Guidelines In The Filing, Investigation, And Resolution Of Complaints For Violation Of The Right To Inspect And/or Reproduce Corporate Records

On 9 September 2020, the Securities and Exchange Commission (“SEC”) released Memorandum Circular No. 25, series of 2020 (“MC No. 25, s.2020”), which contains the guidelines in enforcing the right to inspect and/or reproduce corporate records. Under this MC, an aggrieved party (such as a director, trustee, shareholder, or member of a corporation who is denied access to corporate records) can request the SEC to order the corporation to allow such party to inspect corporate records.

Under MC 25, s.2020, an aggrieved party may file a verified complaint with the Company Registration and Monitoring Department (“CRMD”) or any of the extension offices of the SEC if a corporation or any of its officers or agents, denies or does not act on a demand for inspection and/or reproduction of corporate records.

Upon the filing of the verified complaint, the payment of the filing fees, and the determination by the CRMD director or the appropriate extension office of its authority to act over the verified complaint, the CRMD or the appropriate extension office shall issue summons within five (5) calendar days from the filing of the verified complaint. Within ten (10) calendar days from the receipt of the summons, the respondent shall file three (3) original copies of his verified answer and serve a copy to the complainant.

Before the issuance of a Final Order, the CRMD or the appropriate extension office, in its discretion, may conduct a clarificatory conference or hearing, not later than thirty (30) days after the last verified answer is filed.

A Final Order shall be issued within thirty (30) days after the conclusion of the clarificatory conference or hearing, or the receipt of the last documents or papers requested or ordered to be submitted, or expiration of the period for filing the same. The Final Order shall contain the appropriate order, sanction, grant of relief or denial thereof or such other conditions or terms to be imposed, and a demand for payment of the penalties, if applicable.

The inspecting or reproducing party shall remain bound by confidentiality rules under prevailing laws, such as the rules on trades secrets or processes under Republic Act No. 8293, otherwise known as the “Intellectual Property Code of the Philippines”, as amended, Republic Act No. 10173, otherwise known as the “Data Privacy Act of 2012”, Republic Act No. 8799, otherwise known as “The Securities Regulation Code”, and the Rules of Court.

The provisions of Republic Act No. 9285, otherwise known as the “Alternative Dispute Resolution Act of 2004” and its implementing rules and regulations, and the arbitration agreements provided in the articles of incorporation or by-laws of the corporations shall not apply to the resolution of disputes or controversies arising from violations of the right to inspect and/or reproduce corporate records.