Rules Requiring the Keeping of Accounting Records and Filing of Annual Financial Statements by Corporations (As Amended)

March 26, 1958 RULES REQUIRING THE KEEPING OF ACCOUNTING RECORDS AND FILING OF ANNUAL FINANCIAL STATEMENTS BY CORPORATIONS (AS AMENDED) In order to keep stockholders and those dealing with corporations transacting business in the Philippines, whether domestic or foreign, properly informed as to their financial status, and for the proper execution of all the laws administered by this Office, the Commission, pursuant to the powers vested in it by Republic Act 1143 and Commonwealth Act 287, hereby promulgates the following rules for the information and guidance of all concerned. 1. All corporations, whether domestic or foreign, transacting business in the Philippines, excepting those hereinafter specified, shall keep proper books of accounts and other financial records, vouchers and papers, showing all business transactions including the receipts and disbursements of funds, the purposes for which they have been spent and the authorizations therefor. 2. At the end of its fiscal year, each such corporation must prepare a balance sheet and related profit and loss statement. These financial statements must be duly audited and certified by an independent certified public accountant, but where the authorized capital stock of the paid-up capital, but whichever is lower, is less than P50,000.00 the said financial statements, may, instead, be attested and sworn to by the treasurer of the corporation. * 3. A copy of the balance sheet and related profit and lost statement, certified or sworn to as aforesaid, must be filed with the Commission. The deadlines are as follows: (a) For corporations whose securities are not registered under the Revised Securities Act one hundred twenty (120) days from the end of the fiscal year of the corporation. A copy of the annual financial statements, duly stamped "Received" by the Bureau of Internal Revenue (BIR), must also be submitted. (b) For corporations whose securities are registered under the Revised Securities Act including commercial paper issuers one hundred five (105) days from the end of the fiscal year of the corporation. In addition, written consent by the corporation allowing the SEC to obtain a copy of the annual financial statements filed with the Bureau of Internal Revenue (BIR) must be submitted. (c) For securities brokers sixty (60) days from the end of the fiscal year of the corporation. An application for extension of time of not exceeding thirty (30) days to file the annual financial statements may be entertained if presented before the due date, and upon payment of a compromise penalty of P50.00 for non-listed securities, and P100.00 for listed issues. ** 4. The Balance Sheets and related Profit and Loss Statements filed pursuant to the provisions of this Rule are open for public inspection during reasonable hours on any business day, subject to the following terms and conditions: (a) Only persons with legitimate interest may exercise the right of inspection of financial statement and records on file with this Commission; (b) The right shall be denied when the inspection is sought for purposes of harassment or merely to satisfy curiosity or to further any improper or useless purpose; (c) A corporation making objection to the public disclosure of information contained in the Financial Statements and other records on file with this Commission shall state the grounds for such objection and the Commission shall immediately set such objection for hearing. If the Commission finds after due notice and hearing that disclosure of information is required in the public interest or for the protection of the investors, it shall issue an order denying such objection and immediately make the documents available for public inspection; (d) Copies of information so made available may be furnished to any person having legitimate interest therein after payment of a fee of two (P2.00) pesos per page; (e) For any assistance or service rendered to aid in the inspection of each financial statement or other pertinent records, a fee of two (P2.00) pesos shall be charged and collected. *** 5. Banks and banking institutions, public utility corporations, insurance corporations, cooperative associations, labor unions, and other corporations governed by laws not entrusted to this Commission for enforcement are required to furnish the SEC their annual financial statements in the same form with the same content submitted to appropriate government agencies regulating their operations. 6. Corporations which have ceased to operate although still existing, are likewise exempted from these rules provided that a signed resolution of the board of directors declaring the cessation of business has been previously filed with the Commission. If there is no board of directors in office, a statement as to the cessation of business signed and sworn to by the President, manager, or officer-in-charge of the corporation shall be filed by him in lieu of the resolution of the board of directors. 7. Any violation of these rules shall be dealt with in the manner authorized under Republic Act 1143 without prejudice to taking such further action as may be warranted by applicable laws. 8. These rules shall take effect fifteen (15) days after their publication in the Official Gazette. (SGD.) MARIANO G. PINEDA Commissioner Approved: March 26, 1958 (SGD.) PEDRO C. HERNAEZ Secretary of Commerce and Industry Footnotes * As amended on December 24, 1964 and further amended on July 9, 1982. ** As amended on May 5, 1970. *** Amended by SEC Circulars dated June 10, 1981 and November 4, 1982. ATTACHMENT SEC MEMORANDUM CIRCULAR NO. 1 SUBJECT : Regulating the Examination of Financial Statements by Private Parties In order that the Commission may not be charged with tolerating, however unknowingly, the unethical and unfair practice of some companies of prying into the operations of rival firms by going over the latter's financial statements on file in the Commission pursuant to the provisions of the Securities Act and/or of the Rules requiring the Keeping of Records and Filing of Annual Financial Statements of Corporations promulgated under Republic Act 1143, the procedure hereunder prescribed shall be strictly observed by all those concerned: 1. In the case of financial statements submitted periodically by corporations whose securities are registered and/or licensed under the Securities Act, or have been duly exempted from the registration requirements thereof, the said statements may be shown to any person upon his written request; 2. In the case of financial statements of other corporations not falling under No. 1 above, especially those which request that their financial statements be kept confidential, the same should not be shown to outsiders other than credit investigators, internal revenue agents and examiners, or representatives of law enforcement agencies of the government upon presentation of their identification cards and pertinent credentials, unless such outsiders can show proofs of their legitimate and bona fide interest in the corporation. 3. In the case of financial reports or statements filed by members of the Manila Stock Exchange and brokers and dealers who transact business in securities through the medium of such members, the restrictions specified in No. 2 above shall be closely adhered to; and 4. All request for financial statements should be made on a form prepared and supplied, free of charge, for the purpose, duly signed by the person making the request and approved by the Chief Examiner in cases No. 1 and 2, by the Chief of the Brokers and Exchange Division in case No. 3, or either by the Deputy Commissioner or the Commissioner in whichever case. cdll Manila, October 6, 1961. (SGD.) MARIANO G. PINEDA Securities and Exchange Commission