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This SEC MC implements Section 26 of Republic Act No. 11232 or the “Revised
Corporation Code of the Philippines” (RCC) which states that:
(b) Found administratively liable for any offence involving fraudulent acts.
(c) By a foreign court or equivalent foreign regulatory authority for acts, violations, or
misconduct similar to those enumerated in paragraphs [a] and [b] above."
Adding to Section 26, the SEC MC further lists the following causes of disqualification:
1. Within five years prior to the election or appointment, the director, trustee, or
officer was convicted by final judgment of an offence punishable by imprisonment
for a period of exceeding six years.
2. Within the tenure, the director, trustee or officer was convicted by final judgment
of an offence punishable by imprisonment for a period exceeding six years.
3. Within five years prior to the election or appointment, the director, trustee or
officer was convicted by final judgment for violating the RCC.
4. Within the tenure, the director, trustee or officer was convicted by final judgment
for violating the RCC.
5. Within five years prior to the election or appointment, the director, trustee or
officer was convicted by final judgment for violating the Securities Regulation
Code (SRC).
6. Within the tenure, the director, trustee or officer was convicted by final judgment
for violating the SRC.
7. Within five years prior to the election or appointment, the director, trustee or
officer was found administratively liable, by final judgment, for any offense
involving fraudulent acts punishable under the RCC, SRC, and other laws, rules
and regulations enforced or implemented by the SEC.
8. Within the tenure, the director, trustee or officer was found administratively liable,
by final judgment, for any offense involving fraudulent acts punishable under the
RCC, SRC, and other laws, rules and regulations enforced or implemented by
the SEC.
9. Within five years prior to the election or appointment, the director, trustee or
officer was convicted or found administratively liable by a foreign court or
equivalent foreign regulatory authority for acts, violations or misconduct similar to
those enumerated in paragraphs (a) and (b) of Section 26 of the RCC.
10. Within the tenure, the director, trustee, or officer was convicted or found
administratively liable by a foreign court or equivalent foreign regulatory authority
for acts, violations or misconduct similar to those enumerated in paragraphs (a)
and (b) of Section 26 of the RCC.
11. Within five years prior to the election or appointment, or within the tenure, the
director, trustee or officer was found administratively liable, by final judgment, for
refusal to allow the inspection and/or reproduction of corporate records.
The SEC MC also state that if the articles of incorporation of a close corporation state
that the business will be managed by the stockholders of the corporation rather than by
a board of directors, the said stockholder removed shall be excluded from being part of
the governing body which exercises the corporate powers, conducts all business, and
controls all properties of the corporation.
In addition to their removal, the SEC may also issue a permanent cease and desist
order or impose a fine ranging from Ten Thousand pesos (PHP 10,000.00) to Four
Hundred Thousand pesos (PHP 400,000.00) for every single violation of its Orders or
any of the RCC provisions regarding the disqualifications. These penalties will take into
consideration the extent of participation, nature, effects, frequency, and seriousness of
the violation.
The proceedings will not be dismissed outright nor discharge the Respondent from the
imposition of any administrative sanction or penalty. The SEC can continue the
proceedings where documentary evidence shows that there exists a prima facie case.
The SEC shall maintain an Index of the removed director, trustee or officer which will be
kept confidential. However, the contents may be accessed by outside parties with the
authority of the individual subject of the removal, together with the approval of the
relevant operating department of the SEC. The said authority must be notarized.