Taxwise Or Otherwise — By Cyril B. Pestilos
To acquire juridical personality, a partnership and a corporation must register first with the Securities and Exchange Commission (SEC) before registering with the Bureau of Internal Revenue, the Local Government Unit having jurisdiction over the place where the entity intends to operate and locate, and the mandated social agencies such as the Social Security System, Pag-IBIG and PhilHealth.
Once registered, companies are enjoined to comply with various requirements. For instance, every amendment to the Articles of Partnership or Incorporation and the By-laws must be filed with the SEC. During the course of business operations, corporate entities may also find themselves needing to file a request for opinion to secure confirmation or a ruling from the SEC on issues affecting their rights and interests. Likewise, the Certificate of Good Standing, which has come to be a popular requirement of other government offices nowadays, may be needed to establish proof of compliance with reportorial requirements of the SEC.
On top of the annual reporting requirements, the foregoing transactions suggest why agents or representatives of partnerships and corporations need to ensure that they are up to date in regard to SEC compliance requirements and policy changes.
For those unaware, the SEC head office is no longer located at the intersection of EDSA and Ortigas Avenue. It is now at the Secretariat Building, PICC Complex, Roxas Boulevard, Pasay City. Apart from the change in location, other changes recently adopted by the SEC are, as follows:
1. Downloadable Stock and Transfer Book (STB) and Membership Book (MB).
As you may know, the STB for stock corporations and MB for non-stock corporations must be registered with the SEC within 30 calendar days from the issuance of the Certificate of Incorporation. Pursuant to SEC Resolution No. 546, series of 2016, the STB and MB are now downloadable from the SEC website.
Unlike manual books of account, which are readily available at your local bookstore or office supplies shop, STBs/MBs seem only available at the SEC offices. Although it may appear that the SEC has a monopoly over the issuance of these books, the limited demand and its regulated purpose may have curbed other printing press companies from retailing them on the market. Fortunately, they are now readily downloadable.
Based on the SEC Resolution, the downloaded STB and MB are registrable only at the SEC Satellite Offices located in: 1) Ali Mall, Cubao, Quezon City; 2) SM North, Quezon City; 3) Robinson’s Galleria, Ortigas Avenue, Quezon City; and 4) SM Manila, City of Manila. The STB is composed of 60 pages, excluding the first page as the registration page, while the MB is composed of 30 pages, excluding its registration page. Just like its hardbound counterpart, each page of the downloadable STB or MB must be certified correct by the Corporate Secretary.
2. New SEC consolidated schedule of fees and charges
As approved by the Department of Finance, the SEC has issued Memorandum Circular (MC) No. 03 series of 2017 dated March 7, 2017 to publish the full text of the “Consolidated Schedule of Fees and Charges” to be imposed and collected by the SEC.
Under the new schedule, the name reservation fee is now P100 per allowable name for 30 days.
While there is an apparent additional cost to the transacting public, the increase is only fair considering that the SEC took more than two decades to modify its fees. Moreover, not all transaction fees were increased.
3. Update on General Information Sheet (GIS) and Notification Update Form (NUF)
Under SEC MCs Nos. 14 and 16, series of 2016, revised templates of the GIS and NUF have been issued. Both can be downloaded from the SEC website. The GIS must be filed annually within 30 calendar days after the actual general annual meeting of the stockholders/members or after the anniversary date of the issuance of the SEC license while the NUF must be filed within 30 calendar days from the occurrence of the reportable change.
Markedly, the new GIS and NUF now have separate pages where the Tax Identification Numbers (TIN) and addresses of the Board of Directors/Trustees, Officers, Stockholders and Resident Agent have to be indicated. However, the separate sheet designated as the TIN Page will not be uploaded for public viewing in the SEC i-View (the Commission’s online database that is accessible to the public for a fee).
Further, the Corporate Secretary’s Certification has been revised to include, among others, the stipulation that failure to file the GIS for five consecutive years shall be construed as non-operation of the corporation, which is a ground for revocation, with the corporation considered as waiving its right to a hearing for the said revocation.
4. Reduced requirements for financing and lending companies
Part of the reform initiatives of the SEC to ease doing business in the Philippines is to modify the Application Form, Company Information Sheet and Personal Information Sheet, which are documents required by the Company Registration and Monitoring Department (CRMD) in securing a Certificate of Authority to Operate as a Financing Company/Lending Company. Likewise, the Treasurer’s Affidavit for this particular industry has been revised. The purpose of these modifications is to consolidate some of the documentary requirements and minimize redundancies in the elicited information.
Further, the CRMD dispensed with the following requirements: (1) local police clearance; (2) certificate of good moral character; (3) work permit from the Department of Labor and Employment for foreign directors and officers; and (4) location map and copy of the lease contract or title of the building/unit where the company intends to locate or is located.
However, there is an additional requirement of submitting a valid clearance from the National Bureau of Investigation (NBI clearance) for all incorporators and stockholders, regardless of nationality. The NBI clearance was previously required only from Filipino incorporators and stockholders, and from foreign directors and officers.
With the recently introduced changes, the SEC has turned a page on its institutional landscape by adapting to the demands and trends of the times. To stay on the path of competitiveness, the government must embrace change as its mantra for development. If the Philippines intends to engage the new world order of connectivity, it must define its framework for change. After all, innovation is the key to the future.
The views or opinions presented in this article are solely those of the author and do not necessarily represent those of Isla Lipana & Co. The firm will not accept any liability arising from the article.
Cyril B. Pestilos is a Senior Consultant at the Tax Services Department of Isla Lipana & Co., the Philippine member firm of the PwC network.
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