Connect with us

Hi, what are you looking for?


Corporations face higher fines for failure to disclose beneficial ownership


CORPORATIONS that do not disclose their beneficial owners will have to pay higher penalties, as well as face nonfinancial penalties, starting next year.

The Securities and Exchange Commission (SEC) issued Memorandum Circular No. 10, which increased the penalties on corporations that fail to disclose their beneficial ownership without any lawful cause. The circular will take effect on Jan. 1.

“It has been observed that despite the promulgation of the 2019 revision on the GIS (general information sheet) to include beneficial ownership information, a significant number of corporations have yet to declare their beneficial owners with the Commission,” the regulator said.

Aside from higher fines, the SEC said additional nonfinancial sanctions should be imposed on corporations “to make them proportional, effective, and dissuasive for noncompliance.”

This is in line with the recommendation of the Financial Action Task Force (FATF), which placed the Philippines in its “gray list” of jurisdictions subjected to increased monitoring for “dirty money” risks. It has been on the list since June 2021.

Under the circular, stock corporations with retained earnings of less than P500,000 will face fines ranging from P50,000 for the first violation to P500,000 for the fourth and subsequent violations. This is significantly higher than the previous penalties ranging from P10,000 to P100,000.

Nonstock corporations which have a fund balance of less than P500,000 will now pay a fine of P25,000 for the first violation, from P5,000 previously. The penalty will rise to P250,000 for the fourth and subsequent violations, from P50,000 previously.

Meanwhile, the SEC retained the fines for stock and nonstock corporations which have a retained earnings or fund balance of P500,000 up to P10 million. These corporations may pay up to four times the penalties imposed on those with retained earnings of less than P500,000.

The SEC will slap an additional fine of P1,000 on the corporation for each day of delay in the submission of the beneficial ownership information as a continuing violation. However, this may not exceed P2 million.

If found to have submitted false beneficial ownership information, a corporation may be penalized up to P2 million and “subsequently dissolved.”

Directors and officers of the corporation will also face higher penalties.

For the first violation, the company’s directors, trustees and officers will be fined P10,000 (from P5,000 previously). This will go up to P100,000 (from P50,000 previously) for the fourth and succeeding violations.

If found responsible for noncompliance of the beneficial ownership information disclosure, the directors, trustees and officers may face a fine of up to P200,000 each. They will also be disqualified from being appointed as directors, trustees and officers for five years.

The SEC can also revoke the corporation’s certificate of incorporation if it finds willful violation of this circular.

The SEC said the circular will also be applied to foreign corporations.

The GIS should now only be submitted through SEC’s Electronic Filing and Submission Tool as over-the-counter or mailed submissions will no longer be accepted. — Justine Irish D. Tabile

Your information is secure and your privacy is protected. By opting in you agree to receive emails from us. Remember that you can opt-out any time, we hate spam too!


Editor’s Pick

<?xml encoding=”utf-8″ ??> Aspect is the well-known property maintenance company in London that is recognised for its signature yellow and blue vans, which are...

Editor’s Pick

<?xml encoding=”utf-8″ ??> The Wakelet Microsoft 365 Children’s Parliament backed by The Express, is proud to announce that James Caan CBE, the former Chairman...


THE TOWERING BUILDINGS of Makati’s central business district are seen in the background in this May 13, 2020 file photo. — PHILIPPINE STAR/ MIGUEL...


A Philippines peso note is seen in this illustration on June 2, 2017. — REUTERS THE PHILIPPINES could benefit from the proposed Maharlika Investment...


PASSENGERS queue before the check-in counters at the Ninoy Aquino International Airport (NAIA) Terminal 3 after flights were canceled due to technical issues on...


By Arjay L. Balinbin, Senior Reporter METRO PACIFIC Investment Corp. (MPIC) expects to generate P500 million in revenue from its dairy business by 2025,...

You May Also Like


COVID-19 has had a significant impact on the mental health of Filipinos across different groups all over the archipelago. From frontline workers, parents balancing...


REUTERS By Luz Wendy T. Noble, Reporter The country’s foreign exchange buffers slightly increased as of end-October as the value of the central bank’s...


BW FILE PHOTO GROSS BORROWINGS by the National Government reached P2.6 trillion as of end-September as it continued to raise funds to respond to...


KARASOLAR.COM TENA, Ecuador — Ecuador’s rainforest Achuar people say their ancestors long dreamed of a “fire canoe” or “electric fish” that would let them...

Disclaimer: Respect, its managers, its employees, and assigns (collectively "The Company") do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

Copyright © 2022 Respect Investment. All Rights Reserved.