In the Philippine commercial landscape, the Securities and Exchange Commission (SEC) serves as the primary regulatory agency mandated to oversee the corporate sector. For investors, legal professionals, and business partners, verifying the registration and affiliations of an entity is not merely a procedural step—it is a critical exercise in due diligence to mitigate risks of fraud, "fly-by-night" operations, and unauthorized investment schemes.
1. The Statutory Basis of SEC Registration
Under the Revised Corporation Code of the Philippines (Republic Act No. 11232), a corporation's juridical personality begins only upon the issuance of a Certificate of Incorporation by the SEC. Without this, an entity cannot legally enter into contracts as a corporation or sue under a corporate name.
Furthermore, the Securities Regulation Code (SRC) mandates that any entity engaging in the sale or distribution of securities to the public must have a secondary license.
Important Note: Basic registration as a corporation (Primary License) does not automatically authorize a company to solicit investments from the public. Public investment solicitation requires a Secondary License.
2. Methods of Verification
Verification can be conducted through both digital platforms and physical verification at SEC offices.
A. SEC Check App and Online Portal
The most efficient way to verify a company’s status is through the SEC Express System or the Electronic Simplified Processing of Application for Registration of Company (eSPARC).
- Company Search: Users can input the registered corporate name to check if the company exists in the SEC database.
- Verification of Status: The system will indicate if the corporation is "Active," "Revoked," or "Suspended."
B. Verification of Secondary Licenses
If the company is offering investment opportunities (e.g., stocks, mutual funds, or crowdfunding), you must check the SEC’s List of Licensed Investment Advisers or Brokers.
- Visit the SEC website’s "Public Information" section to view lists of companies authorized to issue securities.
- Cross-reference the company name against the SEC Advisory list, which flags entities found to be operating without the necessary permits.
C. Physical Inspection of Documents
For a more thorough legal review, one may request official copies of the following documents via the SEC Express System:
- Articles of Incorporation (AOI): To verify the primary purpose of the company and its authorized capital stock.
- General Information Sheet (GIS): Filed annually, this document lists the current directors, officers, and stockholders. It is the definitive source for verifying affiliations and identifying the "beneficial owners" of the company.
- Audited Financial Statements (AFS): To verify the company’s financial health and declared assets.
3. Identifying Corporate Affiliations
To determine a company's relationship with other entities (subsidiaries, affiliates, or parent companies), a legal practitioner must scrutinize the General Information Sheet (GIS).
| Feature to Check | Legal Significance |
|---|---|
| Stockholders’ List | Identifies if another corporation owns a controlling interest (Parent-Subsidiary relationship). |
| Interlocking Directors | Identifies "Affiliates" where the same individuals sit on the boards of multiple companies. |
| Primary Purpose | Checks if the company is legally allowed to hold shares in other companies (Holding Company status). |
4. Red Flags and Indicators of Non-Compliance
When conducting verification, the following should be treated as high-risk indicators:
- "Pending" Status: The company has not finalized its registration or has failed to file its GIS/AFS for several years.
- Ultra Vires Acts: The company is engaging in activities (like lending or investment solicitation) that are not included in its "Primary Purpose" in the Articles of Incorporation.
- Presence in SEC Advisories: The SEC regularly issues "Cease and Desist Orders" (CDO) against companies suspected of running Ponzi schemes or unauthorized investment operations.
5. Summary Checklist for Verification
- Step 1: Confirm the existence of the Certificate of Incorporation via eSPARC/SEC Search.
- Step 2: Check the "Company Status" (ensure it is not Revoked or Suspended).
- Step 3: Review the latest General Information Sheet (GIS) for current directors and stockholders.
- Step 4: If investments are involved, verify the Secondary License specifically for securities issuance.
- Step 5: Search the SEC Advisories page for any warnings against the entity or its incorporators.
By strictly adhering to these verification protocols, parties can ensure that their dealings are protected by the mantle of corporate legality and regulatory oversight provided by Philippine law.