SEC Memorandum 13-2024: Enhanced Compliance Incentive Plan (ECIP)

September 17, 2024

The Enhanced Compliance Incentive Plan (ECIP), introduced by the Securities and Exchange Commission (SEC) of the Philippines through Memorandum Circular No. 13, Series of 2024, was a pivotal initiative to assist non-compliant corporations in restoring their good standing with reduced penalties. Building on the success of the 2023 Amnesty Program, the ECIP offered a streamlined process for businesses to address delinquent reportorial submissions, such as the General Information Sheet (GIS) and Audited Financial Statement (AFS), while complying with digital contact requirements. Although the ECIP application period ended on December 31, 2024, its lessons remain vital for businesses navigating the SEC’s stringent compliance landscape in 2025, where penalties for non-compliance have increased significantly. This article provides a comprehensive guide to the ECIP, its requirements, outcomes, and the ongoing importance of SEC compliance, tailored for businesses in the Philippines seeking to maintain regulatory adherence.

What Was the ECIP and Its Purpose?

The ECIP was a time-limited program encouraging non-compliant corporations to regularize their status with the SEC. It aimed to ease the financial burden of penalties while promoting adherence to regulatory requirements.

Definition and Scope: The ECIP, introduced via SEC Memorandum Circular No. 13, Series of 2024, targeted corporations that failed to submit their GIS and AFS or comply with SEC Memorandum Circular No. 28, Series of 2020, which mandates official email and mobile phone contact details. It offered a structured pathway for compliance with reduced fees.
Objective: The program sought to help businesses avoid the steep penalties outlined in SEC Memorandum Circular No. 6, Series of 2024, which increased fines by 900% to 1,900% compared to previous rates. The ECIP encouraged businesses to restore their good standing by providing a cost-effective compliance option.
Context: Following the 2023 Amnesty Program, which saw over 81,700 corporations participate, the ECIP continued the SEC’s efforts to promote compliance. It addressed the backlog of delinquent submissions exacerbated by the economic disruptions of the COVID-19 pandemic.
Eligibility: The program was open to domestic stock and non-stock corporations, including those with suspended or revoked status, provided they met specific requirements. Over 3,200 corporations applied by November 28, 2024, demonstrating significant interest.
Significance: The ECIP underscored the SEC’s commitment to fostering a compliant business environment. Its closure highlights the urgency for businesses to maintain regular filings to avoid severe penalties in the current regulatory framework.

Who Was Eligible for the ECIP?

The ECIP caters to many corporations facing compliance issues with the SEC. Its eligibility criteria were designed to address various types of non-compliance.

Non-Compliant Corporations: Corporations that failed to submit their latest GIS or AFS, as required under the Revised Corporation Code, were eligible to participate. These included businesses delayed in their annual reporting obligations.
MC 28 Non-Compliance: Companies that did not provide official email addresses and mobile phone numbers, as mandated by SEC Memorandum Circular No. 28, Series of 2020, could resolve this violation through the ECIP. This requirement ensures that the SEC can communicate effectively with corporations.
Suspended Corporations: Corporations with suspended status due to prolonged non-compliance were eligible to apply, subject to additional proceedings. These businesses needed to address both reportorial and procedural requirements.
Revoked Corporations: Entities with revoked SEC registration could also participate, provided they submitted a Petition to Lift Order of Revocation alongside other documents. This allowed previously deregistered companies to regain operational status.
Exclusions: Corporations under dissolution, those with intra-corporate disputes, or those facing legal impediments were ineligible. The SEC aimed to focus the program on businesses capable of swift regularization.

What Were the ECIP’s Fees and Requirements?

The ECIP offered a simplified fee structure to incentivize compliance alongside specific documentary requirements. These conditions ensured that businesses could efficiently restore their status.

Fee Structure for Non-Compliant Corporations: Eligible corporations paid a flat fee of PHP 20,000 to settle fines for late or non-submitted GIS, AFS, and MC 28 violations. This was significantly lower than the standard penalties under SEC MC No. 6, Series of 2024.
Fees for Suspended or Revoked Corporations: Suspended or revoked corporations paid PHP 3,060 plus 50% of their assessed fines, subject to additional SEC proceedings. This structure balanced affordability with regulatory accountability.
Documentary Requirements: Applicants must submit their latest GIS and AFS, proof of compliance with MC 28 (official contact details), and, for suspended/revoked entities, a Petition to Lift Order of Suspension/Revocation. Additional documents included a Secretary’s Certificate of No Intra-Corporate Controversy and proof of ongoing operations.
Submission Process: Applications were submitted through the SEC’s Electronic Filing and Submission Tool (eFAST), with payments processed via eSPAYSEC. The digital process streamlined compliance but required careful document preparation.
Completion Requirement: Payment alone did not restore compliant status; corporations had to submit all the necessary documents within the application period. Failure to do so resulted in forfeiture of fees and exposure to full penalties.

How Did the ECIP Application Process Work?

The ECIP application process was entirely digital, efficiently leveraging the SEC’s online platforms. It required businesses to follow a structured procedure to ensure compliance.

Expression of Interest (EOI): Corporations began by submitting an EOI form through the eFAST platform, indicating their intent to participate in the ECIP. This step was essential to initiate the process.
Payment via eSPAYSEC: Applicants paid the required fees (PHP 20,000 for non-compliant corporations or PHP 3,060 plus 50% of fines for suspended/revoked entities) through the SEC’s eSPAYSEC system. Payments were non-refundable if requirements were not completed.
Document Submission: Corporations uploaded their latest GIS, AFS, and MC 28 compliance documents via eFAST. Suspended or revoked corporations also submitted a Petition to Lift the Order of Suspension/Revocation and supporting documents, such as proof of operations.
SEC Review and Approval: The SEC reviewed submissions to confirm compliance with ECIP requirements. Approved corporations received confirmation of their restored status, while incomplete applications faced rejection.
Deadline and Extension: The program ran from September 2 to December 31, 2024, and was extended from the original November 30 deadline via SEC Memorandum Circular No. 17, Series of 2024. This extension provided businesses with additional time to comply.

Why Is Professional Assistance Essential for SEC Compliance?

Navigating SEC compliance, including programs like the ECIP, involves complex regulatory requirements that demand expertise. Triple i Consulting offers specialized support to simplify this process.

The complexity of Requirements: The ECIP required precise submission of documents like GIS, AFS, and petitions, which is often challenging for businesses unfamiliar with SEC processes. Submission errors could lead to fee forfeiture and continued non-compliance.
Digital Platform Navigation: Using eFAST and eSPAYSEC requires technical proficiency and attention to detail. Professional assistance ensures accurate and timely submissions, avoiding costly mistakes.
Tailored Guidance for Suspended/Revoked Status: Corporations with suspended or revoked status face additional procedural hurdles, such as preparing petitions and supporting documents. Experts at Triple i Consulting streamline these steps to achieve compliance.
Avoiding Penalties: With penalties under SEC MC No. 6, Series of 2024, now 900% to 1,900% higher, professional support helps businesses prevent financial risks. Triple i Consulting ensures adherence to current regulations.
Ongoing Compliance Support: Beyond the ECIP, Triple i Consulting provides comprehensive services for regular SEC filings, ensuring businesses maintain good standing. Their expertise is vital for navigating the SEC’s digital platforms like eSECURE.

What Are the Lessons and Next Steps Post-ECIP?

The ECIP’s closure on December 31, 2024, marks a shift to stricter SEC enforcement, but its lessons remain relevant for businesses. Companies must now prioritize proactive compliance to avoid severe penalties.

Impact of ECIP: By November 28, 2024, over 3,200 corporations had applied for the ECIP, building on the 2023 Amnesty Program’s success with 81,700 participants. This demonstrates strong business interest in regularization programs.
Current Penalty Landscape: Non-compliant corporations now face penalties under SEC MC No. 6, Series of 2024, which significantly increased fines. For example, late GIS or AFS submissions can incur penalties of up to PHP 100,000 or more, depending on the violation.
Digitalization Trends: The SEC’s shift to platforms like eSECURE (introduced under SEC MC No. 10, Series of 2024) emphasizes digital compliance. Businesses must adapt to these systems for ongoing filings.
Proactive Compliance: Regular submission of GIS, AFS, and MC Aligned with the Revised Corporation Code of 2019, the ECIP was a significant initiative by the Securities and Exchange Commission (SEC) in the Philippines to assist non-compliant corporations in restoring their good standing with reduced penalties. Although the program ended on December 31, 2024, its lessons remain relevant for businesses navigating the SEC’s stringent compliance landscape in 2025. This article provides a detailed guide to the ECIP, its requirements, outcomes, and the ongoing importance of SEC compliance for businesses in the Philippines.

Final Insights

The ECIP, implemented through SEC Memorandum Circular No. 13, Series of 2024, was a significant opportunity for Philippine corporations to address non-compliance with reduced penalties. However, its closure on December 31, 2024, underscores the need for ongoing regulatory adherence. Businesses that participated restored their good standing, while those that missed the deadline now face substantial penalties under the SEC’s updated framework. The program’s reliance on digital platforms like eFAST and eSPAYSEC highlights the SEC’s push toward digitalization, which continues with systems like eSECURE. Businesses can better navigate the current compliance landscape by understanding the ECIP’s requirements and outcomes.

Is Assistance Available?

Yes, Triple i Consulting can help businesses manage the complex SEC compliance process efficiently. Contact us today to schedule an initial consultation with one of our experts: