The Securities and Exchange Commission (SEC) in the Philippines has cancelled the corporate registrations and secondary licences of 401 lending companies.
The companies’ failure to meet reportorial requirements prompted this action. It forms part of the Commission’s efforts to address non-compliant firms and safeguard investors.
On May 30, the SEC’s Financing and Lending Companies Department (FinLend) issued an order to revoke the corporate registrations of these 401 corporations. The SEC identified these companies as delinquent for not submitting their required reports.
The companies failed to file several required documents. These included their audited financial statements and general information sheets. Additionally, they did not submit director or trustee compensation reports or director or trustee appraisal or performance reports, nor the standards used for assessment.
Consequently, the SEC also revoked their certificates of authority to operate as lending companies.
In October 2023, the SEC offered these companies an amnesty program. The program was to provide an opportunity to settle fines and penalties for late and non-compliance with reportorial obligations at reduced rates. The companies’ failure to participate in this program resulted in their classification as delinquent.
Under Section 177 of Republic Act No. 11232, also known as the Revised Corporation Code, the SEC has the authority to declare a corporation delinquent. This can occur if the corporation fails to submit reportorial requirements three times. These failures can be either consecutive or intermittent, provided they happen within a five-year period.
Furthermore, SEC Memorandum Circular No. 19, Series of 2023, stipulates that delinquent corporations have a six-month period from receiving the order of delinquency to submit their outstanding reportorial requirements. Non-compliance after this period allows the Commission to revoke their corporate registration.
Featured image: Edited by Fintech News Philippines, based on images by Freepik and elenapimukova via Freepik.
