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The New Standard of Corporate Accountability: Understanding SEC MC No. 16, Series of 2025

The Philippine corporate landscape has reached a historic turning point in how it measures success. For years, sustainability reporting was largely viewed as a voluntary "comply-or-explain" exercise, often relegated to the marketing pages of annual reports. However, with the formal issuance of SEC Memorandum Circular (MC) No. 16, Series of 2025, the Securities and Exchange Commission has officially elevated sustainability to the same level of legal and financial rigor as traditional accounting. By adopting the Philippine Financial Reporting Standards (PFRS) on Sustainability Disclosures (PFRS S1 and S2), the Philippines aligns itself with the global standards set by the International Sustainability Standards Board (ISSB), creating a unified language for climate risk and corporate resilience.

A Framework Built on Four Pillars

At the heart of this mandate is a shift toward deep transparency, requiring companies to look beyond carbon footprints and into the very core of their business models. Under PFRS S1 (General Requirements) and PFRS S2 (Climate-related Disclosures), entities must provide comprehensive information across four thematic areas: Governance, Strategy, Risk Management, and Metrics and Targets. This means a company can no longer simply report its green initiatives; it must now prove how its Board of Directors oversees sustainability risks, how those risks might impact its financial planning in the long term, and exactly what quantitative targets it has set to mitigate those threats.

Navigating the Three-Tier Implementation Roadmap

Recognizing that the transition to these complex standards requires significant technical capacity, the SEC has established a phased roadmap. Tier 1, which includes Publicly Listed Companies (PLCs) with a market capitalization exceeding ₱50 billion, is the first to cross the line, with mandatory reporting beginning for fiscal year 2026. This is followed by Tier 2, covering PLCs with a market capitalization between ₱3 billion and ₱50 billion, whose reporting starts in fiscal year 2027. Finally, Tier 3captures smaller listed firms and, for the first time, Large Non-Listed Entities (LNLs) with annual revenues over ₱15 billion, starting their mandatory journey in fiscal year 2028. This inclusive approach ensures that even private giants, whose operations significantly impact the national economy, are held to the same standard of transparency as their publicly traded counterparts.

Strengthening Credibility through Mandatory Assurance

One of the most groundbreaking features of MC No. 16 is the move toward independent verification. To combat "greenwashing" and ensure data integrity, the SEC has mandated limited external assurance on Scope 1 and Scope 2 greenhouse gas emissions. This requirement kicks in exactly two years after an entity’s initial adoption year. For a Tier 1 company, this means their 2028 reports must be verified by an independent third party, such as a CPA or a qualified practitioner. This layer of oversight is designed to provide investors and lenders with the confidence that the sustainability data they are using for capital allocation is as reliable as the audited financial statements.

Balancing Rigor with Pragmatic Transition Reliefs

Understanding the immense data challenges involved—particularly regarding Scope 3 emissions (indirect emissions in the value chain)—the SEC has incorporated several practical reliefs. In their first year of adoption, companies are granted a "climate-only" focus, allowing them to prioritize climate-related disclosures before expanding to broader sustainability topics. Additionally, entities are exempt from providing comparative data in their inaugural reports and are given a one-year grace period for Scope 3 reporting. These measures provide a "safe harbor" for companies to refine their data collection systems without the immediate threat of penalties for perfection-related lapses.

Future-Proofing the Philippine Capital Market

Ultimately, SEC MC No. 16-2025 is a strategic tool for national economic growth. By adopting a standard that is globally recognized, Philippine companies become more attractive to international institutional investors who are increasingly divesting from opaque or high-risk ESG assets. For the modern C-suite, this is no longer just about compliance; it is about future-proofing the organization. Those who successfully integrate these disclosures into their core strategy will not only satisfy regulators but will also unlock lower costs of capital and build a brand defined by trust and long-term sustainability.

Reference: SEC MC No. 16, series of 2025ADOPTION OF PHILIPPINE FINANCIAL REPORTING STANDARDS (PFRS) ON SUSTAINABILITY DISCLOSURES AND ISSUANCE OF REPORTING GUIDELINES FOR PUBLICLY LISTED COMPANIES AND LARGE NON-LISTED ENTITIES - 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. 16, series of 2025and seek guidance from qualified professionals for compliance matters specific to their circumstances.

Photo by u_pier2nqk5k 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 

The Securities and Exchange Commission (SEC) has proposed new regulations that would put more stringent limits on interest rates and fees charged by lending and financing corporations in an effort to improve consumer safety in the financial industry. This seeks to protect borrowers from predatory and abusive lending practices, while still maintaining an environment where legitimate lenders can operate competitively and sustainably.

The proposed regulation targets loans of Php20,000 or less, with repayment terms of up to six months. Starting December 1, 2025, these rules would apply to both online and offline lending channels. The SEC says this is about striking a balance: making sure borrowers aren’t overcharged, while still allowing legitimate lenders to operate sustainably.

The SEC’s proposal is anchored on its authority under the Financial Products and Services Consumer Protection Act, which empowers the Commission to assess and regulate the fairness of financial charges imposed on consumers. The new framework builds on earlier efforts, including a 2022 regulation that capped interest rates for smaller loans, but expands the scope to reflect current economic realities and borrower needs.

Under the proposed guidelines, lending companies may charge up to a 6% nominal interest rate per month, while the effective interest rate would be limited to 10% per month. Penalties for late or  non-payments would be restricted to a maximum of 5% monthly, and the total cost of borrowing, including all fees and penalties, must not exceed the original loan amount. These measures aim to prevent borrowers from falling into debt traps caused by excessive charges.

The SEC is implementing a system of penalties to ensure that these regulations are adhered to. Lending companies are subject to fines of up to Php25,000 for first-time violations and higher penalties for subsequent offenses. The fines would be doubled for financing companies, starting at Php50,000 for the first offense. The Commission may impose more severe penalties if offenses persist, such as suspension or even revocation. They also stressed that these restrictions will be periodically reviewed to make sure they continue to be equitable and efficient while keeping up with developments in the lending sector.

The Commission is still currently seeking public feedback on the proposed rules, with comments accepted only until November 14, 2025, via Google Form linked here. For those who want to review the full details or verify the source, the complete press release can be found on the SEC’s website or through the link provided.

Google Form:  Comment on the Draft SEC Memorandum Circular on the Recalibrated Ceilings on Interest Rates and Other Fees Charged by Financing Companies, Lending Companies, and their Online Lending Platforms. 

Source:  SEC TO LIMIT INTEREST RATES TO PROMOTE FAIR LENDING PRACTICES - Securities and Exchange Commission

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

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.

The Securities and Exchange Commission (SEC) has taken a step toward sustainable finance with the release of Memorandum Circular No. 13, Series of 2025, which introduces the Guidelines on Philippine Green Equity offerings. The circular aims to make companies that engage in green activities more visible and attractive to investors while ensuring that such activities are credible, transparent, and measurable.

Through this initiative, the SEC strengthens its active role in promoting the use of capital markets to help achieve the United Nations Sustainable Development Goals and meet targets under the Paris Agreement, particularly in reducing greenhouse gas emissions.

Applicability and Coverage

The Philippine Green Equity Guidelines primarily govern the designation of the Green Equity label in the Philippine stock market. The Guidelines intends to provide a coherent framework for issuers that voluntarily choose to align their equity offerings or listings with environmentally sustainable finance objectives.

While the framework encourages more companies to integrate sustainability into their financial strategies, it does not modify, supplement, or otherwise affect the existing mandatory listing requirements of the Philippine Stock Exchange (PSE)’s existing mandatory listing requirements. Instead, it works alongside them, allowing both newly listed and existing companies to apply for the Green Equity label provided they meet the eligibility criteria and compliance requirements specified in the Guidelines.

Objectives

The Guidelines aims to:

• Enhance the visibility and attractiveness of companies that actively engage in green activities.
• Complement existing sustainable finance instruments including thematic bonds by establishing a parallel equity-based framework to provide investors with additional mechanisms to support environmentally sustainable enterprises. 
• Accelerate the use and integration of the SFTG* and the ATSF** into business practices. 

*SFTG refers to the document published by the FSF (SEC, BSP, IC & PDIC), which provides guidance on the classification of economic activities as being environmentally and socially sustainable.

**ATSF refers to the multi-tiered framework designed to be an inclusive and credible classification system for sustainable activities in ASEAN.

Criteria for the Green Equity Label

To qualify, companies must satisfy all four criteria below:

1. At minimum, more than 50% of the revenue of the company as reported in the latest audited annual financial statements, must be derived from Green Activities. 
2. At minimum, more than 50% of the investments (sum of capital expenditure and operating expenditure) of the company as reported in the latest audited annual financial statements, must be channelled towards Green Activities. 
3. Revenues of the company derived from fossil fuel must be limited to less than 5%. 
4. The company's activities must meet the eligibility criteria of the SFTG or ATSF. 

Failure to meet any one of these criteria shall disqualify a company from obtaining or maintaining the Green Equity Label. 

External Review

To ensure credibility and transparency, an external reviewer must evaluate the company’s alignment with the criteria for the Green Equity Label, applying their published proprietary methodology for the assessment and detailing all required information in an assessment report.

External reviewers must possess demonstrated expertise and a strong, credible track record in conducting assessments relevant to green equity designation, sustainable finance, and Environmental, Social, and Governance (ESG) practices. They are also required to disclose their relevant credentials and expertise, methodology, and scope of the review conducted in the assessment report. Furthermore, the assessment reports which confirms the company’s alignment with the Green Equity Label criteria, must also be publicly available through a website designated by the company.

Disclosure and Periodic Assessment

To uphold transparency, companies with Philippine Green Equity Label are required to submit an annual assessment report to the PSE, after one (1) year from the initial grant of the label, and annually thereafter. The report must be made available and accessible on a publicly available website.

The report should contain:

1. The share of revenue derived from Green Activities;
2. The share of investments of the company that are channeled into Green Activities;
3. The activities from which the company derives its revenue and details of alignment with either the SFTG or ATSF;
4. The investments of the company and details of alignment with either the SFTG or ATSF; and
5. The revenues of the company derived from fossil fuel limited to less than 5%.

The assessment report shall be externally reviewed in line with the expertise and experience of the external reviewer, and must also be made publicly available. The disclosures made should be able to support the company's assertion that it has met the requirements of the Guidelines and must include details of the criteria used, methodology applied and outcomes.

Amendments

Any amendment to the information on activities in which the company is engaged or invested in and other relevant material information pertaining to the Philippine Green Equity Label shall first be disclosed to the SEC and the PSE prior its release to the news media or public. 

• For material information, under the Securities Regulation Code (SRC) and its Implementing Rules and Regulations, or the disclosure rules of the PSE, the issuer shall comply with the applicable disclosure and filing requirements.
• For non-material information, pertaining solely to the Philippine Green Equity Label and not forming part of a registration statement or prospectus, the disclosure must be submitted to the Commission and the PSE no later than seven (7) days after the discovery that the information is no longer accurate.

If there are structural or other material changes in the company that may impact the company's ability to meet the criteria set in the Guidelines, a confirmation from an external reviewer verifying the company's continued alignment with the Guidelines is required.

Monitoring and Oversight

The PSE is the primary monitoring body to ensure that companies maintaining the Philippine Green Equity Label continue to comply with the requirements of the Guidelines. 

The PSE shall submit to the SEC, within one hundred five (105) days after the end of the fiscal year, a consolidated report summarizing:

1. The compliance status of all issuers with Philippine Green Equity Label;
2. Instances of delayed, inconsistent, and incomplete disclosures;
3. Any observed trends or systemic issues in relation to adhering to the criteria specified in the Guidelines.

Where the PSE identifies non-compliance, misrepresentation, or other violations of the Guidelines, it shall immediately notify the SEC.  The cancellation, suspension or withdrawal of a company's Green Equity label, as well as the imposition of administrative penalties for violations of the Guidelines shall be determined by the SEC pursuant to the Guidelines or other actions deemed appropriate by the SEC.

Withdrawal, Suspension, or Cancellation of the use of the Philippine Green Equity Label:

The SEC reserves the right to cancel any use of the Philippine Green Equity Label after due notice and hearing. The use of the green equity label shall be subject at all times to the continued compliance with the established criteria, disclosure obligations and other requirements.

A company whose label has been withdrawn, suspended, or cancelled may reapply for Green Equity designation upon the completion of necessary requirements and submission of confirmation by an external reviewer that the company fully complies with the applicable standards and requirements set in the Guidelines.

Except for a company whose label has been cancelled or suspended for the reason(s) stipulated in the Guidelines, in which case the company may reapply only after two (2) years from the date of cancellation or suspension of the Green Equity designation.

For the full memorandum circular, read here:  SEC MC No. 13, series of 2025SEC GUIDELINES ON PHILIPPINE GREEN EQUITY - Securities and Exchange Commission 

Disclaimer: The above document is shared for informational purposes only. All rights and authority remain with the Securities and Exchange Commission.

On 30 September 2025, the Securities and Exchange Commission (SEC) of the Philippines released a draft Memorandum Circular proposing new rules on the duration and term limits of Independent Directors (IDs). This initiative reflects the Commission’s commitment to enhancing board independence, aligning with international best practices, and reinforcing the principles of accountability and transparency under Republic Act No. 11232, the Revised Corporation Code of the Philippines (RCCP).

The proposed circular is open for public comment until 15 October 2025 and is expected to take effect on 01 January 2026, following publication in two national newspapers. Covered entities include publicly-listed companies, public companies, and registered issuers.

Fixed Three-Year Term Independent Directors shall be elected for a fixed term of three years. This replaces flexible tenure arrangements and introduces a standardized term structure across boards.

Staggered Term Expiration To ensure continuity and avoid simultaneous board turnover, companies must adopt staggered initial terms (e.g., 1-year, 2-year, and 3-year assignments). This approach supports institutional memory while enabling periodic board refreshment.

Nine-Year Term Limit IDs may serve a cumulative maximum of nine years, reckoned from 2012. Any fraction of a year served counts as one full year. Companies must disclose nominees who will breach the term limit during their upcoming tenure in SEC Form 20-IS.

Disqualification and Reclassification IDs who reach the nine-year limit are disqualified from continuing as independent directors in the same company but may be eligible for election as non-independent directors. IDs who lose their qualifications mid-term must immediately vacate the position.

Penalties for Non-Compliance Violations of the circular’s mandatory provisions carry penalties of ₱1,000,000, with an additional ₱100,000 monthly fine for continued breaches.

Transitory Provision Incumbent IDs who have already served the maximum term may remain in office until the company’s Annual Stockholders’ Meeting in 2026.

This reform signals a shift toward disciplined board governance. By enforcing fixed terms and staggered expiration, the SEC aims to preserve independence while ensuring orderly succession. The nine-year cap mitigates risks of entrenchment and reinforces objectivity in board oversight.

Governance committees, corporate secretaries, and compliance officers must immediately review board composition, term histories, and succession plans. Disclosure protocols should be updated to reflect term breaches, and nomination processes must anticipate reclassification of long-serving IDs.

The SEC’s proposed framework for Independent Director tenure represents a maturing governance landscape in the Philippines. It balances continuity with accountability and aligns local practices with global standards. As the January 2026 effectivity date approaches, covered companies are urged to prepare for implementation and actively participate in the comment process to ensure practical and effective adoption.

Reference; Access the draft memorandum circular here:  REQUEST FOR COMMENTS ON THE EXPOSURE OF THE DRAFT MEMORANDUM CIRCULAR ON THE DURATION OF TERM AND TERM LIMIT OF INDEPENDENT DIRECTORS - Securities and Exchange Commission 

According to Securities and Exchange Commission (SEC) Press Release No. 2025-110 (issued 27 August 2025), the Commission has significantly expanded the list of industries eligible for its One Day Submission and Electronic Registration of Companies (OneSEC) Zuper Easy Registration Online facility. 

From the previous 33 industries, the list has now grown to 81, enabling more businesses to complete their company registration within a day. The expanded coverage has resulted in a significant increase in the number of companies registered through OneSEC. In July 2025, the SEC recorded 2,938 registrations, compared to only 1,014 registrations in May, representing a growth of nearly 300%.

Launched in 2021, OneSEC is a subsystem of the Electronic Simplified Processing of Application for Registration of Company (eSPARC), which makes use of pre-filled application forms to streamline the registration process. With the system, companies can complete the registration in as fast as 1 minute and 14 seconds, from the start of the application to the receipt of a digital certificate of incorporation.

Corporations eligible under the “pass through” system include one-person corporations and regular corporations with 2 to 15 incorporators, board of directors, and stockholders.

The SEC also highlighted several incentives and reforms to improve ease of doing business, and to encourage more micro, small, and medium enterprises to register as corporations, the SEC granted:

• A 20% discount in registration fees for micro, small, and medium enterprises (MSMEs), and
• Up to 50% discount in the filing fee for those seeking to tap the capital market, under Memorandum Circular (MC) No. 8, Series of 2025.
• MC No. 6, Series of 2025, which reduced rates for corporate data requests by half.
  MC No. 7, Series of 2025, which imposed strict timelines in the processing of applications for permits, licenses, registrations, certificates, clearances, and other authorizations. This circular also included the adoption of a “deemed approved” policy should the Commission fail to meet its own deadline for review.

For the complete list of the 81 industries now qualified for OneSEC registration and full details of the new policies, please refer to the official SEC Press Release No. 2025-110. 

Disclaimer: The below document is shared for informational purposes only. All rights and authority remain with the Securities and Exchange Commission.

Source:  SEC EXPANDS INDUSTRIES ELIGIBLE FOR ONE-DAY COMPANY REGISTRATION - Securities and Exchange Commission 

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