SEC says amnesty program to help firms attract more investors 

THE Securities and Exchange Commission (SEC) said its ongoing amnesty program would help corporations attract more investors as it would prove the legitimacy of their operations.

“Corporations in good standing have the potential to attract more investors, as they will be able to prove their legitimacy to the investing public,” the SEC said in a statement on Thursday. 

“The badge of legitimacy offered by the SEC will assure potential investors that their hard-earned money is in good hands, while also helping them manage their risk better,” the regulator added.

The SEC’s amnesty program, launched in March and set to end on Sept. 30, allows a reprieve for companies from the fines and penalties imposed on the late or non-filing of their general information sheet, annual financial statement, and non-compliance with Memorandum Circular No. 28, Series of 2020.

However, the SEC warned that investors should take “extra precautions” to verify that the entity being dealt with has all the required permits and licenses to perform investment-taking activities.

“Note that a corporation may only solicit investments from the public after it has secured from the SEC a certificate of permit to sell securities, and an order of registration for the investment contract. The agents of the corporation must also be registered and licensed by the SEC,” it added.

The SEC said there are also benefits to being a registered corporation, such as having a separate juridical personality from its stockholders that allow the entity to enter into contracts and transactions, akin to a real person.   

“Because it has a separate personality, a corporation is not affected by the death of its owners or stockholders. It can exist continuously; in fact, it can exist forever under the Revised Corporation Code of the Philippines,” the SEC said.

“Further, a corporation enjoys limited liability, which means that creditors cannot generally go after the properties of its stockholders to satisfy the debts and obligations of the business,” it added.

Meanwhile, the SEC said that complying with its amnesty program would support the agency’s plan to make the Philippine corporate sector among the best in the region.

“Compliance with reportorial requirements mutually benefits corporations and the SEC, as this helps the Commission prudently identify active and inactive corporations, enhance and organize its digital database, and cultivate a healthy and vibrant corporate sector,” the SEC said.

“With this, the SEC will be able to efficiently perform its mandate as overseer of the corporate sector, regulator of the capital markets, and protector of the investing public,” it added.

Under the SEC’s amnesty program, non-compliant corporations only need to pay a P5,000 fine for failure to submit any of their annual reports regardless of the number of years that they failed to comply.

“If the corporation’s registration was suspended or revoked, it will pay only half of the total fines and penalties, plus the P3,060 petition to lift order of suspension/revocation fee. Such corporations must also submit the necessary documents to complete the process of lifting the order of suspension/revocation imposed by the SEC,” the regulator said.

The SEC warned that the penalties will increase once the amnesty program is closed. — Revin Mikhael D. Ochave