SEC reportorial requirements simplified for micro businesses

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December 16, 2025 | 12:00am

MANILA, Philippines — The Securities and Exchange Commission (SEC) is moving to simplify the reportorial requirements of micro enterprises.

The SEC said it has secured the nod of the Department of Finance (DOF) to exempt micro enterprises from submitting audited financial statements.

The commission in October recommended to the DOF the exemption of more companies from the mandatory submission of audited financial statements to relieve financial pressures on micro, small and medium enterprises (MSMEs), reduce incidents of rubber-stamp audits and simplify compliance obligations.

The DOF approved the adjustment of the audit threshold, confirming that such a policy aligns with the government’s effort to stimulate economic growth, while ensuring strong compliance monitoring and accountability of certifying officers.

The SEC is authorized to revise the prescribed audit threshold, subject to the approval of the DOF.

In line with the DOF’s approval, the SEC has issued for public comment draft guidelines that seek to lower the audit threshold for financial statements of MSMEs.

Under the proposal, the SEC seeks to amend Part I, Section 1(A) of Rule 68 of the Securities and Regulation Code, to exempt both stock and non-stock corporations with total assets or liabilities not exceeding P3 million from submitting audited financial statements.

Only stock and non-stock corporations with total assets or liabilities lower than P600,000 are currently exempted from mandatory audit.

The SEC is eyeing to apply the higher P3 million threshold to financial statements covering fiscal years ending on or after Dec. 31, 2025.

In lieu of audited financial statements, a corporation within the audit threshold will be allowed to submit financial statements certified under oath by both the president and treasurer or chief financial officer, as duly authorized by the board of directors.

The SEC said that the certifying officers would assume full responsibility for the accuracy and completeness of the submitted financial statements.

The commission said the proposed higher threshold would not apply to entities classified under Groups A, B and C as well as corporations vested with public interest due to the nature of their regulatory obligations and the degree of public interest they represent.

Group A covers corporations such as public companies or those with at least P50 million worth of assets, and with 200 or more holders, each holding at least 100 shares; issuers of securities listed in an exchange, and stock and securities exchanges and other self-regulatory organizations, among others.

Group B includes issuers of registered timeshares, proprietary and non-proprietary membership certificates and corporations applying for the registration of such securities; investment houses; brokers and dealers; government securities eligible dealers and universal banks registered as underwriters of securities.

Group C, meanwhile, is composed of financing companies with assets of over P10 million in the preceding year; lending firms with assets of over P5 million the year before; transfer agents and non-stock, non-profit corporations, including foundations, which solicit or receive annual donations or contributions and/or with fund balance of more than P25 million, among others.