Manila: The Securities and Exchange Commission (SEC) has announced a significant policy shift, exempting companies with capital and liabilities up to PHP3 million from the requirement to submit audited financial statements. This adjustment is intended to streamline processes and reduce the regulatory burden on micro enterprises.

According to Philippines News Agency, the SEC previously required only companies with total assets and liabilities of less than PHP600,000 to submit unaudited financial documents. Under the new guidelines, companies not meeting the audit threshold must submit financial statements accompanied by a Statement of Management's Responsibility (SMR).

SEC Chairperson Francis Lim emphasized this change as a recognition of the challenges faced by micro enterprises, which often have limited resources. He stated that this policy would make compliance more proportionate, thus allowing these businesses to focus their resources on growth rather than regulatory obligations. Lim also highlighted that the new rule preserves accountability by requiring management to take formal responsibility for the accuracy and integrity of their financial statements, ensuring continued regulatory oversight.

The SEC further clarified that the new rule applies to financial statements covering fiscal years ending on or after December 31, 2025. The SMR for stock and non-stock corporations must be sworn to and signed by the board chair, president or chief executive officer, and treasurer or chief financial officer, all duly authorized by the board. In the case of one-person corporations, the SMR must be signed by the president and treasurer. The SEC stressed that the signatories are fully responsible for the accuracy, completeness, and truthfulness of the submitted financial statements.