Accounting Alert

This Accounting Alert is issued to circulate Securities and Exchange Commission (SEC) Memorandum Circular (MC) No. 19-2023 dated October 26, 2023. The SEC promulgates the following guidelines that will standardize and govern the declaration of delinquent status and revocation of certificate of registrations of corporations pursuant to the grounds stated in Sections 21 and 177 of the RCC.

Adoption and Issuance of Guidelines:

Non-use of corporate charter

Corporations who have failed to formally organize and commence business within 5 years are deemed revoked as of the day following the end of the 5-year period subject to monitoring of the Commission. The Commission through its Company Registration And Monitoring Department (CRMD) shall enter a "Revoked Status" in the Commission's database and issue an order of revocation by registered mail to its President, Corporate Secretary, Treasurer, Compliance Officer, in-house counsel, director, trustee, incorporator or such officer identified in the latest available records of the Commission.

A corporation with a revoked status may, at any time, file a Petition to Lift the Order of Revocation, subject to existing rules and regulations.

Continuous inoperation

Corporations who commenced business but became inoperative for a period of at least five (5) consecutive years. A show-cause order will be sent through registered mail to its President, Corporate Secretary, Treasurer, Compliance Officer, in-house counsel, director, trustee, incorporator, resident agent or such officer identified in the latest available records of the Commission. The Commission shall enter a "Delinquent Status" if the Corporation:

1. Failed to appear before a commission at the hearing date, time, and place stated in the order and within 30 days failed to submit any justification why its status should not be delinquent.
2. Failed to submit any valid justification within 30 days from the receipt of the show cause order.

A corporation with a delinquent status by reason of its continuous inoperation may, within two (2) years from receipt of the Order of Delinquency, file a Petition to Lift the Order of Delinquency and resume its operations. 

Non-filing of reportorial requirements

The Commission shall enter a "Delinquent Status" if Corporations failed to file its Financial Statements (FS) and/or General Information Sheet (GIS) three times consecutively or intermittently within a period of five years.

A corporation with a delinquent status by reason of its non-filing or reportorial requirements may, within six (6) months from receipt of the Order of Delinquency, file a Petition to Lift the Order of Delinquency.

Corporations with delinquent status by reason of non-filing of reportorial requirements shall appeal within six months from the receipt of the Order of Delinquency provided the following shall be submitted:

(a) Audited FS;

(b) GIS;

(c) director or trustee compensation report

(d) director or trustee appraisal or performance report and the standards or criteria used to assess each director or trustee.

Failure to submit the reportorial requirements - the SEC shall enter a "Revoked Status" in said corporation's records.

See attached Memorandum Circular for further details.