You may have recently incorporated and registered your company with the Securities and Exchange Commission (SEC) or even done so a few months ago. By now, you might still be feeling a bit lost when it comes to all the reportorial and compliance requirements. We totally get it—and it can be overwhelming!

While the corporate vehicle can sometimes be used to defraud investors and the market, the SEC has a crucial role to play as the registrar and overseer of the Philippine corporate sector. That means they’ve put in place strict policies to make sure corporations stay compliant. One of those policies includes requiring an SEC Monitoring Clearance before you can make certain transactions with the commission.

This blog provides a helpful guide on how to obtain a SEC Monitoring Clearance in the Philippines, covering also the documentary requirements and the various purposes that the clearance serves. Read on and tell us in the comments how we can assist you with your corporate services and business compliance needs.    

What is a SEC Monitoring Clearance?

A SEC Monitoring Clearance is a clearance certificate issued by the Securities and Exchange Commission (SEC) through its Compliance Monitoring Division (CMD) to confirm a registered corporation’s compliance with all reportorial requirements and other regulatory standards. 

Understanding SEC Reportorial Requirements

Under the Philippine corporate laws, the SEC is mandated to ensure that corporations doing business in the country, whether domestic or foreign, comply with the laws and regulatory standards through reportorial requirements, which generally include:

General Information Sheet (GIS)

This document provides a snapshot of your company’s structure, management, financial status, and other pertinent information. This must be submitted annually (i.e., usually within 30 days from the date of the stockholders’ meeting) and upon filing of corporate amendments. 

Annual Financial Statements (AFS)

These are audited and BIR-filed reports on your corporation’s financial performance and position over the course of a year and typically include a balance sheet, income statement, and cash flow statement. Like the GIS, these must be submitted annually, normally within 120 calendar days after the end of the fiscal year.

Stock and Transfer Book (STB)

This is a record maintained by your corporation to track the ownership and transfer of shares of stock. It details the names of stockholders, their acquired shares, and changes in ownership. This must be stamped within 30 days after the company incorporation and upon filing of the amendments on shareholdings. 

Minutes of Meeting

These are records of all the meetings among your shareholders, board of directors, and committees. Although these are not required to be submitted regularly, they must be kept in the corporate files and made readily available during inspection or upon SEC request.

Other Reportorial Requirements for Specific Transactions

Additional documents and filings may be required for your specific transactions, such as mergers, acquisitions, changes in capitalization, and changes in corporate governance, among others.

Payment of Fees

Fees at varying rates must also be paid to the SEC by your corporation during your filing of documents, amendments, and other services rendered by the commission.      

Under the SEC regulations, noncompliance, including non-submission and delayed submission of reportorial requirements, will result in the imposition of penalties, placing your corporation under a delinquent status, and even revocation of your Certificate of Incorporation. 

Stock corporations who fail to submit their GIS and AFS are currently fined within the range of PHP 1,000 to PHP 10,000 per report yearly, depending on the retained earnings from the latest AFS. Non-stock corporations, on the other hand, have corresponding fines of PHP 500 to PHP 5,000 for non-filing of the same documents. Late filing of reportorial requirements for both stock and non-stock corporations will be imposed a fine equivalent to 50% of these rates.  

Purposes of SEC Monitoring Clearance

Obtaining a SEC Monitoring Clearance is important and imperative in many situations. Here are the top reasons why you should secure it for your corporation: 

1. Legal Compliance

When you incorporate and register your company, your legal entity is bound by legal obligations. You can then ensure that it is in good standing with the SEC and compliant with the laws and regulations by performing these obligations, and one proof is a clearance with a “cleared” remark.  

2. Risk Management and Regulatory Oversight

With SEC Monitoring Clearance, you can be promptly notified of any missing, incorrect, or late filings of reportorial requirements. This early alert can help you address discrepancies quickly, thus preventing mistakes and avoiding additional penalties.

3. Documentary Requirement

When filing for corporate amendments, mergers, acquisitions, or issuing additional shares of stock, you must first resolve any issues, pay penalties (if any), and obtain SEC Monitoring Clearance. Since processing the clearance can take months, it is a proactive corporate housekeeping practice to always have a valid and unexpired document ready.  

4. Investor Confidence and Market Credibility

When your potential investors or shareholders see that your corporation has been issued a clearance, it reassures them of your compliance and credibility. On the other hand, your failure to get a clearance can hurt your company’s reputation and cause investor distrust.

5. Preparation for Growth and Other Big Business Efforts

Whether you’re planning to raise additional capital, make strategic investments, or expand your company operations, it is always good to have everything in order and stay aligned with best practices for governance, reporting, and ethical conduct.    

How to Get a SEC Monitoring Clearance (Step-By-Step Process) 

To proceed with your application for SEC Monitoring Clearance, simply follow the steps outlined below. Alternatively, you can contact us, and we can process the clearance on your behalf. 

1. File Your Application via Email or Monitoring Request Forms (Google Forms).

Generally, there are no documentary requirements to prepare for the clearance request. You just need to ensure that your company complies with all reportorial requirements. While the request may be made via email, you may also file it more conveniently through the Google Forms below:

3. Receive the Acknowledgement Email and SEC Monitoring Sheet.

Expect an acknowledgment email from CMD and the assignment of the request to a SEC Evaluator after a few days. If there are no additional compliances and penalties to pay, simply wait for the signed SEC Monitoring Clearance (with “Cleared” remark). Otherwise, receive the SEC Monitoring Sheet with a list of additional documents for compliance from the SEC Evaluator.

4. Receive the Payment Assessment Form (PAF) and Pay the Penalties (if any).

After your compliance with all the delinquent reportorial requirements, the CMD will send you the Payment Assessment Form (PAF) for the penalties, if any. You can pay via the Electronic System for Payment to SEC (eSPAYSEC). After payment, send the proof or receipt to the email thread with the CMD. 

5. Receive Your SEC Monitoring Clearance.

The processing of the clearance may take two to three months depending on the CMD timelines. The clearance is valid only for six months.  

While the SEC Monitoring Clearance—a document typically required for corporate amendments—can take months to process, there are steps you can take to ensure it is issued right on time. Make sure you review all documentary requirements before filing and anticipate all necessary compliance and penalties, if any. You may also just look for a reliable service provider to obtain the clearance regularly on your behalf and take the hassle out of the process.  

… and you might just need our assistance.

At FilePino, we ensure our team stays updated with the latest rules and regulations governing business compliance across various government agencies. We also leverage our extensive experience and expertise in navigating the intricacies of transactions. 

Need help with obtaining a SEC Monitoring Clearance? Set up a consultation with FilePino today! Call us at (02) 8478-5826 (landline) and 0917 892 2337 (mobile) or send an email to info@filepino.com.