Updated April 2022
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.
Why do you need to register with the SEC?
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 and PhilGEPS Project Financing to businesses that are registered with SEC and other important government agencies.
What is eSPARC by SEC?
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.
Which processing option should you choose on eSPARC?
eSPARC has two types of processing. The first one is Regular Processing, which caters to registrations under the following company types:
- One Person Corporation (OPC)
- Domestic corporations (stock and non-stock) with 2 or more incorporators
- Partnerships and associations
- Foreign corporations
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:
- All-Filipino company classification, which means incorporators, directors, and subscribers of the corporation must be natural persons and residents of the Philippines
- Proposed corporate name must have a name descriptor according to its industry classification
- Proposed corporate name must not contain a Trade Name or any set of letters that act as an acronym, and must not be subject to any name appeal
- Company has a perpetual corporate term of existence
- Company is not located in any economic zone
- Company is able to pay registration fees immediately in the SEC Payment Portal
- None of the company officers or members have pending/convicted criminal cases, administrative cases, or government sanctions.
eSPARC and SEC requirements to prepare
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:
- Company representative details. The name, position, TIN, and contact details of the person filing the SEC registration
- Company type, classification, and industry
- Company address, purpose, fiscal year details
- Company’s Term of Existence. Number of years your company will be in operation
- Company’s Capital Structure. The total amount of your authorized capital stock, total number of shares, and so on.
- Company officers, incorporators, directors and/or subscribers
The details requested may vary or increase depending on the type of company you are trying to register.
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:
- Cover Sheet
- Articles of Incorporation or Articles of Partnership
- Treasurer’s Affidavit
- Secondary Licenses
- Endorsements from Other Government Agencies
- Name appeal. If you failed the name verification stage but still want to go for the trade name, you can send this document to appeal.
SEC Registration Process
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.
eSPARC registration under Regular Processing
Part 1. Name Verification
- Visit eSPARC at https://esparc.sec.gov.ph/application. Click ‘Regular Processing’ > ‘Proceed to Regular Processing’ > ‘Continue to Application’.
- On the name verification form, enter your company details, proposed company name, and trade name. Then click ‘Next’.
- On the summary page, click ‘Send OTP to email’. Enter the OTP from your registered email on the space provided, then click ‘Save and Proceed’. Your application should now appear as ‘Draft’ status.
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.
Part 2. Company Details
- On the form provided, complete your company purpose, address, and other business contact information. Then click ‘Save and Proceed’.
- Enter your company’s Capital Structure details, then click ‘Save and Proceed’.
- Enter your Company Officers, Incorporators, Directors, and/or Subscriber details, then click ‘Save and Proceed’.
- On the File Uploading section, upload the pre-defined documents and name appeal document, if applicable. Then click ‘Save and Proceed’.
- Type the verification code generated by the page and click ‘Submit Application’. An email containing your application reference number will also be sent to your email.
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.
Part 3. Uploading of authenticated documents
- Click the application link on your SEC email. This will lead you to your completed application on eSPARC.
- Download and print the system-generated forms on the page. Provide all the necessary signatures needed from you and your company officers. Then, have your documents authenticated or notarized if necessary.
- Once the documents are ready, go back to the eSPARC page. Click ‘Upload Documents’ to add your documents, then ‘Submit’.
- Wait for another email from the SEC, this time about your Approved Application. Receiving this means you may already pay your SEC registration fee. Click the email link, choose your payment method, and complete the provided payment process.
- Once the payment is done and confirmed, SEC will send you a Registration Approved email. You can now download the Digital Certificate of Incorporation/Partnership on the email link provided.
You may pay your SEC registration fee through the following SEC payment methods:
- Electronic System for Payment to SEC (Espaysec)
- Over-the-Counter (OTC) of SEC Cashier Office
- Land Bank Over-the-Counter
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.
eSPARC registration under OneSEC Processing
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.
How to check your SEC Registration Status on eSPARC
At any point of your application, you can also check your status on eSPARC through the following steps.
- Visit the e-SPARC website and click ‘Open Existing Application Form’.
- Enter your registered email address of the applicant or application reference number, then click “Search”. You will find your reference number in the eSPARC System Confirmation email sent to you by the SEC.
- Enter the OTP sent to you via email, then click “Proceed.”
Other important reminders
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:
- SEC Cashier Over-the-counter. You can pay using Cash, Manager’s check, and Postal Money Order
- SEC Online payment portal, https://www.sec.gov.ph/sec-payment-portal/
- Authorized Land Bank branches
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.
Which types of businesses must register with the SEC?
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!