IMAGINE a world where staying compliant doesn't just keep you out of trouble, but also helps your business thrive.
Picture a business environment where compliance, more than a chore, becomes a stepping stone to long-term success. Welcome to the future envisioned by the Securities and Exchange Commission (SEC), which is shaking up the corporate world with its Enhanced Compliance Incentive Plan (ECIP).
This innovative program is designed to reward businesses that strive to exceed their minimum regulatory standards.
What's in it for your business? Think of faster approvals, fewer penalties, and even the chance to be publicly recognized as a leader in corporate governance and transparency. By embracing ECIP, your business demonstrates its commitment to integrity and responsible practices, winning the trust of stakeholders, clients, and investors.
In a marketplace where trust is currency, this can provide a crucial edge over competitors.
The ECIP encourages companies to turn regulatory adherence into a strategic advantage. The program promotes good governance, transparency and accountability by offering tangible benefits to businesses that exceed their compliance obligations.
Under SEC Memorandum Circular (MC) 13, series of 2024, companies which have incurred fines or penalties for the late or non-filing of their annual financial statements, general information sheets, or noncompliance with MC 28, series of 2020, can regain their good standing for a fee of just P20,000.
MC 28 mandates that corporations submit official and alternative mobile phone numbers and email addresses for their transactions with the SEC. This promotes transparency and helps ensure smoother communication between businesses and regulators, while also minimizing administrative delays.
Corporations that have been suspended, or had their registrations revoked, can also apply for reinstatement by paying a petition fee of P3,060 and settling only 50 percent of their total fines and penalties.
But here's the catch: the window to apply for the ECIP runs only till November 30. This limited timeframe offers companies a crucial opportunity to clear up past compliance issues and start fresh without financial burdens.
As SEC chairman Emilio Aquino pointed out, "The amnesty program in 2023 showed that companies and associations recognize the importance of maintaining their good standing."
The benefits of being in good standing go beyond legal or financial security. A compliant corporation enjoys smoother operations, better relationships with regulators, and stronger trust from investors and customers.
By participating in the ECIP, businesses can demonstrate their willingness to comply with their reportorial requirements and, in doing so, contribute to a more robust and dynamic business environment. The SEC is giving noncompliant, suspended, or revoked corporations a second chance — an opportunity to settle their fines at a lower rate, regain their good standing, and continue contributing to the economy.
The ECIP is open to a wide range of businesses, including stock and nonstock corporations, branch offices, representative offices, regional headquarters, and regional operating headquarters of foreign companies.
However, certain companies are not eligible to participate in the program, such as those whose securities are listed on the Philippine Stock Exchange, those considered public companies, and those involved in intra-corporate disputes, among others.
This SEC initiative, more than just a compliance program, is a visionary approach to corporate governance. The ECIP aims to make compliance not just a legal requirement but a competitive advantage. By staying compliant, your business doesn't just avoid penalties, it gains an edge in operational efficiency, risk management, and reputation.
The ECIP isn't just about avoiding fines and penalties, but also about reimagining compliance as a tool for growth and competitive advantage. With the SEC's program, companies can foster a culture of integrity and accountability, all while improving their operational efficiency and reducing risks.
But the clock is ticking. The window to apply for the ECIP is limited, and businesses that don't take advantage of it may find themselves paying a steeper price in the long run.
Stay compliant, stay ahead — because in today's competitive business landscape, integrity is not just about keeping up with the rules, but also about leading the way.
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Ken John B. Asadon, CPA, CTT, MBA, is the tax partner of Paguio, Dumayas & Associates, CPAs (PrimeGlobal Philippines), an institutional member of the Association of CPAs in Public Practice (ACPAPP). His opinion does not reflect in any way the views of these institutions.
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