A company that fails to start its business operation within five years after it was incorporated shall have its certificate of incorporation deemed revoked, the Securities and Exchange Commission (SEC) said.
The “revoked status” will start on the day following the end of the five-year period, with the corresponding order of revocation to be issued to the corporation.
Companies, however, could appeal the revocation by filing a petition to lift the order, the SEC said.
“If the petition is approved, the Commission shall issue an order lifting the delinquent or revoked status of the corporation. Petitions of corporations with pending intra-corporate dispute between two or more groups claiming ownership or right over the same, shall only be accepted upon the finality of a court decision resolving the intra-corporate controversy,” the SEC said.
Before an order of revocation is released, however, companies will be considered in a delinquent status and will be required to explain why it should not be categorized as delinquent.
“Failure to provide a valid justification for continuous inoperation shall cause the corporation to be placed under delinquent status, which means that the SEC shall no longer process such corporation’s applications for amendment of articles of incorporation, amendment of license, or conversion to one person corporation, among other similar transactions,” it said.
“A corporation with delinquent status due to continuous inoperation shall have two years from receipt of order of delinquency to resume operations, through the submission of proof of its operations, such as income tax returns, mayor’s or business permits, contracts, and receipts for payment of real estate tax, as well as other similar documents,” it added.
Companies that fail to file their financial statements (FS) and/or general information sheet (GIS) for three times within a five-year period, meanwhile, shall also be placed under delinquent status, the SEC said.
Such companies have six months from receipt of the order of delinquency to submit their audited FS, GIS, director or trustee compensation report, director or trustee appraisal or performance report, and the standards or criteria used to assess each director or trustee.
“If the non-compliant corporation fails to comply with these requirements, the SEC shall enter a ‘Revoked Status’ in its records in the Commission’s database and issue an order of revocation,” it said.
A company with delinquent status due to continuous inoperation may file a petition to lift the order of delinquency within two years.
A corporation with delinquent status due to non-filing of reportorial requirements may file the same petition within six months from receipt of the order of delinquency.
The release of the guidelines follows the issuance of a list of 22,403 ordinary corporations in danger of having their certificates of incorporation revoked for failure to submit their GIS within five years from the date of their incorporation.
Another 298,335 companies were remiss in filing their GIS for three consecutive times or intermittently within a five-year period.
The SEC said the companies’ failure to submit their GIS in the five years from their date of incorporation can be read to mean that they have not operated for that period.