Ensuring timely submission of reportorial requirements is a critical aspect of corporate governance. According to Section 177 of the Revised Corporation Code of the Philippines (RA No. 11232), corporations and registered partnerships must adhere to specific reporting obligations. Failure to comply, especially if repeated, can result in a company being placed under delinquent status.
The Securities and Exchange Commission (SEC) has introduced the Enhanced Compliance Incentive Plan (ECIP), a new initiative that offers corporations a chance to regain good standing if they have missed deadlines for submitting their annual reports.
What Is Enhanced Compliance Incentive Plan (ECIP)?
The Enhanced Compliance Incentive Plan (ECIP) is a new initiative by the SEC designed to offer corporations a pathway to rectify their non-compliance issues and reinstate their good standing. Whether your company has faced delays in filing necessary reports or has accumulated unpaid fines, the ECIP provides a structured opportunity to address these issues with reduced financial penalties.
Who Can Benefit from ECIP?
The ECIP is available to various types of corporations, including branch offices, representative offices, regional headquarters, and regional operating headquarters of foreign corporations. If your business falls into one of the following categories, the ECIP could be a valuable opportunity:
- Non-Filing or Late Filing of General Information Sheets (GIS): If your company has failed to submit or has submitted late GIS forms for the latest and prior years, you can benefit from the ECIP.
- Non-Filing or Late Filing of Financial Statements (AFS): Corporations that have not filed their audited or certified financial statements, including any required attachments, can also take advantage of this plan.
- Suspended or Revoked Corporations: If your company’s registration has been suspended or revoked, and you have pending petitions for lifting these orders, the ECIP offers a reduced rate for fines and a structured process to address these issues.
Enhanced Compliance Incentive Plan (ECIP) Rates
The rates applicable under this Circular are as follows:
A. Non-Compliant Corporations, including Delinquent Corporations
The applicable rate requires the corporation to (i) submit the latest due reportorial requirement at the time of application and (ii) comply with MC No. 28 through the MC28 Submission Portal. Payment of the ECIP fee alone does not confer compliant status. Corporations must also submit the supporting documents specified in this Circular.
Through the ECIP, corporations that are non-compliant or have been marked as “delinquent” can resolve their outstanding or unpaid fines and penalties for a reduced fee of Php 20,000.
B. Suspended and Revoked Corporations
For corporations that are suspended or revoked, including those seeking to lift their suspension or revocation orders, the ECIP allows them to pay only 50% of their assessed fines and a petition fee of Php 3,060.
The said ECIP rates for suspended and revoked corporations apply to those listed below, including those with pending petitions for lifting the suspension or revocation:
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- Late and Non-Filing of GIS;
- Late and Non-Filing of AFS; or
- Non-compliance with MC No. 28.
Payment of the ECIP fee does not automatically lift the suspension or revocation. A petition to lift the suspension or revocation must be filed separately.
What Happens After You Apply?
Once your application is processed and approved, you will receive a Confirmation of Payment. This confirmation will indicate that you have resolved your compliance issues and restored your good standing with the SEC. However, it is important to note that this does not exempt you from future reportorial requirements. Continuing compliance is crucial to maintain your restored status.
Exceptions to the ECIP
Certain entities are excluded from the ECIP, including:
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- Corporations whose securities are listed on the Philippine Stock Exchange (PSE), as well as securities registered but not listed on the PSE.
- Corporations with expired corporate terms or intra-corporate disputes.
- Public Companies and those with disputed GIS.
- Entities covered under the Securities Regulation Code (RA No. 8799).
Important Dates and Deadlines
This Circular will become effective immediately upon its publication in a newspaper of general circulation. Additionally, the implementation of SEC Resolution No. 435, Series of 2010, is suspended. The ECIP applications will be accepted from September 2, 2024, to November 30, 2024.
Tips for Staying in Good Standing
After successfully restoring your company’s status with the SEC using ECIP, it is essential to maintain compliance to avoid future issues. Here are a few tips to ensure continued good standing:
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- Set Reminders for Filing Deadlines: Use a calendar or reminder system to track upcoming SEC filing deadlines, including GIS and AFS.
- Designate a Compliance Officer: Assign someone in your company to monitor compliance and ensure all requirements are met on time.
- Stay Updated on SEC Regulations: Regularly review updates and advisories from the SEC to stay informed of any changes to reportorial requirements or penalties.
Act Now to Secure Your Compliance!
The Enhanced Compliance Incentive Plan (ECIP) represents a valuable opportunity for corporations to address their compliance issues in a cost-effective and efficient manner. Don’t miss out on this chance to restore your good standing with the SEC and ensure your business is operating smoothly and within regulatory requirements.
… and you might just need our assistance.
Have Questions about the ECIP? 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.