Keeping up with SEC updates

The Securities and Exchange Commission (SEC) has rolled out several issuances this 2026 to update the regulatory framework for corporations. More than just procedural changes, the updated requirements represent reforms to help simplify and improve the ease of doing business in the Philippines. For registered corporations, keeping abreast with the new rules is necessary to avoid potential violations and penalties. Let’s take a closer look at what these changes mean.

Statutory Audit Requirement

One of the key changes introduced by the SEC is the increase in the threshold at which corporations must submit audited financial statements (AFS) . Previously, following the Revised Corporation Code (RCC), corporations with total assets or total liabilities of at least P600,000 were already mandated to file AFS. Now, to align with current economic conditions, the SEC exercised its authority under Section 74 of the RCC (with the approval of the Department of Finance) and raised the threshold to more than P3 million in total assets or total liabilities.

In lieu of the AFS, exempt corporations need only to submit the financial statements accompanied by the Statement of Management Responsibility signed by the Chairman of the Board, President/Chief Executive Officer, and Treasurer/Chief Financial Officer duly authorized by the Board of Directors. In their absence, the Board may expressly designate another signatory.

This new threshold is effective for fiscal years ending or after 31 December 2025. The higher threshold is expected to benefit start-ups and small enterprises by removing the need to comply with audit requirements. Nonetheless, businesses should note that the Bureau of Internal Revenue still mandates the preparation of the AFS for corporations with gross sales/receipts exceeding P3 million for the taxable year in compliance with the Tax Code.

Special Audit Report

Another significant move from the SEC is the expanded use of subscription contracts as supporting documents for applications to increase the Authorized Capital Stock (ACS).

Previously, a cash-funded ACS increase only required the submission of a subscription contract except when the increase amounts to more than P50 million, in which case a Special Audit Report (SAR) was also necessary.

The SEC removed this distinction under Memorandum Circular 6-2026. Under the relaxed rules, a notarized subscription contract executed by the subscriber/s, the President, and the Treasurer of the corporation will now suffice, regardless of the amount of increase. If the President and/or Treasurer are unavailable to sign the subscription contract, a Director or Officer may sign, as long as he has been duly authorized by a Board Resolution.

However, Special Audit Report must still be submitted in case the applicants for increase in ACS are corporations which are either listed, public as defined under the Securities Regulations Code, offering/selling securities to the public or holders of secondary licenses regulated by the SEC. It should be emphasized that these changes only apply to increase in ACS settled in cash. In case the increase in ACS will be paid in-kind, specific SEC requirements depending on the form of payment must be followed.

This move is expected to shorten the preparation of the documentary requirements and, hopefully, the review process for increase in ACS applications. This would also allow companies to save costs normally incurred in the preparation of the SAR.

Beneficial Ownership Registry

Another notable change in SEC rules affects the disclosure requirements for Beneficial Owners. As most people are aware, Beneficial Owners refer to any natural person who ultimately owns or controls or exercises effective control over a corporation or legal entity. To ensure that corporations will not be misused for purposes contrary to law such as corruption, money laundering, terrorism and the like, the SEC requires corporations to disclose their beneficial owners.

Previously, beneficial ownership information was reported through a separate page of the General Information Sheet (GIS). This has now changed with the SEC’s launch of the Hierarchical and Applicable Relations and Beneficial Ownership Registry, or simply called HARBOR, the SEC’s new beneficial ownership registry. Beginning 30 January 2026, corporations are now required to file the beneficial ownership information via HARBOR, and will no longer form part of the GIS.

As part of this transition, new versions of GIS have also been released. Access to HARBOR requires the authorized filer to log in through their eSECURE account, which is integrated with the SEC’s electronic filing system (eFAST).

For new corporations, beneficial ownership information must be provided during the incorporation process. For existing corporations, the rule would depend on when the GIS is filed. If the 2026 GIS was submitted with the beneficial ownership information before 30 January 2026, then no separate HARBOR filing is required for 2026. The beneficial ownership information must only be uploaded via HARBOR when the 2027 GIS is filed.

On the other hand, if the GIS is submitted on or after 30 January 2026, then the new GIS template must be used, and the beneficial ownership information must be disclosed via HARBOR. Any change in the beneficial ownership information must be reported within seven days of its occurrence. Similarly, if a GIS submitted before 30 January 2026 will need to undergo amendment, then the GIS using the new template must be filed, and separate HARBOR disclosure is required.

Under this new system, corporations only need to input beneficial ownership information once through HARBOR (except when changes occur). Since HARBOR is integrated with the SEC’s eFAST, the submission of the beneficial ownership declaration form will be done (by clicking submit) as part of the GIS filing process. This effectively reduces the information needed to be manually inputted in the GIS on a yearly basis.

With all accounts now interconnected (eSECURE, eFAST and HARBOR), it is important to ensure that all information encoded is consistent across accounts to avoid any discrepancies or complications.

The SEC’s digitalization efforts demonstrate meaningful reforms. While the initial transition may present challenges, such as account creation and portal navigation, these initiatives hold promise for delivering long-term benefits to the public, enhancing transparency, streamlining compliance, and improving the overall compliance experience. They say every journey begins with a single step, so it is extremely encouraging that the SEC has already taken several steps to carry out its reform agenda.

The views or opinions expressed in this article are solely those of the author and do not necessarily represent those of Isla Lipana & Co. The content is for general information purposes only, and should not be used as a substitute for specific advice.