SEC Updates Fines and Penalties on Late and Non-Submission of Audited Financial Statements, General Information Sheet, and Non-Compliance with MC 28

The Securities and Exchange Commission (“SEC”) through SEC Memorandum Circular (“MC”) No. 6, series of 2024 updated the fines and penalties for late filing or non-submission of audited financial statements (“AFS”), general information sheets (“GIS”), and non-compliance with SEC MC No. 28, series of 2020 (“SEC MC 28”).

In SEC MC No. 6, series of 2024, the SEC clarified the meaning of late filing and non-submission for one person, stock, and non-stock corporations, and for stock and non-stock foreign corporations.

• For One Person, Stock, and Non-Stock domestic corporations:

1. Late filing/submission means:

1. Filing after the due date but still within a year of the prescribed deadline for filing;
2. Filing beyond 1 year from the prescribed period, in which case the penalty shall be the base fine for “non-filing” and the computation of the monthly penalty shall not exceed 12 months; or
3. In the case of SEC MC 28, submitting beyond 30 calendar days from the issuance of the certificate of registration, license, or authority.

2. Non-filing means non-submission of the reportorial requirements.

• For Stock and Non-Stock foreign corporations: 

1. Late filing means:

1. The filing after 30 calendar days from the anniversary date of the issuance of the SEC license for GIS or from the prescribed deadline for AFS;
2. The filing after 60 calendar days from the anniversary date of the issuance of the SEC license for GIS or from the prescribed deadline for the AFS, in which case the penalty shall be the base fine of “non-filing” and the computation of the monthly penalty shall not exceed 12 months; or
3. In the case of SEC MC 28, submitting beyond 30 calendar days from the issuance of the certificate of registration, license, or authority.

2. Non-filing similarly means non-submission of the reportorial requirements.

Late Filing of Reportorial Requirements

For late filing of reportorial requirements for domestic stock and one-person corporation, the imposable fine ranges from PHP5,000 to PHP45,000, depending on the retained earnings/fund balance/equity of the corporation, and the number of offenses.

Meanwhile, for domestic non-stock corporations, the imposable fine ranges from PHP5,000 to PHP27,000, based on the retained earnings/fund balance/equity of the corporation, and the number of offenses.

For foreign stock corporations (such as branches, representative offices, and regional operating headquarters), the imposable fine ranges from PHP10,000 to PHP54,000 depending on the accumulated income (“AI”)/fund balance/members’ equity, the number of offenses, and when the required document was submitted.

Finally, for foreign non-stock corporations (such as branches, representative offices, and regional headquarters), the imposable fine ranges from PHP5,000 to PHP45,000 depending on the AI/fund balance/members’ equity, the number of offenses, and when the required document was submitted.

Non-Filing of Reportorial Requirements

For non-filing of reportorial requirements for domestic stock and one-person corporation, the imposable fine ranges from PHP10,000 to PHP54,000, depending on the retained earnings/fund balance/equity of the corporation, and the number of offenses.

For domestic non-stock corporations, the imposable fine ranges from PHP10,000 to PHP36,000, based on the retained earnings/fund balance/equity of the corporation, and the number of offenses.

Meanwhile, for foreign stock corporations (such as branches, representative offices, and regional operating headquarters), the imposable fine ranges from PHP10,000 to PHP90,000 depending on the AI/fund balance/members’ equity, the number of offenses, and when the required document was submitted.

Finally, a fine ranging from PHP10,000 to PHP54,000 depending on the AI/fund balance/members’ equity and the number of offenses, is imposable on foreign non-stock corporations (such as branches, representative offices, and regional headquarters).

Non-Compliance with MC28 and Other Matters

For late and non-compliance with SEC MC 28, the imposable fine is PHP20,000.

The SEC has the power to put a corporation under delinquent status if they fail to submit their reportorial requirements 3 times, consecutively or intermittently, within 5 years; while the commission of a 6^th offense after being notified of its delinquent status constitutes a ground for revocation of its Certificate of Registration/License to Transact or Secondary License. It shall also warrant the imposition of monetary fines equal to the 5^th offense plus 100% surcharge of the total assessed fine. 

The complete scale of fines and penalties may be found in SEC MC No. 6, series of 2024.