Higher penalties for failures in submitting beneficial ownership information

The Revised Corporation Code of the Philippines (RCCP) requires all corporations to keep and preserve all information relating to the corporation. As of December 2022, the Securities and Exchange Commission (SEC) published Memorandum Circular No. 10, S. 2022 in which it amended its Memorandum Circular No. 15, S. 2019 by increasing the penalties and by imposing additional non-financial sanctions for submissions from 1 January 2023 onwards. It also provided further guidelines for the submission in the new Memorandum Circular.

Tightened Reporting Timeline

As the Memorandum Circular states, all SEC registered corporations are required to take reasonable measures to obtain and hold up-to-date information on their beneficial owners as defined in the Circular, and to disclose the same in a timely manner in the company's General Information Sheet (GIS).

Changes in the submitted beneficial ownership information must now be submitted to the SEC within 30 calendar days after the change occurred. If the SEC finds that the reporting corporation has failed to dis-close its beneficial ownership in accordance with the SEC's provisions, the reporting corporation will be penalized based on retained earnings or fund balance. Details can be found in the amended SEC. 11 of Memorandum Circular No. 15, S. 2019.

Tougher Penalties

In addition, the SEC imposed penalties of up to ₱200,000.00 upon directors, trustees and officers of the reporting corporation, who failed to exercise the due diligence required in ensuring compliance with the requirement to disclose beneficial ownership information in accordance with the SEC's provisions.

Those affected will also be disqualified from their positions for a period of five (5) years.

In the event of particularly serious violations, the SEC will impose the penalty of suspension or revocation of the certificate of incorporation of the reporting corporation.

The possibility to file criminal charges remains unaffected.