SEC poised to ease reporting obligation of small businesses
The Securities and Exchange Commission (SEC) wants to exempt more small corporations from the mandatory submission of audited financial statements as it seeks to shrink “unnecessary” compliance costs for micro, small and medium enterprises (MSMEs).
In a statement, the corporate watchdog said it had submitted a policy paper to the Department of Finance (DOF) recommending that corporations with total assets or liabilities not exceeding P3 million be required to submit only annual financial statements.
These must be certified under oath by their treasurer or chief financial officer before submitting the documents in lieu of audited financial statements.
The proposed policy will apply to financial statements covering fiscal years ending on Dec. 31, 2025. This is still subject to the approval of the DOF.
“Our proposed policy will not only improve the ease of doing business, but will also cut unnecessary compliance requirements for micro entities, in support of the government’s goal of driving inclusive economic development,” SEC Chair Francis Lim noted.
The SEC currently requires corporations with total assets or liabilities of at least P600,000 to submit annual financial statements audited by an independent certified public accountant.
However, the regulator pointed out that the Revised Corporation Code of the Philippines also recognized the authority of the DOF to determine the cap.
In pushing for the expansion of the threshold, the SEC is also seeking to reduce incidents of rubber-stamp audits, cut barriers to registration and simplify compliance obligations.
“We have repeatedly said that MSMEs are the backbone of the Philippine economy, which is why the SEC remains committed to implementing measures that will foster a business environment that is easier to navigate for our budding entrepreneurs,” Lim said.
This is the agency’s latest move to make it easier for MSMEs to do business. Earlier, the SEC announced that its newest policies have resulted in over P80 million worth of discounts for small corporations. The total covered over 40,000 transactions, including company filings.
Of the total discount, more than half, or P40.9 million, went to MSMEs, according to the SEC.
In July, a time-bound 50-percent discount on the physical and authenticated copies of company filings took effect, translating to over P36.5 million in discounts. These documents include articles of incorporation and by-laws, general information sheets and annual financial statements that used to cost up to P2,000 each.
The discount will be effective until the end of the year.
Under a separate memorandum, the SEC also provided discounted rates on filing fees to support MSMEs. This allowed a total of 8,506 MSMEs to accumulate P21.4 million in discounts on fees that need to be paid before they are registered as corporations.
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