The SEC Company Registration System
FLORIAN SALCEDO
On November 21, 2017, in time for its 81st anniversary celebration, the Securities and Exchange Commission (SEC) launched the full implementation of the SEC Company Registration System (CRS), an online platform providing for the full automation and online processing of corporations and partnerships, licensing of foreign corporations, and other corporate applications requiring SEC approval.
The SEC CRS includes the following features: (1) online verification of company name; (2) online appeal for disallowed proposed name; (3) online fill-out of Articles of Incorporation and By-laws; (4) built-in validation in the pre-form and in-form data encoding; (5) online submission through uploading of documents for internal processing/evaluation; (6) online issuance of deficiencies on submitted/uploaded application; (7) online assessment of filing fees; and (8) online payment of fees. Through the SEC CRS, users should be able to complete online the entire incorporation process from corporate name reservation up to payment of registration fees.
According to then SEC Chairperson Teresita J. Herbosa, the mandatory implementation of SEC CRS was intended “to serve the public better — it eliminates face-to-face interactions for the registration of new corporations, and most importantly…to save the public’s time and effort and to further ease doing business in the Philippines.”
However, since its initial implementation on November 2017, the SEC has received numerous complaints concerning the recurring software glitches and delays in processing company registrations under the SEC CRS. Instead of achieving efficiency, company registration under SEC CRS has ironically become more tedious and drawn out.
In many practitioners’ experience, it usually takes two to four months for the SEC to issue Certificates of Incorporation in favor of those seeking to register new corporate entities under the SEC CRS.
Further, the system itself has been the subject of several hacking attempts, causing further delays in the release of certificates for new companies and partnerships. The SEC’s Company Registration and Monitoring
Department (CRMD) Director Ferdinand Sales downplayed these hacking attempts as mere “part[s]of birthing pains.” According to Sales, “a lot of people do not want this system to succeed so [it]probably has 500 hacking attempts every day.”
To help address these complaints, Senator Nancy Binay, on January 29, 2018, filed Senate Resolution No. 596 directing the proper Senate Committee to conduct an inquiry, in aid of legislation, on the reported delays in the release of Certificates of Registration by the SEC.
On the scheduled inquiry by the Senate committee on banks, financial institutions and currencies, Sales admitted that the Commission then still had a backlog of 5,378 new applications as a result of their current level of staff (assuming that average incoming applications were at 296 a day with “no unforeseen circumstances” that may cause interruptions).
The need to address the problems of bureaucratic red tape and government inefficiency prompted the government to recently enact Republic Act (RA) No. 11032, or the Ease of Doing Business and Efficient Government Service Delivery (EODB) Act of 2018, which declared as a policy the promotion of measures and programs adopting simplified requirements and procedures to reduce red tape and expedite business and non-business related transactions in government.
Among the measures mandated by RA 11032 is the standardization of the deadlines for government transactions to three to seven working days, depending on the complexity of the transaction. In fact, in case of failure to approve or disapprove an original application or request for issuance of license, clearance, permit, certification or authorization within the prescribed processing time, said application or request shall be deemed approved.
Clearly, the SEC CRS has a long way to go in order to fully comply with the mandate of RA 11032.
While we commend the initiative and the noble intentions of the SEC in launching the SEC CRS, we strongly encourage the SEC to provide tighter measures for cyber-security, define more clearly the guidelines in company registration, further streamline the process by cutting off redundant and unnecessary steps/procedures, and foster manpower efficiency and productivity in reviewing the documentary submissions, in light of the clear mandate of the RA 11032.
Florian G. Salcedo is a Junior Associate of Mata-Perez, Tamayo & Francisco (MTF Counsel). He is an active member of MTF Counsel’s corporate, labor, litigation and immigration practice. The contents of the above article are intended for general information purposes only and don’t constitute legal advice. If you have any question or comment regarding this article, you may email the author at info@mtfcounsel.com or visit MTF Counsel’s website at www.mtfcounsel.com.
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