The Securities and Exchange Commission (SEC) has proposed a bold move to ease the regulatory landscape for micro, small, and medium-sized enterprises (MSMEs) in the Philippines. This proposal aims to exempt MSMEs with assets or liabilities under P3 million from the requirement to submit audited financial statements. Instead, these businesses would only need to provide annual financial statements certified by their treasurer or CFO.
But here's where it gets controversial: the Revised Corporation Code (RCC) currently mandates that firms with assets or liabilities of at least P600,000 must submit audited financial statements. The RCC grants the Department of Finance (DOF) the authority to set this threshold, which is also reflected in the Securities Regulation Code's implementing rules and regulations.
If approved, this recommendation would apply to financial statements covering fiscal years ending on or after December 31, 2025, pending final approval from the DOF.
SEC Chairperson Francis Lim emphasizes the importance of MSMEs as the backbone of the Philippine economy. He believes that this proposed policy will not only enhance the ease of doing business but also reduce unnecessary requirements for micro entities, aligning with the government's goal of fostering inclusive economic development.
Data from the Department of Trade and Industry (DTI) reveals that MSMEs constitute a significant 99.63% of registered businesses in the country as of 2024. Of these, 90.66% are micro enterprises with assets up to P3 million, 8.60% are small enterprises with assets ranging from over P3 million to P15 million, and 0.37% are medium enterprises with assets from over P15 million to P100 million.
Lim assures the public that this proposal will not compromise oversight over corporations, including those involved in public infrastructure or other regulated sectors, as they generally exceed the P3-million threshold.
What are your thoughts on this proposed change? Do you think it will benefit MSMEs and drive economic growth, or is there a potential downside that could impact oversight and accountability? We'd love to hear your opinions in the comments below!
