![Tax Notes: SEC grants relief to non-compliant firms through the Enhanced Compliance Incentive Program](http://media.assettype.com/sunstar%2Fimport%2Fuploads%2Fimages%2F2023%2F10%2F07%2F470233.jpg?rect=0%2C19%2C1000%2C563&w=480&auto=format%2Ccompress&fit=max)
To help businesses restore good standing, the Securities and Exchange Commission (SEC) introduced its Amnesty Program in 2023, with over 81,700 companies participating and successfully complying with their reportorial requirements. This year, to continue the gains from the Amnesty Program, the SEC rolled out a new initiative with the same aim, the Enhanced Compliance Incentive Program (ECIP).
Covered Violations
The ECIP covers unassessed and/or those already assessed but not yet paid violations by corporations, including branch offices, representative offices, regional headquarters (RHQ) and regional operating headquarters (ROHQ) of foreign corporations. These violations include (i) non-filing and/or late filing of General Information Sheet (GIS) for the latest and prior years; (ii) non-filing and/or late filing of Audited Financial Statements (AFS) and its attachments; and (iii) violations under Memorandum Circular (MC) 28, s. 2020, or the SEC requirement to create and/or designate an e-mail account address and cellphone number for transactions.
ECIP Fees
For non-compliant and delinquent corporations, a P20,000 ECIP fee is imposed provided that the entity will (i) submit the latest reportorial requirement due at the time of application, and (ii) comply with MC 28 through the SEC MC 28 submission portal. For suspended and revoked corporations, the ECIP fee is 50 percent of the assessed fines and a petition fee of P3,060. It is to be noted that the ECIP fee only corresponds to a violation of timeliness and the penalties for erroneous contents in the report are separate. Moreover, the payment of the ECIP fee neither confers compliant status nor automatically lifts suspension or revocation. Corporations are still required to comply with the requirements set by the SEC as well as payment of the relevant fees.
Filing of Application and Supporting Documents
In the filing, a web-based Expression of Interest Form and application for availment of ECIP shall be filed by the duly authorized representative or resident agent corporation through the Electronic Filing and Submission Tool. The applicable ECIP fees shall likewise be paid. Then, the following documents should also be uploaded: (i) the latest due AFS or Amended AFS and its attachments, and (ii) the latest GIS or Amended GIS. For non-compliant and delinquent corporations, once the submitted documents have been evaluated and deemed compliant, a Confirmation of Payment (COP) will be issued to their registered email address.
For revoked and suspended corporations, the petition fee shall first be settled before the assessment of 50 percent of their fines and penalties that will be sent to their registered email address. The Petition to Lift Order of Suspension/Revocation must also be submitted to the designated SEC emails depending on their respective jurisdiction, alongside the supporting documents. For the complete list of supporting documents, please refer to SEC MC 13, s. 2024. The applicant should then wait for the verification of its corporate status. After payment and evaluation of documents submitted, a COP will be issued to their registered email address. The corporation’s status will then be updated, subject to the processing and issuance of the Lifting of Revocation and/or Order of Revival.
If the documents are found to be incomplete upon initial evaluation, the application will be reverted and the reason will be communicated to the entity’s official email address, as declared in its MC 28 compliance.
Exceptions
Corporations whose securities are listed on the Philippine Stock Exchange (PSE) or are registered but not listed on the PSE, public companies, those involved in intra-corporate disputes, those with disputed GIS, those with expired corporate terms, and other corporations covered under the Securities Regulation Code are excluded from the coverage of the ECIP.
Other Guidelines
If an applicant fails to submit the complete set of requirements within the prescribed period, the ECIP fees paid will be forfeited. Refunds of excess ECIP fees for non-compliant corporations will not be accommodated, except for highly meritorious cases.
The application period for the ECIP is from Sept. 2, 2024, to Nov. 30.
Please be guided accordingly.
Source:
P&A Grant Thornton
Certified Public Accountants