SEC moves to simplify rules for foundations

The Securities and Exchange Commission (SEC) is proposing a consolidated set of rules for foundations to simplify compliance and strengthen its supervision of the nonprofit sector.

The corporate regulator on Sept. 29 released the draft omnibus rules and guidelines on foundations and invited public comments until Oct. 15.

The proposal will gather registration, reporting and continuing compliance requirements currently spread across several laws, memorandum circulars and other SEC issuances.

“Through a single framework, the proposed rules provide foundations with a single, current reference for their organizational, reportorial and continuing compliance obligations, including the necessary forms, templates, instructions and procedures,” the SEC said.

Under the draft, a foundation must be organized as a nonstock, nonprofit corporation established to provide grants or endowments or raise funds for charitable, religious, educational, athletic, cultural, literary, scientific and social welfare purposes, among others.

Applicants must include the word “foundation” in their corporate name.

They must also maintain a minimum paid-up capitalization of P1 million, supported by a notarized certificate of bank deposit.

Foundations will be required to register their membership book with the SEC within 30 days of incorporation.

They must also submit a general information sheet within 30 days after their annual meeting. If no meeting is held, the document must be filed by Jan. 30 of the following year.

Those with total assets or liabilities exceeding P3 million must submit audited financial statements.

Foundations at or below the threshold may file unaudited financial statements signed under oath by designated officers.

The financial statements must be submitted within 120 days from the end of the fiscal year or according to the SEC’s annual filing schedule.

The draft will also replace the older, multidocument reporting requirements under Revised Rule 68 of the Securities Regulation Code with three simplified nonstock, nonprofit organization (NSPO) forms.

These forms will contain supplemental disclosures on a foundation’s operations, governance, programs, projects and use of funds.

Nonfiling of the required NSPO forms will carry a fine of P5,000 for each year. Late submissions would be penalized by P2,500 annually.