PUBLIC COMPANIES and registered issuers will soon be required to submit corporate governance reports annually to the Securities and Exchange Commission (SEC).
“The SEC will soon require public companies and registered issuers to submit an Annual Corporate Governance Report (ACGR), as part of efforts to develop a strong corporate governance culture in the country,” the commission said in a statement.
Public companies are those with at least P50 million in assets and have 200 or more stockholders owning at least 100 shares each of equity securities.
Meanwhile, registered issuers are those that issue proprietary and/or nonproprietary shares or certificates, equity securities not listed but are offered to the public, and registered debt securities offered to the public, whether or not listed in an exchange.
The corporate regulator drafted an SEC form for ACGR for public companies and registered users. Reporting will be done through a “comply or explain” approach in accordance with SEC Memorandum Circular (MC) No. 24, series of 2019 or the Code of Corporate Governance and SEC MC No. 19, Series of 2020.
The Code of Corporate Governance puts forward governance responsibilities, disclosure and transparency, Corporate Go control and risk management frameworks, cultivating a synergic relationship with shareholders/members, and duties to stakeholders.
Companies are not required to adopt these principles, instead they are given the “flexibility” in creating corporate governance practices. However, they must state in their reports whether they are compliant with the Code’s provisions and identify areas where they are noncompliant and explain why.
Under the draft rules, ACGRs will cover information from January to December of a given year, regardless of registration date.
Submission of an ACGR will be required on or before May 30 for as long as these companies qualify as public companies or registered users. Newly registered firms should also submit their Manual on Corporate Governance with the commission.
Three copies must be submitted to the SEC main office or the nearest extension office, one of which should be notarized and include the original and manual signatures of the company’s officers. Firms will be fined P5,000 and a monthly penalty of P500 for incomplete or incorrect signatories.
Once the draft circular is approved, these firms may submit their reports covering the January-to-December period of 2021 on or before May 30, 2022. Late submissions and noncompliance may lead to a P20,000 penalty fee and a monthly fee worth P2,000.
Publicly listed companies and registered issuers that are already listed on the Philippine Stock Exchange are exempt from the new guidelines as they already required to submit their ACGRs under a previous circular.
Once the new rules take effect, public companies and registered users will no longer need to submit a certificate of compliance with the Manual of Corporate Governance, as well as a certificate of attendance of directors in board meetings. — K.C.G.Valmonte