SEC Just Changed the Compliance Landscape
The Securities and Exchange Commission (SEC) has released major regulatory updates this first quarter of 2026, and notably — these are not just procedural changes but substantial in form.
The changes are pertinent to:
- Statutory audit requirements
- Authorized Capital Stock (ACS) increases
- Beneficial Ownership Disclosures through HARBOR
- General Information Sheet (GIS) filing process
Hence, if your corporation is registered in the Philippines, these updates havea direct impact on your compliance obligations.
The goal of these updates is to improve the sense of ease of doing business and its corresponding processes. Yet, the risks are if one commits non-compliance, errors in filings — ending up in penalties and rejected submissions.
Let’s break this down in plain, strategic terms.
3 Major SEC Changes That Will Affect Your Corporation
Higher Statutory Audit Threshold – A Relief for Small Corporations
Under the provisions of the Revised Corporation Code (RCC), Corporations were required to submit their Audited Financial Statements (AFS) if the total assets or liabilities reached at least ₱600,000. Hence, considering this, it can be costly to a startup business, specifically for Micro Enterprises.
Hence, with the issuance of the SEC Memorandum Circular No.4 of 2026, effective for fiscal years ending on December 31, 2025 onwards — the SEC has increased the threshold to the said requirement of AFS, which is currently more than ₱3,000,000 in total assets OR total liabilities
This change was made pursuant to Section 68 of the Securities Regulation Code and Section 74 of the RCC with approval from the Department of Finance. Additionally, the SEC also considered the fact that the previous threshold of ₱600,000 no longer reflects current economic conditions nor the present-day definition of micro enterprises, and is facing disproportionate compliance costs resulting from mandatory audit requirements despite their limited scale of operations.
Now, what this means for you:
- Corporations having below ₱3M assets or liabilities are no longer required to submit AFS to the SEC
- On the other hand, financial statements with a signed Statement of Management Responsibility (SMR) will suffice
- Reduced audit costs for startups and small businesses
While the SEC has increased the statutory audit threshold to more than ₱3 million in total assets or liabilities, corporations should not automatically assume that an audit is no longer required, as the Bureau of Internal Revenue (BIR) still requires AFS for corporations with gross sales/receipts exceeding ₱3M under the Tax Code. This simply means that a corporation may:
- Be exempt from filing AFS if both assets/liabilities and sales/receipts are below P3M
- Be exempt from filing AFS with the SEC, but required to file for BIR requirements
Understanding which threshold applies and when it is appropriate — is essential to avoid compliance gaps.
Effortless Authorized Capital Stock (ACS) Increases
Before, for Corporations that intended to increase their Authorized Capital Stock (ACS) beyond ₱50 million needed to file a Special Audit Report (SAR) first. Conversely, with the issuance of SEC Memorandum Circular No. 6 of 2026, the following changes are major updates:
- Notarized Subscription Contract now suffices, regardless of such amount
- No SAR for cash-funded ACS increases
- Reduced documentary compliance
- Faster preparation and lower fees
However, SAR is still required if the corporation applying for ACS is publicly-listed and holding secondary licenses that are regulated by the SEC. Also, it is important to note that this relief is applicable only to cash-funded increases. Specific compliance documentation is still required for in-kind contributions.
For those corporations that are in the growth-stage, raising capital — this issuance shortens the length of time required and reduces the problem in restructuring equity.
The New Beneficial Ownership Registry: HARBOR
With our latest article regarding Beneficial Ownership, the SEC has officially launched HARBOR, which stands for Hierarchical and Applicable Relations and Beneficial Ownership Registry. The issuance of SEC Memorandum Circular No. 15-2025 has replaced the old method of declaring beneficial ownership with the General Information Sheet (GIS).
To define — Beneficial Owners are natural persons who own or control at least 20% of voting rights, shares, or capital of a corporation or legal entity, whether in a direct or indirect manner. Furthermore, they have also expanded the scope of responsibility to directors, trustees, officers, shareholders, members, corporate secretaries, resident agents, and other covered persons under the SEC.
Moreover, under the new system:
- Filing of beneficial ownership is now done through HARBOR, and must no longer be included directly in GIS
- Business entities must explicitly disclose nominee arrangements
- Filing is integrated with eFAST via eSECURE accounts
- Information is submitted promptly when changes occur, which must be reported within 7 days
This reform strengthens transparency and aligns with anti-money laundering and corporate governance initiatives.
Regarding the transitory period, it is necessary for you to watch out these things:
- If your 2026 GIS was filed BEFORE January 30, 2026 — no separate HARBOR filing is required for 2026
- If filed ON or AFTER January 30, 2026 — must use new GIS template + HARBOR submission
Why This Matters For Businesses — Beyond Compliance
The aforementioned SEC updates are not mere administrative changes, but indeed change the flow for compliance. Substantially, they represent:
- Reduced audit burden for small enterprises
- Faster capital raising processes
- Digitalization of regulatory reporting
- Strengthened corporate transparency
Truly, as digitalization comes with increased accountability, they have gradually adapted to it and are making the essence of Ease of Doing Business a reality. Yet, it is important to acknowledge that such erroneous filing, inconsistencies, overdues, and misunderstanding of rules can lead to:
- Monetary penalties
- Filing rejections
- Corporate governance risks
- Reputational damage
Hence, the real advantage belongs to corporations that proactively align internal processes, whether it is in accounting, corporate secretarial, tax, or compliance — before issues arise.
Don’t Just React — Strategize Your Compliance
The recent SEC reforms are designed to simplify compliance and improve the flow of business operations — but only for those who understand how to implement them correctly.
Here at Babylon2k, we help corporations:
- Assess whether they still require a statutory audit under the new threshold
- Align SEC and BIR financial reporting requirements
- Review the ACS increase documentation before filing
- Navigate HARBOR registration and beneficial ownership compliance
- Ensure account consistency across eSECURE, eFAST, and registry systems
Not sure how these updates affect your corporation? Reach out to our team for a compliance assessment and consultation, and together — let’s make regulatory change work for your growth, not against it.
