BSP cautions banks against dealing with delinquent firms
The Bangko Sentral ng Pilipinas (BSP) has told banks to exercise caution when doing business with companies that are at risk of losing their incorporation papers for failure to submit their annual financial statements.
In a memorandum dated Jan. 14, 2025, the BSP reminded regulated entities to “ensure the conduct of appropriate customer due diligence” on their corporate clients, particularly those flagged by the Securities and Exchange Commission (SEC) that are in danger of being suspended for not filing their audited financial statements.
The central bank said financial firms must update their customers’ records and risk profile. This will start by checking if a bank has customers in the SEC’s list.
The BSP then ordered its regulated firms to advise any concerned clients to directly coordinate with the SEC.
SEC requirements
Under the law, every corporation—domestic or foreign—that is doing business in the Philippines shall submit to the SEC annual financial statements and a general information sheet, among other reportorial requirements, annually and within the period prescribed by the regulator.
Failure to comply with this rule after proper notice and hearing is one of the grounds for suspension or revocation of the certificate of incorporation.
In a notice issued last Dec. 13, the SEC listed 11,677 companies that have failed to submit their annual reports from 2015 to 2022. This already far exceeds the two-year grace period given to corporations that did not submit reportorial requirements three times within a five-year period.
These firms are under evaluation for possible suspension of their certificates of incorporation. To avoid losing their incorporation papers, the SEC said companies that appeared in the list may avail of the regulator’s Enhanced Compliance Incentive Plan (ECIP), which provides significantly lower fees until Dec. 31.
Under the ECIP, noncompliant corporations and those with a “delinquent” status may only have to pay P20,000 to settle their penalties. The SEC’s current schedule of fees stipulate that these companies may incur up to P22,000 in penalties. They also have to pay fees for every month that they fail to submit the required documents.
