CORPORATE GOVERNANCE NEWS

Overview of SEC Memorandum Circular No. 03, Series of 2026  (𝐋𝐓𝐑/𝐍𝐌𝐍) 

The Securities and Exchange Commission (SEC) on January 12 has issued Memorandum Circular No. 03, Series of 2026, introducing updated rules on the classification, processing, and submission of amendment applications filed through the Electronic Application for Modification of Entity Data (eAMEND) Portal, and imposition of penalties for non-submission of amendment documents.

The Circular applies to corporations, partnerships, and other entities registered with the SEC that are required to file amendments to their corporate records, including amendments to Articles of Incorporation, By-Laws, and other registrable corporate information.

The issuance aims to make corporate amendment processes faster, more consistent, and fully digital, while also imposing clear penalties for late or non-submission of required documents.

Purpose of SEC Memorandum Circular No. 03, Series of 2026

The issuance of this Memorandum Circular seeks to:

• Streamline the amendment process for Articles of Incorporation (AOI) and By-Laws
• Ensure uniformity and efficiency in SEC transactions
• Reduce processing time beyond what is required under the Ease of Doing Business and Efficient Government Service Delivery Act of 2018 (EODB Act)
• Promote full digitalization through the eAMEND Portal

According to the SEC, these reforms allow corporations to focus more on business growth rather than regulatory delays.

The eAMEND Portal: A Digital Solution for Corporate Amendments

Launched in 2024, the eAMEND Portal enables corporations to electronically file, process, and pay for amendment applications.

Under SEC MC No. 03, Series of 2026, amendment applications filed through eAMEND are classified into:

• Simple Processing
• Regular Processing

Each classification has distinct requirements and processing timelines.

Simple Processing: Expanded Coverage and Faster Approval

One of the key highlights of the circular is the expansion of transactions eligible for 

Simple Processing—from only four transactions to 28 amendment types.

Processing Time

• Classified as complex transactions under the EODB Act
• Must be processed within seven (7) working days

Examples of Transactions under Simple Processing

In addition to previously allowed amendments, Simple Processing now includes, among others:

• Change of corporate name
• Change of primary and secondary purposes
• Shortening of corporate term
• Amendment of audit of books and dividends
• Term of office of officers (other than directors or trustees)
• Provision for undertaking to change corporate name

All approved Simple Processing applications are issued a digital certificate through the eAMEND Portal, completing the transaction fully online.

Regular Processing: Highly Technical Amendments

Amendments that require detailed evaluation and technical review fall under Regular Processing.

Processing Time

• Classified as highly technical transactions
• Must be processed within twenty-one (21) working days under the EODB Act

Examples of Transactions under Regular Processing

• Adoption of new by-laws
• Amendments involving five (5) or more provisions in the by-laws
• Dissolution through shortening of corporate term
• Conversion of:
• Stock to non-stock corporations
• One Person Corporations (OPC) to ordinary stock corporations, or vice versa
• Amendments of articles of partnership and dissolution of partnerships

Approval under Regular Processing is issued only after SEC review and approval.

Penalties for Late or Non-Submission of Documents

SEC MC No. 03, Series of 2026 also introduces graduated penalties to ensure compliance.

Submission Deadline

• Amendment documents must be submitted within 15 days from payment of filing fees

Penalties

• A ₱5,000 penalty shall be imposed if the required amendment documents are submitted beyond the 15-day period but within 45 days from the issuance of the digital certificate.
• Failure to submit the required hard copies within 45 days from the issuance of the digital certificate shall result in the cancellation of the application, rendering the digital certificate null and void, with the application and filing fees forfeited in favor of the SEC.

Cancelled or purged applications may be re-apply, subject to SEC requirements.

Read the full Memorandum Circular No. 03, Series of 2026:  SEC MC No. 03, series of 2026GUIDELINES ON THE CLASSIFICATION, PROCESSING, AND SUBMISSION OF AMENDMENT APPLICATIONS FILED THROUGH THE EAMEND PORTAL, AND IMPOSITION OF PENALTIES FOR NON-SUBMISSION OF AMENDMENT DOCUMENTS - Securities and Exchange Commission 

Disclaimer: This article is for general informational purposes only and should not be taken as professional advice. Readers are encouraged to consult the official text of SEC MC No. 3, series of 2026 and seek guidance from qualified professionals for compliance matters specific to their circumstances.

Photo via Pixibay 

The Securities and Exchange Commission (SEC) Office of the General Counsel issued SEC OGC Opinion No. 25-08, which clarified the treatment of revaluation increment or appraisal surplus in relation to declaring cash or stock dividends. This opinion was issued in response to a request asking whether the exception found in the 1981 SEC Opinion is still applicable today.

Background of the Rule

Under the original 1981 SEC Opinion, the SEC stated that increases in the value of fixed assets due to revaluation should not be considered part of retained earnings available for dividend declaration. The reason is straightforward: increases caused by revaluation do not come from the normal operations of the business. They are unrealized, and could still fluctuate based on market conditions.

In simple terms, you cannot declare dividends out of mere increases in asset values.

The 1981 Exception

However, the 1981 Opinion also introduced an important exception. If the revaluation increment is being depreciated — and the depreciation related to the revaluation is recorded as an expense — then that depreciation portion may be treated as part of actual earnings.

This is because the depreciation on the revaluation increment is recognized through operations. Therefore, that exact portion becomes an actual realized amount.

The exception can apply only if the following conditions are met:

1. The company has sufficient income from operations where the depreciation was charged.

2. The company did not have a deficit when the depreciation was recognized.

3. The depreciation amount charged to operations has not been impaired by later losses.

Recent Guidance Under MC 16-23

With the issuance of SEC Memorandum Circular No. 16 Series of 2023, the SEC updated how retained earnings available for dividend declaration should be computed. The circular strictly focuses on unrestricted retained earnings based on stand-alone audited financial statements.

The circular also requires an itemized reconciliation that adds or deducts various unrealized income items, realized items, and other adjustments. Inside this formula, the depreciation on revaluation increment is specifically recognized as an allowable adjusting item.

This confirms that the principle from the 1981 exception is still consistent with current rules.

Key Takeaway

The revaluation increment itself is not distributable. But the depreciation expense relating to the revaluation increment may be added back to adjusted retained earnings, making it available for dividend declaration — provided the conditions set out by the SEC are satisfied.

The SEC’s 2025 opinion confirms that this principle remains aligned with the provisions of MC 16-23. Thus, while companies cannot declare dividends based solely on revaluation surplus, they may declare dividends sourced from the depreciation of that surplus under specific and well-defined conditions.

Source: Opinion No. 25-08 Re: Revaluation Increment or Appraisal Surplus Available for Cash and Stock Dividend 

Transparency is a long-term commitment that fosters trust and protects society from financial malfeasance; it shouldn't be something that applies only once. People today want to understand the key details of the companies they deal with, including not just those whose names appear on paper but also the real people who ultimately own, control, or gain from a company. As people demand more accountability and transparency, the government and regulatory agencies are stepping up by strengthening their rules.

Indeed, the Securities and Exchange Commission (SEC) has recently intensified its efforts to promote transparency and accountability in the Philippine business sector. A draft memorandum circular outlining updated and new rules for how businesses disclose their beneficial owners was made public for criticism on October 10. This measure is highly relevant given the growing need to prevent corporate misconduct and financial crimes.

SEC Chairperson Francis Lim stressed that the reforms aim to strengthen the nation's commitment to accountability and transparency in the corporate sector, as well as to address the gaps that have long allowed financial crimes to occur. All SEC-registered companies, including partnerships, domestic and foreign corporations, and even one-person corporations (OPCs) with trusts or estates, are required by the draft rules to explicitly identify persons who hold substantial influence or control, along with their corresponding categories. This guarantees complete transparency, even for complicated ownership systems.

Key Disclosure Requirements

Entities must provide detailed information about each beneficial owner, including:

• Full name and nationality
• Residential address
• Category of beneficial ownership
• Percentage of ownership or voting rights
• Nature of their influence or involvement
• Date when beneficial ownership was acquired

For new entities, this information must be provided at the time of incorporation; for existing entities, it must be included with the subsequent GIS. Within seven days, any modifications to beneficial ownership must be disclosed. The SEC's designated beneficial ownership registry will be used for all submissions. This information will be available to the public, subject to the Data Privacy Act, as well as to media outlets that follow ethical standards, covered persons under the Anti-Money Laundering Act, and regulators and law enforcement agencies in order to maintain accountability.

Penalties for Non-Compliance

• Failure to disclose beneficial ownership: Corporations may face fines ranging from Php 25,000 to Php 500,000, depending on retained earnings or fund level.
• False declarations or misleading information: Can result in fines up to Php 2 million and even corporate dissolution.
• Negligence by officers and directors: Those who fail to ensure compliance may be fined, with penalties ranging from Php 50,000 to Php 1 million for repeated violations.

The SEC is opening its doors to public feedback on the proposed circular until 

November 9, 2025. All are encouraged to review the draft rules and share their thoughts by emailing eipd-amld@sec.gov.ph. Let's take part in this push for greater transparency.

Source: SEC to introduce reforms for greater transparency in corporations’ beneficial ownership

Disclaimer: The information provided is for general informational purposes only. All rights and authority remain with the Securities and Exchange Commission.

In a bold move to enhance transparency and accountability, the Securities and Exchange Commission (SEC) is preparing to roll out a blockchain-based platform aimed at revolutionizing the authentication process for corporate filings. This initiative comes as part of the ongoing efforts to integrate advanced technologies into government processes, ensuring secure and immutable documentation for businesses and other stakeholders.

The SEC unveiled its plans on the "Blockchain-Based Digital Signing and Authentication of SEC Documents." The platform, named VERITAS (Verification of Electronic Records and Information Trust and Authentication System), will enable corporations to securely sign and authenticate their reports and other documents filed with the SEC using blockchain technology.

VERITAS is a blockchain-powered digital signature platform that leverages public-key cryptography to offer a higher level of security for SEC-related documents. It records all digital signing events on a decentralized ledger, ensuring that each document is timestamped, cryptographically verified, and immutable. This system aims to prevent document tampering and fraud, offering a robust solution for corporate filings.

SEC Chairman Francis Lim explained that the move to blockchain technology aligns with the Commission’s commitment to both security and digital transformation. “By integrating blockchain-based digital signing and authentication into our processes, we aim to strengthen the integrity and reliability of reports and documents submitted by corporations,” Lim said. He further emphasized that this initiative would not only enhance security but also reduce paperwork and processing time, streamlining SEC operations.

The SEC's proposed guidelines for the adoption of VERITAS aim to integrate this new platform into the existing electronic systems, such as eSECURE (the SEC's digital identity and credentialing system) and eSAP (the Electronic Submission Authentication Portal). These systems currently allow individuals to register their corporations online, eliminating the need for paper-based documentation or wet signatures.

With VERITAS, however, the SEC plans to move beyond the current reliance on one-time passwords for document authentication. The platform will introduce end-to-end encryption, multi-factor authentication, and cryptographic signing, which will require users to authenticate documents using their private keys. These measures ensure that only authorized individuals can sign documents, preventing unauthorized access or tampering.

To access VERITAS, users will need to create an account through eSECURE, where they will undergo a mandatory credentialing process. This includes submitting verified government-issued identification and completing a liveness detection protocol to ensure that the person requesting authentication is indeed the rightful individual.

VERITAS will be available to all individuals involved in SEC filings, including incorporators, directors, officers, authorized representatives, and anyone else submitting documents to the Commission. The platform will also cover various entities, such as corporations, partnerships, and other juridical entities registered with the SEC, as well as the SEC personnel involved in processing and verifying electronically submitted documents.

The documents eligible for digital signing and authentication through VERITAS include Articles of Incorporation, Certificates of Authentication, General Information Sheets, Board Resolutions, Financial Statements, and other filings requiring SEC approval.

One of the most significant benefits of this blockchain-based platform is the legal standing of digitally signed documents. According to Republic Act No. 8792, or the Electronic Commerce Act, documents signed and authenticated through VERITAS will hold the same legal weight as signed and notarized paper documents, unless the law explicitly demands physical notarization or another specific form of authentication.

This means that, once implemented, businesses can conduct their SEC transactions digitally, without needing to submit physical copies of documents, making the process faster and more efficient.

While VERITAS will be an optional tool during its initial phase, the SEC may eventually mandate its use for specific filings or entities. This phased approach will give businesses time to adjust and adopt the new system before it becomes a requirement.

The Commission hopes that by integrating blockchain technology into its operations, it will not only improve security but also demonstrate the broader potential of blockchain for other government agencies.

The SEC’s adoption of VERITAS marks a significant step toward enhancing digital security, reducing bureaucratic hurdles, and embracing blockchain technology in government services. As the platform continues to evolve, it will serve as a model for other agencies and private entities to follow in the pursuit of secure, transparent, and efficient digital transactions.

This website does not claim ownership of the material and does not provide legal advice, opinions, or interpretations. For authoritative reference, please consult the Official Gazette or other official government publications.

SEC ALL SET TO ADOPT BLOCKCHAIN FOR AUTHENTICATION OF DIGITAL FILINGS - Securities and Exchange Commission