced fees.

Previously, the SEC released guidelines for purging corporations under delinquent status through SEC Memorandum Circular No. 19, Series of 2023. The Commission remains steadfast in enforcing the reportorial requirements of corporations as stipulated by laws, rules, and regulations.

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