How to pay lower SEC penalties? | Screengrab from Securities and Exchange Commission/Youtube
CEBU CITY, Philippines — Corporations grappling with delinquent, suspended, or revoked statuses have an opportunity to regain their good standing at reduced penalties through the Securities and Exchange Commission’s (SEC) Enhanced Compliance Incentive Program (ECIP).
As the November 30, 2024, deadline looms, the SEC has reiterated that this initiative presents a one-time opportunity for businesses to address compliance issues without the heavy financial burden typically associated with penalties.
What is the ECIP?
The ECIP, introduced through SEC Memorandum Circular No. 13, Series of 2024, is designed to encourage corporations to comply with their reportorial requirements by offering significantly reduced penalties.
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SEC Cebu Director Sheara Lupango-Tamayo described the program as “a very favorable plan” that corporations should take advantage of, especially as penalties under normal circumstances can be financially overwhelming.
The ECIP provides a pathway for corporations to clear their records and return to good standing, safeguarding their ability to operate legally and competitively.
Reduced penalties
One of the program’s most attractive features is the reduced penalties for non-compliance. For delinquent corporations, the penalties can be as low as P20,000, a drastic reduction from the usual P200,000.
Suspended or revoked corporations, on the other hand, are eligible for a 50 percent reduction in penalties.
Additionally, corporations with revoked or suspended statuses are required to file a petition to lift their orders. This entails paying a P3,060 petition fee and submitting supporting documents, including proof of continued operation and compliance with SEC regulations.
According to Tamayo, the ECIP is not merely a penalty-reduction scheme; it also emphasizes the need for corporations to ensure long-term compliance with regulatory obligations.
“This program offers a clean slate, but we encourage corporations to maintain compliance to avoid future penalties,” she said.
The ECIP has garnered attention since its recent launch, with 2,786 corporations across the country already availing of the program. Of these, 151 are based in Cebu, according to data from SEC Cebu.
Tamayo said that this number is expected to rise as the deadline nears, with corporations rushing to take advantage of the program before it concludes.
In 2023, the SEC reported that over 298,335 corporations nationwide were marked as delinquent, with 22,000 at risk of being revoked and 117,885 currently suspended.
How to apply for ECIP
Corporations interested in applying for the ECIP must submit their applications through the SEC’s Electronic Filing and Submission Tool (eFAST).
The process involves filing an Expression of Interest Form, paying the required fees, and completing all overdue submissions of AFS and GIS.
For suspended or revoked corporations, additional requirements include:
– Filing a petition to lift suspension or revocation orders.
– Submitting proof of continued operations.
– Providing a compliance checklist to ensure all regulatory requirements are met.
Meanwhile, the SEC Cebu director said that the November 30 deadline is non-negotiable at the moment. Corporations that fail to meet this cut-off date will no longer be eligible for the reduced penalties offered under ECIP and will face the full extent of fines and sanctions.
This includes the risk of permanent revocation of their certificates of registration, which could have severe legal and operational repercussions.