MANILA — The Securities and Exchange Commission (SEC) is proposing to replace the existing multi-document reporting requirements for foundations with three standardized forms covering their operations, governance, programs, projects, and use of funds.

The proposed change forms part of draft omnibus rules released on Sept. 29 that would consolidate registration, reporting, and continuing compliance requirements currently spread across various laws, rules, memorandum circulars, and other SEC issuances. The draft is open for public comment until Oct. 15, a window that gives registered foundations and applicants opportunity to seek adjustments to the proposed thresholds, deadlines, and penalties before a final version is adopted.

Scope and Eligibility

The SEC said the proposed rules would apply to all foundations registered with the commission, as well as those applying for registration, covering entities from the point of incorporation through their recurring annual filings.

Under the draft, applicants must be organized as non-stock, nonprofit corporations, include the word "Foundation" in their corporate name, and maintain at least P1 million in paid-up capitalization supported by a notarized certificate of bank deposit.

The SEC defines a foundation as a non-stock, nonprofit corporation established to provide grants or endowments, or raise funds, for charitable, religious, educational, athletic, cultural, literary, scientific, social welfare, or similar purposes.

Consolidated Reporting Requirements

The draft likewise brings existing reporting obligations into a single framework. According to the SEC, a foundation's Membership Book must be registered with the commission within 30 days from incorporation, while its General Information Sheet must be filed within 30 days after the annual meeting. If no annual meeting is held, the General Information Sheet must be submitted by Jan. 30 of the following year.

Foundations with total assets or liabilities exceeding P3 million would be required to submit audited financial statements under SEC Memorandum Circular No. 4, Series of 2026, the regulator said. Those with total assets or liabilities of P3 million or less may submit unaudited financial statements signed under oath by designated officers. The P3 million threshold draws a size-based line between foundations subject to full audit requirements and those that may instead file sworn, unaudited statements.

Financial statements must be filed within 120 days from the end of the fiscal year or according to the SEC's annual filing schedule.

Three Simplified Forms

To replace the current multi-document requirement under Revised Rule 68 of Republic Act No. 8799, or the Securities Regulation Code, the SEC is proposing three Simplified Non-Stock, Non-Profit Organization forms.

The commission said the forms would use simplified reporting items and instructions and require supplemental disclosures on a foundation's operations, activities, governance, programs, projects, and financial utilization.

Failure to file the required forms would carry a P5,000 annual fine, while late filing would be subject to a P2,500 annual penalty, according to the SEC. The proposed fine and penalty schedule gives foundations a direct financial stake in meeting the new filing deadlines.

The Oct. 15 comment deadline marks the next step in the rulemaking process, after which any revisions the SEC adopts in response to feedback would set the final reporting obligations for the country's foundations.

— Alexandria Grace C. Magno

Source: BusinessWorld