Legal & Tax Updates [Back to list]
SEC Amends Issuance on Disclosure of Beneficial Ownership Information
On 6 December 2022, the Securities and Exchange Commission (“SEC”) issued SEC Memorandum Circular (“MC”) No. 10, series of 2022 which amended SEC MC No. 15, series of 2019. MC 10-2022 increased certain penalties and imposed additional non-financial penalties. It also provided for additional guidelines regarding the disclosure of beneficial ownership information. It is set to take effect on 1 January 2023.
Under MC 10-2022, the passport number of foreign individuals who do not have a Tax Identification Number may now be submitted for purposes of disclosing information on beneficial owners. The time period for updating beneficial ownership information through the submission of an updated General Information Sheet (“GIS”) has also been increased from seven working (7) days to thirty (30) calendar days after the change occurred or became effective. The circular also reiterated that submission of the GIS shall be through the SEC’s Electronic Filing and Submission Tool or eFAST.
Meanwhile, amendments on the penalties include changes to the range of imposable fines for Failure to Disclose and Liability of Directors/Trustees and Officers of the Corporation. Pursuant to MC 10-2022, the basic imposable fines have been increased to the following amounts, based on the frequency of the violation:
Violation | Range of Imposable Fine under SEC MC No. 15-2019 | Range of Imposable Fine under SEC MC No. 10-2022 |
Failure to Disclose | For Stock Corporations with retained earnings of less than PHP500,000.00: | For Stock Corporations with retained earnings of less than PHP500,000.00: |
Liability of Directors/Trustees and Officers of the Corporation | PHP5,000.00 to PHP50,000.00 | PHP10,000.00 to PHP100,000.00 |
False Declaration or the submission of false beneficial ownership information is now penalized and could result in liability for a fine of up to PHP2,000,000.00, plus subsequent dissolution of the corporation. If the violation is made by Directors/Trustees and Officers of the corporation, each can be penalized with a fine of up to PHP200,000.00 and shall be disqualified to be directors, trustees, and officers of any corporation for a period of five (5) years.
Further, if, after due notice and hearing, the SEC finds that there is a willful violation of MC 10-2022 or related orders of the SEC, or that any person has refused to permit any lawful examination into its affairs, the SEC may impose the penalty of suspension or revocation of the certificate of incorporation of the reporting corporation along with other penalties.
To further strengthen the penalty scheme, a provision providing that the imposition of the administrative sanctions is not without prejudice to the filing of criminal charges against persons responsible for the violation of Title XVI of the Revised Corporation Code on Investigation, Offenses, and Penalties, as well as other applicable laws, rules, and regulations, was also added.