Every businessperson who wants to run a business operation in the Philippines has to register with a number of important government agencies. On top of the list, especially for corporations and partnerships, is the Securities and Exchange Commission (SEC).
SEC is the agency responsible for regulating securities or tradable financial assets in the Philippines. It also maintains a registry of legitimate business entities in the country, and is tasked with the regulation, supervision, and investigation of the activities of companies and individuals to ensure compliance with the law.
Having an SEC registration in the Philippines opens your business to a lot of opportunities, since it is the best way to let future clients know that your business is legitimate. The SEC website publishes registered companies and warns consumers against transacting with non-registered entities. Registration also ensures that your business conforms to SEC rules.
More importantly, registration is necessary if you want to access all financing options that are only available to registered businesses. First Circle, for instance, can only extend revolving credit lines to businesses that are registered with SEC and other important government agencies.
The Electronic Simplified Processing of Application for Registration of Company (eSPARC) is SEC’s online system for business registrations. It enables corporations and partnerships to register online and get approval within three (3) working days.
eSPARC is the 2021 replacement of SEC’s previous Company Registration System (CRS), in response to corporations’ need to register their companies quickly and efficiently even without face-to-face interactions. eSPARC is also integrated with Central Business Portal, another online government portal that lets you register to BIR, Social Service Agencies (SSS, PAG-IBIG and PhilHealth), LGU and FDA. After a successful SEC registration, you can simply continue from eSPARC to the Central Business Portal; eSPARC will share some of your personal info to the portal to speed up your other registrations.
eSPARC has two types of processing. The first one is Regular Processing, which caters to registrations under the following company types:
The second type is OneSEC Processing, which stands for One day Submission and E-registration of Companies. This type of registration promises a faster one-day review of your application upon submission. However, it is limited to domestic stock corporations with the following qualifications:
Proposed Business Name
The first part of eSPARC registration is all about verifying your business name. To prevent failing your application, your proposed corporate name and trade name (if any) should comply with SEC corporation name guidelines. The system will then let you know whether or not your proposed trade name is still available for use.
While you can always file an appeal to re-evaluate a rejected trade name, it’s best to prepare two or more alternative business names. This is so you can quickly file for another verification request in case your first trade name is unavailable or rejected.
Company and Company Representative Details
In order for eSPARC to generate important documents, such as Articles of Incorporation, Articles of Partnership, By-Laws, Treasurer’s Affidavit, and other documents, you must provide the following details:
The details requested may vary or increase depending on the type of company you are trying to register.
Business documents
At the last stage of your registration, you will be asked to upload certain documents depending on the kind of application you are working on. Documents must be in PDF format, and the file name must match the content of the document you are uploading.
Some of these documents will also be generated by eSPARC for your completion, while others will have to be sourced elsewhere:
For both Regular Procesing and OneSEC Processing, there are three parts: name verification, input of company details, and uploading of authenticated documents. You must complete all parts to successfully submit your application.
From here, you’ll have to wait for your name verification status via email. If the verification result is Passed, go to your saved application in eSPARC and click ‘Reserve Company Name’ to use your approved company name in your SEC registration forms. However, make sure you submit your application by the date mentioned in your status page, otherwise your reserved name will automatically expire.
If the result is Failed, the reason will be mentioned in your application status on eSPARC. Click ‘Retry’ to return to Step 2 in the name verification section and change your proposed company name. Alternatively, you can click ‘Tag application for name appeal’ if you still want to proceed with your current name. eSPARC will then request for your name appeal document at the uploading section.
While waiting, you can proceed to the next part of the registration process, which is shown under your application status page.
From here, wait for another email that informs you of your Pre-Approved Application Status. As soon as you receive your status email, proceed to the last part of your application.
You may pay your SEC registration fee through the following SEC payment methods:
If you receive a ‘Disapproved Uploaded Documents’ email instead, this means you need to re-upload the documents named in the SEC email with their correction remarks applied. Upload these files in the eSPARC system within fifteen (15) business days so your application will not be canceled.
The steps for applying under OneSEC Processing is the same as Regular Processing, except for the payment process.
If you qualify for OneSEC Processing, start by clicking the ‘Continue to OneSEC Application form’ button on the eSPARC website. Then, follow the steps above for eSPARC regular processing until you reach the final step for Part 2. After typing the verification code, you will be asked to proceed to online payment. This will redirect you to the SEC payment portal, where you can pay via Debit, Credit, or Paymaya e-Wallet.
Once you have paid, you will be directed back to eSPARC, where you can already download your interim Certificate of Corporation.
At any point of your application, you can also check your status on eSPARC through the following steps.
SEC advises a total waiting period of seven (7) working days from name verification to generation of your digital certificate of incorporation or partnership.
For applications with a ‘Pending’ status, make sure you have settled all your pending SEC Fees, such as the Payment Assessment Form (PAF). You may settle this via:
Kindly note that the PAF is only valid for forty-five (45) days from the date of issuance. That said, payment and submission of required documents must be done within thirty (30) calendar days from the date of payment.
It is encouraged to pay promptly and submit three (3) sets of hard copies as Proof of Payment. These must be signed and notarized and then submitted to the SEC Processing Office.
In the event that your application was disapproved, you may update your registration application. You will receive the necessary corrections from the Reviewing Officer. It is advised that you apply these corrections for a successful re-submission of your application.
For further clarifications on the registration process of the Securities and Exchange Commission, you can always call the SEC at 8818-0921 and ask to be connected to their Company Registration and Monitoring Department.
Stock Corporations. These are corporations that engage in income-generating activities. They are permitted to declare dividends and have shareholders who get a portion of the ownership of the business through shares of stock. Stock corporations include both domestic stock corporations and foreign stock corporations.
Non-Stock Corporations. Corporations with no authorized capital stock, which means they don’t issue shares of stock. These corporations’ incomes are not distributable as dividends to their members, trustees, or officers. These corporations can be organized for a range of purposes, including charitable, religious, educational, professional, cultural, and others of the sort. Non-stock corporations can also be domestic or foreign.
Partnerships. A business set up between two or more individuals who will have equal share of both management of—and profits from—the business. A partnership can take the form of any of the following: professional partnership, general partnership, or limited partnership. Unlike a corporation, partners or co-owners in a partnership are taxed according to their individual incomes instead of a corporate rate. They may be held liable for the debts and obligations of the business.
One-Person Corporation (OPC). A corporation with a single stockholder, who must be a natural person or trust. The incorporator nmus tbe of legal age, and the corporation’s term of existence must be perpetual. Being an OPC has many advantages, especially to SMEs, since the corporation has an independent existence from its individual shareholders. This means the tax rate and liabilities of the corporation will not be applied to the corporation’s shareholders.
One key difference between corporations and partnerships is that a corporation becomes a juridical person only after the business is registered with the SEC. A partnership, meanwhile, becomes one immediately from the time the agreement between partners is finalized.
Furthermore, corporations cannot exist beyond a period of 50 years, while partnerships can exist for as long as the partners decide to keep their contract in effect.
If you own a business where you are the sole proprietor, you will have to register your business with the Department of Trade and Industry (DTI) instead of the SEC.
Good luck with your business registration!
