MANILA, Philippines - The Securities and Exchange Commission is lobbying for tougher penalties on companies that fail to disclose complete and material information.
On the sidelines of the annual reception for bankers hosted by the Bangko Sentral ng Pilipinas Friday night, SEC chairperson Teresita Herbosa called for the strengthening of the Securities Regulation Code to ensure timely, complete, understandable, fair and accurate disclosure in company filings.
Among her proposals include imposing stiffer penalties on corporations that fail to meet disclosure laws.
She said tougher fines would put more pressure on companies that keep investors in the dark and conceal illicit activities.
Herbosa noted that while the SEC could penalize firms with incomplete disclosures or misrepresenting information, the sanctions could just be a slap on the wrist for some companies.
The SEC chief said some corporations would rather pay the penalty than comply with their disclosure obligations.
Herbosa said investors need accurate information about companies so they could make informed decisions.
The call for stiffer enforcement and stringent penalties came after an audit conducted by the SEC resulted in adverse findings against some listed firms owned by businessman Antonio Tiu, who claimed ownership of the 350-hectare farm estate believed to be owned by Vice President Jejomar Binay.
During a Senate hearing in November last year, Herbosa cited incomplete disclosures made by Tiu’s AgriNurture Inc., Greenenergy Holdings Inc., Sunchamp Real Estate Development Corp., and Earthright Inc.
A scrutiny of the 2013 financial statements showed that there were incomplete disclosures on leases of Greenenergy Holdings and in related-party transactions.
According to the SEC, Greenenergy failed to provide description of transactions and commitments.
The SEC investigation also noted that Sunchamp did not have disclosures on investment in stocks as well as on its inventories.
There was also incomplete disclosure on “construction-in-progress” to cover the nature of assets being constructed, estimated cost to complete and percentage of completion as of reporting period.
Herbosa said the SEC is required by the law to always make a review, at least annually, of listed companies to check whether their financial reports are accurate.
Greenenergy said the finding of incomplete disclosure on leases was inapplicable as it had no lease arrangements as of Dec. 31, 2013.
As to incomplete disclosures on related party transactions, Greenenergy said these were disclosed to securities regulators and were in compliance with the src.
“These transactions pertain to intracompany advances, non-interest bearing and the required allowance for impairment losses were recognized,” Greenenergy said.
Greenenergy maintained it is strictly monitoring its compliance with the requirements of the src.
The Philippine Stock Exchange itself is monitoring Greenenergy and AgriNurture following allegations that their owner, Tiu, is a dummy of Binay’s.
PSE president Hans Sicat earlier said the exchange would “make sure that any narration of Tiu during the Senate hearings that are considered material developments have actually been disclosed or are properly disclosed to the public.”