Client Advisory Letter

MDF guidelines

Guidelines and deadline for the MDF submissions of non-stock corporations

The SEC released the following guidelines for all non-stock corporations regarding their submissions of Mandatory Disclosure Forms (MDFs):

1. Deadline
   
   The deadline for submitting the printed and notarized copy of the MDFs shall be on 31 July 2020 provided that no community quarantine is still in effect and all travel restrictions have accordingly been lifted.
   
   All MDF submissions coursed through courier services, registered mail and electronic mail (email) must be mailed or received by the courier not later than 31 July 2020.
   
   
2. Access to MDFs
   
   Non-stock corporations which have not yet submitted the printed MDF may fill out and submit the MDF online via the link https://forms.gle/KF4iBSimLKvChCwRA that shall be accessible to the public from Monday to Friday (8AM to 5PM) but until 15 July 2020 only.
   
   
3. Manner of submission
   
   Printed copies of the MDF must be duly notarized and may be submitted through the following means:
   1. Via courier services
      
      MDFs filed via courier services shall be deemed to have been filed on the date they were received by the courier. The courier packaging or label must clearly show the date when the MDF was filed and must be addressed to:
      
      Atty. Oliver O. Leonardo
      Officer-in-Charge
      Enforcement and Investor Protection Department
      Securities and Exchange Commission
      Ground Floor, PICC Secretariat Building, PICC Complex,
      Roxas Boulevard, Pasay City”
   2. Via registered mail through postal services/post offices
      
      The post office stamp must clearly reflect the date it was mailed. MDFs filed through registered mail shall be deemed to have been filed on the date they were mailed. They shall be addressed to the same person and address in option “a” above.
   3. Via email
      1. Scanned copies of the printed and notarized MDFs may be sent in Portable Document Format (PDF) to mdfsubmission_amld@sec.gov.ph.
      2. The following information shall be indicated in the subject field of the email:
      3. “MDF submission – [company name] [date of online submission: mm/dd/yy]”
      4. The authorized person who signed the verification/declaration page of the MDF must execute an undertaking stating that they shall submit a hard copy of the printed and notarized MDF should they be required to do so by the SEC. Such a written undertaking shall likewise be scanned and sent in PDF in the same email along with the scanned copy of the printed and notarized MDF. A template for the undertaking may be downloaded from http://www.sec.gov.ph/2020aml_form_annex-a/.
      5. The same official company email address used in filling out the MDF online must be used in submitting the scanned copy of the MDF. All SEC communications may be sent to such official company email address and the entity concerned is charged with the responsibility of maintaining the same.
         
         Any change in the official email address should be immediately communicated in writing to the Enforcement and Investor Protection Department (EIPD) by the corporate secretary. Until then, all communications sent to the official company’s email address as appearing on record shall be deemed to have been received by the company.
      6. The scanned notarized MDFs sent through email shall be deemed to have been filed on the date the email was sent, provided that the printed and notarized copy is submitted within a specified period as may be required by the SEC.
      7. An email acknowledgment receipt shall be sent within five days from the date the MDF was received and must be printed and attached to the printed and notarized MDF.
4. Receiving copy
   
   Companies filing their MDFs through courier and registered mail shall include a duplicate copy of the MDF for their receiving copy. Only one original copy will be received by the SEC.
   
   The duplicate copies stamped received by the EIPD may later be picked up by an authorized representative of the party concerned with a valid government ID and proper authorization by the company being shown. Only those who have sent two copies may claim their receiving copy from the SEC Main Office once the community quarantine has been officially lifted.
5. Submission to the Extension Offices
6. Printed and notarized MDFs may still be accepted and received at the SEC Extension Offices.

 (SEC Notice posted 9 June 2020)

CGFD companies

Deadlines and procedures for SEC filings and compliance requirements

In view of the GCQ declaration in Metro Manila effective 1 June 2020, investment companies, registered issuers of proprietary and non-proprietary shares/timeshares, public companies, financing companies, lending companies, foundations, accredited microfinance NGOs, corporate governance institutional training providers and publicly-listed companies under the supervision of the Corporate Governance and Finance Department (CGFD) are advised as follows:

1. Receiving and filing of reports, letters and requests
   
   The CGFD Office in PICC Complex, Pasay City is now open from Monday to Friday (8AM to 3PM) to receive hard copies of SEC Form 20-IS, SEC Form 12-1, ICA-7-1 and SEC Form 19-1; requests for exemption and Exemptive Relief under the Securities Regulation Code; and applications for voluntary revocation.
2. Issuance of Payment Assessment Form (PAF)
   
   CGFD-covered companies may request for and be issued electronic copies of the PAF by sending a request via email to cgfd@sec.gov.ph.
3. Payment of annual fees
   
   Lending and financing companies with annual fees that fell due during the ECQ from 16 March 2020 up to 15 June 2020 are now required to settle and pay starting 15 June 2020 until 28 June 2020.
4. Request for monitoring of the following companies shall be sent via email to cgfd_md@sec.gov.ph:

Face to face

Online applications with the SEC Company Registration and Monitoring Department

Pursuant to the Guidelines on the Implementation of the General Community Quarantine (GCQ) effective 1 June 2020, the Company Registration and Monitoring Department (CRMD) shall implement online platform applications through the respective links/electronic mail gateways which may be viewed at http://www.sec.gov.ph/wp-content/uploads/2020/06/2020NOTICE_GCQ-CRMD_Rev060720.pdf.

To mitigate the risk of COVID-19 infection, stringent social distancing measures shall be implemented during manual or “face to face” operations at the SEC Main Office. These operations shall be limited to specific receiving and releasing activities, and to the registration of stock and transfer/membership book.

Only applications assessed and approved for payment through online processing will be entertained. Electronic proof of approval for payment/proof of payment (if paid) may be presented through the guard on duty to be allowed entry.

CRMD applications that were processed prior to the Enhanced Community Quarantine (ECQ) shall be entertained for the release of documents for payment and for the issuance of Payment Assessment Forms. However, for companies with applications not yet approved for payment but were pre-processed before the ECQ, they may get their pre-processed documents but must further comply online through the abovementioned emails.

(SEC Notice posted 3 June 2020)

Restrictions

Amended guidelines for permitted business establishments during the quarantine

The DTI amended Memorandum Circular No. 20-22, which identifies business establishments allowed to operate in areas under ECQ and GCQ. The amendments include the following:

• Revised list of Category I-IV business establishments or activities which may be accessed at https://www.dti.gov.ph/sdm_downloads/memorandum-circular-no-20-33/. No presumption shall arise as to the exclusivity of the enumeration of business establishments or activities.
• Movement of workers
  
  Quarantine control points or checkpoints shall permit the movement of workers of business establishments or of activities allowed to operate. Workers may be asked to present their company identification cards, certificates of employment or previously issued IATF IDs to allow passage. Rapid Pass shall not be required.
  
  Receiving local government units (LGUs) shall neither require nor impose mandatory fourteen (14) day quarantine on workers entering their jurisdiction. This applies to receiving LGUs that have a different community quarantine classification from the worker’s point of origin.
• High-risk groups
  
  In areas under ECQ, MECQ, and GCQ, the following shall not be allowed to be outside their residences except when reporting to work in permitted industries and offices, and when obtaining essential goods and services:
  • those aged between 18 - 21 years
  • those sixty (60) years old and above
  • those with immunodeficiency, co-morbidities or other health risk
  • pregnant women
  • any person who resides with the aforementioned
• Business establishments allowed to operate must:
  • strictly implement the required public health standards prescribed by the DOH for offices/workplaces under Administrative Order No. 2020-0015, DTI-DOLE Joint Interim Guidelines on Workplace Prevention and Control of COVID-19 and any issued protocols for specific sectors;
  • report or notify public health authorities of workers who show COVID-19 signs or symptoms; and
  • implement contact tracing in coordination with the DOH and the LGU concerned in case a worker or workers have been exposed to COVID-19.

(DTI Memorandum Circular No. 20-33, issued 8 June 2020)

Governing ICRCs

Corporate Governance for ICRCs

The Insurance Commissioner promulgated the Revised Code of Corporate Governance for Insurance Commission Regulated Companies, which include insurance/reinsurance companies, insurance and reinsurance brokerage companies, mutual benefit associations, pre-need companies and health maintenance organization companies duly authorized by the Insurance Commission to conduct business.

The above Revised Code is attached to IC Circular Letter No. 2020-71 which may be accessed at www.insurance.gov.ph.

(IC Circular Letter No. 2020-71, dated 13 June 2020)

Insurance deadlines

Further extending the period to comply with IC CL Nos. 2019-65 and 2020-08

All Insurance Commission Regulated Entities shall comply with the following regulatory requirements on or before the extended deadlines:

Establishment Report

Requirement for employers implementing FWAs, retrenchment and closures

Pursuant to Labor Advisory No. 17-2020, all employers implementing the following must accomplish and submit an Establishment Report (RKS Form 5 of 2020), which may downloaded from https://www.dole.gov.ph/news/labor-advisory-no-17-a-series-of-2020-establishment-report-form/:

1. Flexible work arrangement (FWA) or alternative work scheme (AWS)
2. Temporary closure
3. Retrenchment or reduction of work force
4. Permanent closure

Effective 16 June 2020, the Establishment Report shall be submitted either personally or online to the DOLE provincial/field office that has jurisdiction. Establishment Reports must be submitted as soon as possible in case of FWA/AWS or temporary closure, and within thirty (30) days before the effectivity of termination in case of retrenchment or permanent closure.

(DOLE Labor Advisory No. 17-A-2020, dated 11 June 2020)

Due and demandable

Effect of lifting of ECQ/MECQ on loan and interest payment obligations

The BSP Governor added the following frequently asked questions on the implementing rules and regulations of the Bayanihan Act[1]:

1. How will the classification of NCR under the GCQ and certain parts of the country under the ECQ or MECQ effective 1 June 2020 affect the mandatory grace period provided under the Bayanihan Act
   
   Answer: The mandatory 30-day grace period shall no longer apply effective 1 June 2020 pursuant to IATF Resolution No. 40, which places a majority of provinces and cities under the GCQ or MGCQ. Hence, all loan payments with principal and interest falling due from 1 June 2020 onwards shall be due and demandable.
   
   With the lifting of the ECQ in a majority of provinces and cities, the condition for granting the 30-day grace period under the Bayanihan Act is no longer present.
2. Will the mandatory 30-day grace period still apply to loan and/or interest payments falling due until 31 May 2020 even if the new due dates will fall on or after 1 June 2020?
   
   Answer: Yes. It will continue to apply.
3. Following the lifting of the ECQ/MECQ in a majority of provinces and cities effective 1 June 2020, are borrowers required to pay in June 2020 all loan payments that were granted the 30-day grace period in March, April and May 2020?
   
   Answer: No. The mandatory 30-day grace period had the effect of moving the due date by 30 days. The amortization will be effectively rescheduled in accordance with the grace period.
   
   Thus, effective 1 June 2020, the borrower shall only pay the amount of the loan principal and/or interest effectively due in June 2020 or for one month following the application of the 30-day grace period. The last payment due date of the loan is effectively extended by a period equivalent to the grace period granted for the duration of the ECQ.
   
   For accrued interest in March, April and May, the borrower may pay lump-sum in June 2020 or on a staggered basis over the remaining loan term.
4. Can covered institutions set a deadline for payment of interest accrued during the mandatory grace period?
   
   Answer: Borrowers have the option to pay interest accrued during the mandatory grace period in lump-sum on the next payment due date or on a staggered basis over the remaining loan term. Covered institutions may offer less onerous payment terms that include setting new payment due dates for said interest accrued.
5. Can covered institutions impose additional DST for credit extensions/restructuring granted during the ECQ/MECQ period.
   
   Answer: No. No DST shall be imposed. To this effect, the BIR has issued RR No. 8-2020, and RMC Nos. 35-2020 and 36-2020.

(BSP Memorandum No. M-2020-45, dated 1 June 2020 and SEC Notice, dated 17 June 2020)

[1] Republic Act No. 11469.