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Now online: SEC company registration

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Cyril B. Pestilos

Taxwise Or Otherwise

“At last!” I exclaimed in relief twice. First, upon hearing last year about the plans for online registration to be implemented the Securities and Exchange Commission (SEC), and then again upon the signing of Republic Act (RA) No. 11032 or the Ease of Doing Business Act recently.

The SEC online registration system was launched late last year even before the signing of the RA which aims to streamline the procedures and requirements in establishing a business and renewing business permits or registrations.

Prior to the enactment of the RA, the government agencies had been trying to make business registration more efficient by rationalizing the processes through an integrative approach, one of which was the so-called Integrated Business Registry System (IBRS). Under the IBRS, the SEC issues a Unified Registration Record containing the newly registered company’s SEC registration number, pre-issued tax identification number and the corresponding pre-issued employer membership numbers with the three social agencies, the SSS, PhilHealth and Pag-IBIG.

In November, the SEC launched the Company Registration System (CRS), a portal which allows applicants to submit requirements online. To access CRS, applicants are required to open an account through the SEC’s web portal at crs.sec.gov.ph.

The CRS aims to minimize personal appearances at the SEC offices by requiring submission of documents via online upload. Thus, the SEC no longer accepts manually filed applications since the CRS became fully operational. This zero-contact approach likewise limits interactions between examiners and applicants within the CRS network and is in line with the zero-contact policy of the Ease of Doing Business Act.

To contextualize how the CRS works, below is a discussion of the step-by-step registration/licensing process for corporations/partnerships, as well as an explanation of how these steps have been integrated in the new system, and how the CRS compares with its precursor.

The first step in registration is to verify whether the proposed name of the new entity is allowed or available. With its integration in the CRS, this online feature is most convenient since it spares the public from the previous long queues just to pay the name reservation fee.

Once the name reservation has been successfully verified, the applicant has four days to comply with the requirements in the CRS. In the event that the name reservation expires prior to proceeding to the subsequent process, the applicant may log in and redo the process. The fee for name reservation shall be paid together with the registration fees at the tail end of every successful CRS process.

In case the name verification result is denied, and if the applicant wishes to appeal, an appeal letter has to be uploaded in the CRS. This is an improvement from the former practice of physically filing the appeal letter with the SEC office. The applicant will be notified of the result of the appeal via the e-mail address enrolled in the applicant’s CRS account.

After completing the required information in the CRS, applicants may adopt the pre-generated incorporation/registration documents such as the Articles of Incorporation/Partnership and By-laws by downloading them from the CRS or use their own prepared versions.

Once the applicant has completely encoded the required information and uploaded the registration documents, a notification shall be sent to the applicant’s CRS account confirming receipt of the documents, and thereafter, furnishing the results of the SEC examiner’s evaluation. If there are deficiencies, the applicant has to comply via CRS. Once favorably evaluated, an order of payment will be sent to the applicant’s CRS account.

The Payment Assessment Form must be secured from the SEC office upon presentation of the printed order of payment. Thereafter, the applicant can proceed to pay the registration fees through the payment facility options in the CRS. Once paid, the receipt must be uploaded in the CRS before personally proceeding to the SEC office to file the original copies of the registration documents. Finally, an e-mail will be sent notifying the applicant when to drop by the SEC office to claim the Certificate of Incorporation/Registration/Authority/License.

The CRS seems promising in automating the registration process. However, like all other attempts to integrate technology to an age-old process, there have been challenges/birth pains in its implementation. From a personal perspective, here are some difficulties applicants have encountered under the new system and the downside of the CRS vis-a-vis its manual counterpart:

• The assignment of applications to an SEC examiner and the review process take longer in the CRS than in the old manual system. The turnaround time to receive the initial comments of the examiner is one month. In contrast, the application under the old manual process was immediately assigned to an examiner; thus,the applicant receives the examiner’s comments on the same day of submission or the day after, allowing the applicant to immediately rectify the deficiencies, if any.

• For efficient connectivity, the CRS requires a stable Internet connection. Due to the influx of transactions as the CRS accepts applications any time of the day, the system’s operating capacity is running slow. In the previous manual system, the SEC only accepts applications during office hours; hence, the volume of transactions was controlled and managed.

• The CRS experiences errors which sometimes require the applicant to restart or re-encode deleted information due to system failures.

• For payment of registration fees, there is an additional step requiring the applicant to upload a copy of the receipt on the CRS.

• Due to delays and uncertain waiting time, the zero-contact policy is not yet fully achieved; applicants still flock to the SEC to personally follow up their applications.

• The CRS is designed only for standard or pro-forma articles or by-laws.

Like all innovations, initial stages are often peppered with lapses. However, trial periods are but temporary phases in any systems process. Given the SEC’s upbeat stance for change, there are high hopes, that after the pilot year, CRS will soon operate efficiently and effectively as programmed.

The views or opinions expressed in this article are solely those of the author and do not necessarily represent those of Isla Lipana & Co. The content is for general information purposes only, and should not be used as a substitute for specific advice.

 

Cyril B. Pestilos is a Senior Consultant at the Tax Services Department of Isla Lipana & Co., the Philippine member firm of the PwC network.

+63 (2) 845-2728

cyril.b.pestilos@ph.pwc.com