COVID BULLETIN: UPDATES ON COMPLIANCE MATTERS

UPDATES ON COMPLIANCE MATTERS AND FILING DEADLINES

With the imposition of the Enhanced Community Quarantine on account of the COVID-19 outbreak, multiple Philippine government agencies have promulgated new rules and guidelines concerning compliance with filing deadlines and regulatory issuances. This bulletin summarizes guidelines as of 24 March 2020 that have been issued by the Securities and Exchange Commission (SEC), the Bureau of Internal Revenue (BIR) and the Insurance Commission.  

Corporate Regulatory Matters

• The SEC has promulgated the Guidelines on Regular and Special Meetings of Corporations through teleconferencing, video conferencing, and other remote or electronic means of communication. (SEC Memorandum Circular No. 6, Series of 2020, dated 12 March 2020) These guidelines are meant to provide corporations with guidance in formulating their internal procedures and bylaws which will allow their directors, trustees, stockholders, members and other persons to participate and vote in meetings in absentia, or through remote modes of communications, pursuant to the Revised Corporation Code enacted in 2019.

 

• The  SEC has issued Memorandum Circular No. 5, Series of 2020, dated 12 March 2020, providing for an extension to the deadline for the filing of 2019 Annual Reports, applicable 2020 Quarterly Reports, and 2019 Audited Financial Statements. The extension does not apply to companies whose preparation of financial statements or completion of statutory audits are not affected by COVID-19; these companies are required to file their 2019 Annual Reports and/or Audited Financial Reports within the original prescribed deadlines. However, for those companies whose compliance is otherwise impaired by COVID-19:
  • For companies with domestic operations only, filings without penalties are extended until 30 June 2020
  • For companies with domestic and foreign operations, extension is until 30 June 2020 or 60 days from that date of lifting of travel restrictions/ban by the concerned government authorities, whichever comes later.
  • Publicly-listed companies must also submit a written request to the SEC for an extension of time not later than 5 days before the filing deadline. Publicly-listed companies must also submit to the SEC the indicative date to convene their Annual Stockholders Meeting.
  • SEC Memorandum Circular No. 5 had initially required the submission of sworn certifications to be executed by corporate officers and by the external auditor to accompany the submissions by listed and non-listed corporations. However, in a Notice dated 18 March 2020, the SEC announced that it was dispensing with the prior requirement for these sworn certifications.

 

• The SEC, through Memorandum Circular No. 9, Series of 2020, dated 18 March 2020, has issued Guidelines for the filing of General Information Sheet (GIS) during the COVID-19 outbreak and enhanced community quarantine. Corporations are normally required to file their GIS within 30 calendar days from the date of their annual stockholders/members meetings. With COVID-19 impairing the ability to hold meetings or submit GIS, the SEC has issued the following guidelines to ease the burdens on the business sector:

 

• • If the corporation is able to hold an annual meeting with elections of directors, trustees and officers, the GIS shall be submitted within 30 days from the actual meeting through mail, private courier, or the following e-mail addresses:
    • mlmliwanag@sec.gov.ph
    • mdtmabuyo@sec.gov.ph
    • cmdnotice@sec.gov.ph

If the GIS is submitted through electronic means, the hard copy of the GIS shall be submitted to the SEC within 30 days from the lifting of the emergency/outbreak.

• • If the annual meeting cannot be held due to health and safety reasons relating to COVID-19, a notice shall be submitted together with the statement specifying the new date of annual meeting thru mail, private courier or email (cmdnotice@sec.gov.ph).  The new date of meeting shall be scheduled within 60 days from the originally scheduled date of annual meeting in the By-laws. The GIS or the notice of non-holding of meeting shall be submitted with the SEC within 30 days from the date of annual meeting specified in the By-laws.
• The SEC has authorized the electronic filing, due to COVID-19, of the following:
  • Structured and Current Reports filed by all issuers of registered securities, through msrd_covid19@sec.gov.ph
  • Structure and Current Reports filed by Publicly Listed Companies, by uploading these through the Philippine Stock Exchange EDGE, in accordance with relevant PSE Rules and Procedures. For other communications, Publicly Listed Companies shall convey to SEC via e-mail at msrd_covid19@sec.gov.ph
  • Reports under the supervision of the Corporate Governance and Finance Department shall be submitted through cgfd@sec.gov.ph. This alternative filing procedure covers SEC Forms 17-C, 18-A or 18-AS, 23A/23-B, 20-IS, 20-ISA, and an investment company’s Monthly Sales and Redemption Report.  

Revised BIR Deadlines (as of 23 March 2020)

• BIR Revenue Memorandum Circular (RMC) No. 30-2020, issued on 23 March 2020, provides the definitive guidelines to date on the extended deadlines for the filing of certain tax returns, including the Annual Income Tax Returns. Annex “A” of RMC No. 30-2020 in particular provides for the definitive list of deadlines for the filing and payment of such taxes as income tax and value added tax as well as the deadlines for other submission requirements to the BIR. RMC No. 30-2020 amends and clarifies RMC No. 29-2020 and 28-2020, which had been issued days earlier to implement the extension of filing of returns following the COVID-19 outbreak. The BIR had previously maintained the original deadline for the filing of the annual tax return despite the initial implementation of the community quarantine, but such directive has now been superseded by these new BIR RMCs.  

 

• BIR Revenue Regulations No. 5-2020 dated 16 March 2020, now provides that the deadline for availing of the tax amnesty on delinquencies granted under the 2019 Tax Amnesty Act (Rep. Act No. 111213) is until 23 April 2020, with the said date subject to extension if the circumstances warrant an extension such as in case of country-wide economic or health reasons. 

 

• The BIR, through RMC No. 31-2020 (23 March 2020) has extended the deadline for the submission of the following documents required under the Tax Code, to 30 days from the lifting of the Enhanced Community Quarantine:
  • Letter Answer to Notice of Informal Conference (NIC)
  • Response to the Preliminary Assessment Notice (PAN)
  • Protest Letter to Final Assessment Notice (FAN)
  • Formal Letter of Demand (FLD)
  • Submission of relevant supporting documents to support request for re-investigation of audit cases with FAN/FLD
  • Appeal/Request for Reconsideration on the Final Decision on Disputed Assessment (FDDA)
  • Other similar letters and correspondences with due dates. 

Insurance Matters

• The Insurance Commission has allowed all life insurance companies to provide additional benefits or free insurance coverage to customers or stakeholders affected by COVID-19 without prior approval from the Commission. Companies are required to advise the Commission via duly signed letter of the initiative, which shall not be used to induce prospective clients or existing policyholders into purchasing a new product from the company. Further conditions are spelled out in IC Circular Letter No. 2020-19 (23 March 2020)
• The Insurance Commission also issued Circular Letter No. 2020-13 (16 March 2020), respectfully enjoining all insurance and reinsurance companies, mutual benefit associations, and HMOs in adopting relaxed and streamlined procedures and mechanisms (including relaxation of the notice of claim period) to facilitate immediate processing and/or payment of COVID-19 related claims.
• The Insurance Commission strongly encourages all regulated entities to extend the grace period for payment of insurance premiums/contributions, installment amounts and membership fees that are unpaid between 15 March to 13 April 2020, for all insurance, pre-need and HMO polices/plans/agreements. (Per IC Circular Letter No. 2020-18, 23 March 2020)

• The filing of 2019 Audited Statements or Audited Financial Statements of regulated entities is now extended until 1 June 2020 (Per IC Circular Letter No. 2020-20, 23 March 2020)