dog

SEC MC No. 10-

2022 Bulletin

T he Securities and Exchange Commission issued

Memorandum Circular No. 10, series of 2022,
entitled “Amendments to SEC Memorandum
Circular No. 15, s. 2019 (The 2019 Revision of the GIS) Increasing
the Penalties and Imposing Additional Non-Financial Penalties and
For Stock Corporations
Providing Further Guidelines for Submission” (SEC MC No.10-
2022 or the “Circular”). The Circular took effect on January 1,
2023. It increased the penalties imposed under the 2019
Circular and imposed additional non-financial penalties. Retained Penalties
earnings

DISCLOSURE OF BENEFICIAL Less than First Violation PHP50,000.00

PHP500,000.00
OWNERSHIP INFORMATION Second PHP100,000.00
Violation
All corporations registered with the SEC are required to take Third PHP250,000.00
reasonable measures to obtain and hold up-to-date Violation
information on their beneficial owners and to disclose the Fourth and PHP500,000.00
same in a timely manner in the GIS. Failure to comply with this Subsequent
disclosure requirement is subject to penalties as prescribed by Violations
the SEC, which will be discussed further below. PHP500,000.00 or First Violation PHP100,000.00
more but less than
Second PHP200,000.00
UPDATING OF BENEFICIAL PHP5,000,000.00
Violation
OWNERSHIP INFORMATION Third PHP500,000.00
Violation
The SEC shall be timely apprised of relevant changes in the
Fourth and PHP1,000,000.00
submitted beneficial ownership information as they arise. An
Subsequent
updated GIS shall be submitted to the SEC within thirty (30)
Violations
calendar days after such change occurred or became effective.
PHP5,000,000.00 or First Violation PHP150,000.00
more but less than
The 2019 Circular has been amended to prescribe a uniform Second PHP300,000.00
PHP10,000,000.00
period for the updating of beneficial ownership information. Violation
The “30 calendar days” now applies even to corporations that
Third PHP750,000.00
do not have multiple layers of corporate stockholders.
Violation
Fourth and PHP1,500,000.00
INCREASED PENALTIES Subsequent
Violations
Failure to Disclose PHP10,000,000.0 First Violation PHP200,000.00
0 or more
The penalties for failure to disclose, without any lawful cause, Second PHP400,000.00
beneficial ownership information shall be based on the Violation
retained earnings (whether appropriated or unappropriated) Third PHP1,000,000.00
or fund balance of the reporting corporation. The penalties Violation
have been increased to the following:
 Each day of delay in the submission of beneficial ownership
Fourth and PHP2,000,000.00
information shall be considered a continuing violation. An
Subsequent
additional fine of PHP1,000.00 for each day of delay shall be
Violations
imposed, but in no case shall the additional fine for the
continuing violation exceed PHP2,000,000.00.

False Declaration

If the SEC finds motu proprio or upon referral by a competent

authority that a corporation submitted false beneficial
ownership information, the SEC shall send a Notice and Order
to the corporation, stating:

1. the fact of false disclosure of beneficial ownership

information; and
2. giving the corporation fifteen (15) calendar days to
comply and submit complete and accurate beneficial
ownership information and a written explanation for
the false disclosure.
For Non-Stock Corporations
If the corporation fails to comply with the Notice and Order
after the fifteen (15)-day period has lapsed, or after a finding
Retained Penalties by the SEC through its Resolution that the corporation indeed
earnings submitted false beneficial ownership information, the
corporation shall be penalized with a fine of up to
Less than First Violation PHP25,000.00 PHP2,000,000.00 and shall be subsequently dissolved.
PHP500,000.00
Second PHP50,000.00 The directors, trustees, and officers found responsible for the
Violation submission of the False Declaration or for the non-compliance
Third PHP100,000.00 with the Notice and Order shall each be penalized with a fine
Violation of up to PHP200,000.00 and shall be disqualified from being
Fourth and PHP250,000.00 directors, trustees, and officers of any corporation for a period
Subsequent of five (5) years.
Violations
PHP500,000.00 or First Violation PHP50,000.00 Liability of Directors/Trustees and Officers of the
more but less than Corporation
Second PHP100,000.00
PHP5,000,000.00
Violation The directors/trustees and officers of the reporting
Third PHP200,000.00 corporation shall exercise the due diligence required in
Violation ensuring that the requirement to disclose its beneficial owner
in the GIS is complied with. This due diligence requirement is
Fourth and PHP500,000.00 deemed complied with if reasonable measures are undertaken
Subsequent to obtain and hold updated information on the beneficial
Violations owners of the corporation and to ensure that such information
PHP5,000,000.00 or First Violation PHP75,000.00 is timely disclosed in the GIS. Such reasonable measures
more but less than include the adoption of written procedures for obtaining,
Second PHP150,000.00
PHP10,000,000.00 updating, and recording beneficial ownership information and
Violation
timely disclosing the same in the GIS submitted to the SEC by
Third PHP300,000.00 the Corporate Secretary. Board and Senior Management
Violation Oversight in ensuring that such procedures are observed shall
Fourth and PHP750,000.00 likewise be required as part of the due diligence measures.
Subsequent
Violations If the SEC finds that the directors/trustees and/or officers of
PHP10,000,000.0 First Violation PHP100,000.00 the reporting corporation, without lawful cause, failed to
0 or more exercise the due diligence required in ensuring compliance
Second PHP200,000.00 with the requirement to disclose beneficial ownership
Violation information, resulting in no beneficial owner being timely
Third PHP400,000.00 disclosed in the GIS or in the non-submission of the GIS
Violation containing such information within the prescribed period, the
Fourth and PHP1,000,000.00 following penalties shall be imposed upon such directors,
Subsequent trustees, and/or officers:
Violations
a. First violation – PHP10,000.00
b. Second violation – PHP20,000.00
c. Third violation – PHP50,000.00
d. Fourth and subsequent violations – PHP100,000.00

The SyCipLaw Corporate Services Bulletin | February 2023 2

 The absence of written procedures and policies for obtaining, Criminal Actions and Criminal Liability
updating, and recording beneficial ownership information and
for the timely disclosure thereof to SEC or the lack of Board or The imposition of administrative sanctions shall be
Senior Management Oversight to ensure compliance with such without prejudice to the filing of criminal charges against
policies and procedures, shall be prima facie proof of failure to persons responsible for violation of Title XVI of the RCC
exercise the due diligence required. Every submission of the as well as other applicable laws, rules, and regulations.
GIS without the required beneficial ownership information or
every instance of non-submission or late submission of the GIS,
arising from the failure to exercise the due diligence required APPLICATION TO FOREIGN
shall be considered as a prima facie violation of the duty to
exercise the due diligence required by said directors/trustees
CORPORATIONS
and/or officers.
Pursuant to SEC MC No. 30, S. 2020, the pertinent provisions
Other Imposable Penalties and amendments of MC No. 15, S. 2019 remain applicable to
Foreign Corporations. The penalties as provided in this
The SEC may, in its discretion, and subject to existing laws and Circular shall be applicable to foreign corporations.
regulations, impose the penalty of suspension or revocation of
the Certificate of Incorporation of the reporting corporation
along with other penalties that are within the power of SEC to
SUBMISSION OF THE GIS IN THE
impose, in the following cases:
EFAST
1. Willful violation of this Circular or related orders of
SEC; or All Corporations are required to file their annual reportorial
2. Refusal to permit any lawful examination into its requirement through SEC’s Electronic Filing and Submission
affairs. Tool (eFAST). Submission of reports Over-the-Counter (OTC)
and/or through mail/courier via SENS shall no longer be
The foregoing penalties are without prejudice to the accepted.
imposition of other applicable penalties as provided under the
Revised Corporation Code of the Philippines (RCC), the
Securities Regulation Code (SRC), and other rules and
regulations of SEC.

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The SyCipLaw Corporate Services Bulletin | February 2023 3