Extension of and penalty for noncompliance on website template for listed companies

We wrote an article regarding the required disclosure on the website of listed company mandated by Philippine Securities and Exchange Commission (SEC) promote a better corporate governance environment for publicly-listed companies. This was embodied in the SEC Memorandum Circular No. 11, Series of 2014. The SEC has enumerated the  information required under their respective recommended topic headings to be included in all publicly listed companies’ websites and were detailedly discussed in our article entitled “Disclosures on websites of listed companies mandated by SEC“.


Extension and Penalty

The SEC in its meeting last August 28, 2014, signed September 1, 2014, resolves the following:

  • To extend the compliance with SEC Memorandum Circular No. 11, Series of 2014 up to December 31, 2014
  • To impose penalties for non-compliance as follows:
    • Non-posting: Basic penalty – P10,000 | Monthly penalty – P2,000
    • Incomplete posting: Basic penalty – P5,000 | Monthly penalty – P1,000

The required disclosures are intended by the SEC for investors to check the Corporate Governance of their investee, at the same time, to help the publicly listed companies to rank high in the ASEAN Scorecard Peer Review.

Corporate Governance in the Philippines

The Philippine SEC is doing good with regards to requiring listed companies in outlining and disclosing corporate governance especially now that we are ranked near the bottom on Corporate Governance in Asia. The question is, will SEC be able to sustain this, or will non-compliance remain low that will put us to the bottom?

In a report posted at the blog of Chartered Financial Analyst Institute, Singapore and Hong Kong lead Asia on Corporate Governance, while the Philippines and Indonesia bring up the rear according to a recent briefing on corporate governance in Asia by the Asian Corporate Governance Association (ACGA).

Asia as a whole lags other markets on corporate governance standards according to the report.  However, the Philippines and South Korea showed the most improvement in corporate governance matters in the last two years.  Presentation from the ACGA is posted below:

Ranking 10th out of 11 in the Asian markets is really a not-so-good rating but improving for about 4 points, based on the report is a good start for a long-term reform. With the current moves of the SEC, are we going to sustain the growth or are we going to hit the bottom by the next report? It is for us to find out but basically, this will depend heavily on the compliance with the Corporate Governace reforms by covered companies as mandated by the SEC.

Also, neighboring and other countries and other are moving towards adopting the Integrated Reporting Framework <IR> which applies principles and concepts that are focused on bringing greater cohesion and efficiency to the reporting process, and adopting “integrated thinking” as a way of breaking down internal silos and reducing duplication.  It improves the quality of information available to providers of financial capital to enable a more efficient and productive allocation of capital. Its focus on value creation, and the ‘capitals’ used by the business to create value over time, contributes towards a more financially stable global economy and is a force for sustainability.

Question is, when will the Philippines adopt the <IR> in corporate reporting and go along with the global trend?

To know more of the <IR>, please refer to our article on Integrated Reporting: The future of corporate reporting and International Integrated Financial Reporting finally released.

To download a copy of SEC Memorandum Circular No. 18, Series of 2014, click here.

Disclaimer: Opinions expressed in this article are that of the author and information provided are for general conceptual guidance for public information and are not substitute for expert advice. Contact support@philcpa.org for more information and if you want to avail professional services. Find us on Facebook!

Orlando Calundan is a CPA who has exposures in FS audit of entities in various industries such as real estate, food/restaurants, manufacturing, service organizations and BPOs, automotive, holding/investment companies and more. He also has exposure on internal audit engagements.

What are you searching for?

Let us help you! Enter your 'search key word' to search an article / topic!