Introduction

In the Philippine corporate landscape, the Securities and Exchange Commission (SEC) serves as the primary regulatory body overseeing the formation, operation, and amendment of corporations under the Revised Corporation Code of the Philippines (Republic Act No. 11232, or RCC). Amending corporate by-laws is a common corporate action that allows companies to adapt to changing business needs, including modifications to governance structures, operational procedures, and financial reporting timelines. One specific amendment often pursued is the change in the accounting period or fiscal year, which is typically embedded in the by-laws. This article provides a comprehensive overview of the SEC's documentary requirements for these amendments, drawing from the RCC, SEC Memorandum Circulars, and established regulatory practices. It covers the legal framework, procedural steps, required documents, filing processes, fees, potential challenges, and post-amendment obligations, all within the Philippine context.

Legal Framework

The authority to amend by-laws stems from Section 47 of the RCC, which empowers the board of directors or trustees, with the approval of stockholders or members representing at least a majority of the outstanding capital stock or membership, to amend or repeal by-laws. However, for certain amendments, a two-thirds vote may be required if specified in the articles of incorporation or by-laws. The power to amend can also be delegated to the board by a two-thirds vote of stockholders, allowing the board to make changes without further stockholder ratification, except for amendments affecting stockholder rights (e.g., Sections 6, 37, 40, 41, 76, 80, and 137 of the RCC).

Regarding the accounting period, Section 42 of the RCC mandates that corporations adopt a fiscal year for financial reporting, which must be indicated in the by-laws. Changing the accounting period thus necessitates an amendment to the by-laws, as it alters the corporation's financial calendar. This change must align with Bureau of Internal Revenue (BIR) regulations under the National Internal Revenue Code (NIRC), but the SEC focuses on corporate compliance. The SEC's oversight ensures that amendments do not violate public interest, corporate laws, or the corporation's foundational documents.

Key SEC issuances include:

SEC Memorandum Circular No. 6, Series of 2020 (Guidelines on Corporate Governance).
SEC Memorandum Circular No. 28, Series of 2020 (Submission of Documents via Electronic Means).
Various opinions and rulings on by-law amendments.

Amendments must not contravene the RCC's non-amendable provisions, such as those protecting minority rights or ensuring fair corporate practices.

Procedural Steps for Amendment

Before delving into documentary requirements, understanding the procedural prerequisites is essential:

Board Resolution: The process begins with a board meeting where directors approve the proposed amendment via resolution. A quorum (majority of directors) is required, and the resolution must detail the changes, including the rationale for altering the accounting period (e.g., alignment with parent company fiscal year or operational efficiency).
Stockholder Approval: Unless delegated to the board, the amendment requires ratification by stockholders holding at least a majority of the outstanding capital stock at a duly called meeting. Notice must be given at least two weeks in advance (or as per by-laws), specifying the proposed changes. For one-person corporations, the sole stockholder acts in lieu of the board and stockholders.
Special Considerations for Accounting Period Change:
- The new fiscal year must be a 12-month period, typically ending on the last day of a month.
- If the change shortens or extends the current fiscal year, transitional financial statements may be needed.
- The amendment should specify the effective date, ensuring no overlap or gap in reporting periods.
SEC Filing: Post-approval, the corporation must file the amendment with the SEC within the prescribed period (generally within 30 days from approval, though extensions may be requested).

Failure to follow these steps can result in SEC rejection, fines, or invalidation of the amendment.

Documentary Requirements for SEC Submission

The SEC requires a standardized set of documents for by-law amendments, including those changing the accounting period. Submissions can be made physically at SEC offices or electronically via the SEC's eSPARC (Electronic Simplified Processing of Application for Registration of Corporations) or email for certain filings. The following are the core documents:

SEC Cover Sheet: A mandatory form providing basic corporate information, such as company name, SEC registration number, date of amendment approval, and contact details. It must be signed by an authorized officer.
Amended By-Laws: The complete text of the by-laws as amended, clearly indicating the changes (e.g., via strikethrough for deletions and underlining for additions). The document must include:
- The article and section being amended (e.g., "Article X: Fiscal Year – The fiscal year of the corporation shall commence on January 1 and end on December 31 of each year" changed to a new period).
- Certification of adoption by the corporate secretary.
Directors' Certificate: A notarized certificate signed by a majority of the directors (or the sole director in one-person corporations) attesting to:
- The board's approval of the amendment.
- The date, place, and quorum of the board meeting.
- The absence of any dissenting votes or their resolution.
- For accounting period changes, confirmation that the amendment complies with RCC Section 42 and does not prejudice creditors or stakeholders.
Stockholders' Resolution or Certificate of Secretary: If stockholder approval is required, a notarized certificate from the corporate secretary detailing:
- The date, place, and quorum of the stockholders' meeting.
- The vote tally (e.g., shares voted in favor, against, or abstained).
- Confirmation that notice was properly given.
- In cases of delegation to the board, reference to the enabling stockholder resolution.
Additional Documents for Specific Cases:
- For Stock Corporations with Par Value Shares: If the amendment affects share structures indirectly, an audited financial statement may be required.
- For Non-Stock Corporations: Membership certificates instead of stockholder resolutions.
- For Foreign Corporations: If amending branch office by-laws, include authenticated copies of the parent company's board resolution and by-laws.
- GIS Update: If the amendment necessitates changes to the General Information Sheet (GIS), submit an amended GIS reflecting the new fiscal year.
- BIR Clearance or Notification: While not strictly an SEC document, evidence of BIR notification for fiscal year change (via BIR Form 1905) is advisable, as SEC may inquire about tax compliance.
- Affidavit of Undertaking: In some instances, an affidavit affirming no prejudice to third parties.
Proof of Payment: Receipt for filing fees.

All documents must be originals or certified true copies, notarized where required, and in English (or with certified translations if in another language). For electronic submissions, digital signatures compliant with Republic Act No. 8792 (Electronic Commerce Act) are accepted.

Filing Process and Fees

Where to File: SEC Head Office in Metro Manila or extension offices nationwide. Online via SEC's portal for faster processing.
Timeline: Filing must occur within 30 days from stockholder approval. Late filings incur penalties (e.g., P1,000 to P10,000, escalating with delay).
Fees:
- Basic filing fee: P2,000 to P5,000, depending on authorized capital stock.
- Amendment-specific fee: 1/5 of 1% of authorized capital stock or P2,000 minimum.
- Legal research fee: 1% of filing fee.
- For accounting period changes without other amendments: Potentially lower if treated as a minor amendment.
- Expedited processing fees apply for urgent requests.

Upon submission, the SEC reviews for completeness and compliance. Approval is typically granted within 5-10 working days if no issues arise. Rejections may occur due to incomplete documents, non-compliance with RCC, or conflicts with public policy.

Potential Challenges and Remedies

Common issues include:

Incomplete Documentation: Ensure all signatures and notarizations are in place.
Conflicting Provisions: Amendments changing the accounting period must not violate loan covenants or contractual obligations; obtain waivers if needed.
Tax Implications: Changing fiscal year requires BIR approval; SEC may defer if BIR clearance is pending.
Minority Objections: Dissenting stockholders may exercise appraisal rights under Section 80 of the RCC.
COVID-19 Adjustments: Per SEC MC No. 34-2020, remote meetings and electronic voting are allowed, with minutes as supporting documents.

To mitigate, consult legal counsel or SEC pre-filing opinions.

Post-Amendment Obligations

Once approved, the corporation must:

Update internal records and notify stakeholders (e.g., banks, suppliers).
File amended financial statements with SEC and BIR reflecting the new period.
Submit updated GIS within 30 days.
Comply with annual reporting: Audited financial statements due 120 days after fiscal year-end.
For listed companies, disclose via PSE EDGE portal under SEC Form 17-C.

Non-compliance can lead to fines (up to P1,000,000), suspension, or revocation of registration.

Conclusion

Amending corporate by-laws to change the accounting period is a strategic tool for Philippine corporations to enhance operational alignment and financial management. Adhering to SEC documentary requirements ensures legal validity and regulatory compliance. Corporations are encouraged to maintain meticulous records and seek professional advice to navigate this process effectively, fostering sustainable governance in line with the RCC's emphasis on transparency and accountability.