The Securities and Exchange Commission (“SEC”) has temporarily suspended the imposition of the “per month of delay penalty” for the late and non-filing of reportorial requirements, particularly the Annual Financial Statements (“AFS”) and General Information Sheet (“GIS”), pursuant to SEC Memorandum Circular No. 16, Series of 2026 (“MC 16-2026”). The suspension forms part of the SEC’s efforts to reduce compliance costs and promote ease of doing business, especially for corporations seeking to restore or maintain good standing without the burden of continuously accruing penalties. While the monthly penalty component has been suspended until 31 December 2026, corporations remain obligated to comply with their reportorial requirements, and the applicable base fines for late or non-filing continue to apply under the existing SEC penalty framework.
Background: Understanding the Two-Tiered Penalty Structure
The per month of delay penalty was integrated into the SEC’s enforcement framework through SEC Memorandum Circular No. 06, Series of 2024 (“MC 06-2024”), which took effect on April 1, 2024. MC 06-2024 significantly updated the schedule of fines and penalties for corporations failing to submit their GIS and AFS on time.
MC 06-2024 has a two-tiered penalty structure. The first tier is the Base Fine, which is a fixed, one-time penalty assessed immediately upon missing a statutory deadline. This fine varies depending on the corporation’s classification, retained earnings, and whether it is a first or subsequent offense. The second tier is the Monthly Penalty, which is an additional, continuing charge layered on top of the Base Fine.
This second tier penalty or the “per month of delay penalty” is the specific component that the SEC has currently suspended in order to reduce the compliance cost burden on all registered corporations, including Micro, Small, and Medium Enterprises (MSMEs).
Key Framework of MC 16-2026
First, the suspension applies uniformly to all domestic corporations (including stock, non-stock, and One Person Corporations) and all foreign corporations subject to MC 06-2024. This relief is granted without any distinction as to capitalization, retained earnings, or the number of prior offenses.
Second, the suspension takes effect strictly on a prospective basis from its date of effectivity or on 15 May 2026. This means that for corporations with pending monitoring applications, the monthly penalty will no longer be imposed. For those with final assessments pending payment, updated monitoring assessments will be issued to remove the monthly delay penalty component. Conversely, this does not apply retroactively to penalties already assessed and settled prior to MC-16-2026’s effectivity.
Third, it should be noted that this suspension is directed solely at the “per month of delay penalty” component, since the Base Fine for late and non-filing under MC 06-2024 remains applicable in accordance with the existing penalty schedule prescribed therein. Further, the statutory obligation to file the AFS and GIS within the prescribed periods remains unaffected, and all covered corporations are under a continuing duty to comply with their reportorial requirements.
Lastly, this relief is temporary and will remain in force until 31 December 2026. Upon expiration, the monthly delay penalty will automatically become imposable again without further notice. All monitoring requests lodged through the SEC’s official eWATCH system on or after 01 January 2027 will be subject to the full penalty schedule of MC-06-2024.
This guide provides a general overview of the above transactions at the time of writing only and is not intended to be a comprehensive legal advice. This should also not be taken as an opinion on the topic. For more details and information, you may coordinate with any GVES Law Partner regarding the matter.
Atty. Cloie T. Tapel is an Associate at GVES Law.