Filing Past Due Articles of Incorporation with SEC

Below is a comprehensive legal article discussing the filing of past-due Articles of Incorporation with the Securities and Exchange Commission (SEC) in the Philippines. It covers the relevant statutory framework, deadlines, penalties, and practical considerations to guide corporations or incorporators who may find themselves in this situation.

1. Introduction

In the Philippines, incorporating a company requires compliance with the Revised Corporation Code of the Philippines (Republic Act No. 11232) and the rules, regulations, and circulars issued by the Securities and Exchange Commission (SEC). A crucial initial step in establishing a corporate entity is filing the Articles of Incorporation (AOI) with the SEC. This filing includes essential details such as the corporation’s name, principal office address, purpose, term, and other required information under the law.

However, there are instances where incorporators may neglect to file their Articles of Incorporation on time, or may have omissions and incomplete submissions causing protracted delays. This article addresses common issues surrounding past-due filings, including legal grounds, procedures, penalties, and practical tips.

2. Legal Framework

  1. Revised Corporation Code (R.A. 11232)

    • The Revised Corporation Code serves as the primary law governing the creation, organization, and regulation of corporations in the Philippines. It outlines the requirements for the formation of a corporation, including the filing of Articles of Incorporation.
    • Under Section 13 of R.A. 11232, the Articles of Incorporation must be executed, signed, and filed in accordance with SEC requirements.

  2. SEC Memorandum Circulars

    • The SEC regularly issues memorandum circulars outlining specific documentation and procedural requirements for incorporation. These circulars address documentary formats, notarization, timelines, and penalties for non-compliance.

  3. Other Applicable Regulations

    • Depending on the nature of the corporate purpose (e.g., financial institutions, publicly listed companies, foundations, etc.), other specialized government agencies may impose additional requirements or deadlines. These could include the Bangko Sentral ng Pilipinas (for banks) or the Insurance Commission (for insurance companies).

3. When Are the Articles of Incorporation Considered “Past Due”?

Under normal circumstances, the filing of the Articles of Incorporation must happen before the intended corporation officially comes into existence. In general, corporations in the Philippines do not legally exist until the SEC issues a Certificate of Incorporation. The following scenarios typically give rise to “late” or “past-due” submissions:

  1. Missed Initial Filing Deadline

    • Incorporators fail to finalize and file the AOI within a reasonable or prescribed period after the notarization of the documents.
    • The SEC’s guidelines do not allow indefinite delays between preparing Articles of Incorporation and officially registering them.

  2. Resubmission after SEC Findings

    • The SEC initially rejects or sends back the AOI due to incomplete requirements, misleading corporate names, or other deficiencies (e.g., non-compliant principal office address, conflicts with existing corporate names, etc.). If the incorporators fail to rectify these issues within the specified period, the filing is deemed delayed.

  3. Subsequent Amendments or Substitutions

    • There are cases where the original AOI was filed, but the incorporators need to submit amendments. If they fail to comply with the timeline for submission or resubmission, the SEC may treat such amendment filings as past due.

4. Consequences of Delayed or Non-Filing

When the Articles of Incorporation are not filed with the SEC in a timely manner, various consequences may arise:

  1. No Corporate Existence

    • A corporation only attains legal personality upon the issuance of a Certificate of Incorporation by the SEC. Without proper filing, the company does not legally exist, and cannot enter into valid contracts, open bank accounts, hire employees, or conduct business in the corporate name.

  2. Administrative Penalties

    • The SEC is authorized to impose penalties or fines for late or non-filing, in accordance with its schedule of fines and penalties. The amount varies depending on the period of delay and the type of entity. Generally, larger authorized capital stocks or certain industry-specific companies (like publicly listed companies) may incur higher fines.

  3. Risk of Denial or Revocation

    • If the delay persists, the SEC can deny the application for incorporation. In cases where documents were initially accepted subject to conditions (e.g., acceptance in principle), ongoing non-compliance could lead to a revocation of any provisional approval.

  4. Personal Liability

    • Incorporators or those acting on behalf of the unincorporated entity may be personally liable for obligations incurred in the name of the “corporation” during the period when the corporation was not validly existing.

5. Requirements and Procedures to File Past-Due Articles of Incorporation

5.1 Preparing Required Documents

To remedy a past-due filing, the incorporators or their duly authorized representatives must ensure that they have all the requirements updated and in order. Common requirements include:

  1. Articles of Incorporation (AOI)

    • Must contain all mandatory provisions required under Section 14 of R.A. 11232, including:
      • Name of the corporation (ensuring it is not already used or prohibited)
      • Purpose or primary business activity
      • Principal office address
      • Term of existence (if not perpetual)
      • Names, nationalities, and addresses of the incorporators
      • Number of directors or trustees and their details
      • Amount of authorized capital stock (if stock corporation)
    • Must be notarized and duly executed by all incorporators.

  2. Bylaws (if required under SEC regulations)

    • Under the Revised Corporation Code, the submission of bylaws may sometimes be deferred up to six (6) months from the issuance of the Certificate of Incorporation unless the corporation qualifies for certain exemptions. However, if previously required by the SEC (e.g., upon first filing), updated or corrected bylaws may still need to be submitted.

  3. Name Verification Slip

    • Must be obtained to confirm that the corporate name is available. If the previous verification has expired, a new name verification slip may be required.

  4. Treasurer’s Affidavit

    • Must be signed by the treasurer-in-trust attesting to the receipt of the subscription for the capital stock (in case of a stock corporation).

  5. Affidavit of Correction or Explanation (if applicable)

    • If the delay is due to corrections needed by the SEC, an affidavit explaining the reason for delay and certifying that the updated documents address all prior issues may be required.

  6. Proof of Payment of Penalties/Fines

    • The SEC typically assesses and requires settlement of the corresponding fines prior to (or simultaneously with) the acceptance of the late filing.

5.2 Filing Process

  1. Online or In-Person Submission

    • The SEC has introduced online registration systems (such as the SEC’s Company Registration System or One Person Corporation (OPC) platform for certain corporate structures) for greater efficiency. However, if the submission must be done in person (due to the type of corporation or specific SEC instructions), ensure that all documents are properly compiled and the correct fees are settled.

  2. Assessment and Payment

    • The SEC will evaluate the documents and assess the applicable penalties or fees for late filing. Pay the assessed amount at the SEC cashier or other authorized payment centers.

  3. Issuance of Certificate of Incorporation

    • Once the SEC determines that all requirements have been met and fines (if any) have been paid, they will issue the Certificate of Incorporation, which grants the corporation its legal personality.

6. Penalties for Late Filing

The SEC imposes penalties that vary depending on:

  1. Type of Corporation
    • Stock vs. non-stock, or special corporations such as banks or quasi-banks, public companies, etc.
  2. Amount of Authorized Capital Stock
    • Higher authorized capital stock typically correlates with higher penalty brackets.
  3. Length of Delay
    • Penalties may increase for prolonged delays. The SEC typically updates schedules of fines through memorandum circulars.

Failure to pay these penalties can result in further administrative sanctions or outright rejection of the incorporation application.

7. Common Issues and How to Avoid Them

  1. Incomplete Documentation
    • Make sure the AOI is meticulously drafted and meets all statutory requirements. Ensure notary or apostille procedures (if foreign incorporators are involved) are correct.
  2. Name Conflicts
    • Confirm that the proposed name is valid through the SEC’s online name verification. Expired or previously invalidated slips can stall the process.
  3. Delays in Executing Requirements
    • Coordinate with co-incorporators and relevant authorities promptly. Ensuring quick compliance with any SEC corrective directives can avert heavier fines.
  4. Keeping Track of Deadlines
    • Maintain a compliance calendar. Annual requirements (such as submission of General Information Sheets and Audited Financial Statements post-incorporation) can also be missed, leading to further penalties if the incorporation is delayed.

8. Practical Tips

  1. Consult a Legal Professional or SEC-Accredited Service Provider

    • If you are unsure about the process, engaging a lawyer or an SEC-accredited firm can help ensure accuracy and timely compliance.

  2. Monitor SEC Circulars and Notices

    • The SEC regularly updates penalties, procedures, and forms. Check for new memorandum circulars that may affect your filings.

  3. Pay Fines Promptly

    • If assessed, settle fines promptly to avoid compounding penalties.

  4. Utilize the SEC’s Online Systems

    • Where possible, use online platforms to expedite the name verification process, track your filing status, and clarify the documentary requirements.

  5. Document All Communications with the SEC

    • Keeping a paper or digital trail of letters, emails, and submission receipts ensures you can prove diligence in case of disputes about filing dates or compliance.

9. Conclusion

Timely filing of the Articles of Incorporation with the SEC is essential to establish a corporation’s legal existence in the Philippines. Once delayed, the process can become more complicated and costly due to penalties and additional documentary requirements.

Nonetheless, if you find yourself in the situation where your Articles of Incorporation are past due, there is a clear, although more exacting, path to compliance. By gathering the proper documents, paying the necessary fines, and following the SEC’s procedures, you can still secure a Certificate of Incorporation. The key is prompt action and careful adherence to the SEC’s rules and regulations.

If you encounter complexities or concerns, consult a Philippine corporate lawyer or an SEC-licensed professional to guide you efficiently through the process. Compliance with the Revised Corporation Code and relevant SEC issuances not only legalizes your corporate form but also paves the way for smoother operations and stronger credibility in the business community.

Disclaimer: This content is not legal advice and may involve AI assistance. Information may be inaccurate.

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