We have been commending the Securities and Exchange Commission (SEC) for being a government regulator of last resort in developing the capital markets, as it ensures shareholder protection, promotes corporate governance and increases investor confidence. It even fined the Capital Market Integrity Corporation (CMIC) for its repeated rule violations, raising questions over the self-regulatory status of the Philippine Stock Exchange (PSE). CMIC was established to act as the independent audit, surveillance and compliance arm of the PSE. But we were aghast when the SEC suspended the monthly penalties for late or non-filing of reportorial requirements, such as annual financial statements and general information sheets, as part of its efforts to reduce compliance costs and improve the ease of doing business. It is worth mentioning that the previous system imposed escalating charges based on the length of delay with each fraction of a month treated as a full month and penalties capped at 12 months of prolonged non-filing. Even before we reach the age of majority, we have been taught to be prompt on our respective endeavors whatever they may be and wherever we may be. We do understand that the SEC is implementing this order for the sake of ease of doing business through the reduction of compliance costs for companies. But what we do not understand is why the SEC would sacrifice corporate governance at the expense of the general public. In the case of public companies, the basic disclosure requirements are the submission of an annual report within 105 days after the end of the fiscal year and the quarterly reports within 45 days after the end of every quarter of the fiscal year. But these basic disclosure requirements are not basic for some public companies which cannot submit the periodic reports due to a broad range of unacceptable excuses that they blame on systematic risk or risk inherent to the market or unsystematic risk or risk inherent to the company. Instead of penalizing the late filers of basic disclosure requirements, the SEC is condoning the non-compliant public companies. Is the SEC becoming desperate to convince public companies to remain listed after a series of delistings? Perhaps the SEC should implement the best practices of the other stock exchanges in rewarding public companies that follow the rules while penalizing those who take advantage of the regulatory ambiguities.
