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Rekindling the SEC’s eSPARC

To quote a popular Korean pop group, “the wait is over” for eSPARC, which is now ready “to light it up like dynamite.” So I urge companies to “get it, let it roll.”

In April 2021, the Securities and Exchange Commission (SEC) launched the Electronic Simplified Processing of Application for Registration of Company (eSPARC) system to automate the company registration process for domestic corporations, while other types of registration applications, such as those of foreign corporations, are filed through the SEC Company Registration System (CRS). The eSPARC was later enhanced to increase utilization, and to catch up with the regulatory changes imposed by the Revised Corporation Code, subsuming the CRS functions in September 2021.

The registration processes on eSPARC include name reservation, form fill-out, download of pre-generated registration documents, upload of signed and notarized or consularized/apostilled documents, payment of registration fees, and a recently-added facility that allows registrants to download a digital Certificate of Incorporation (CoI).

To maintan its spark, eSPARC was further reformed earlier this year. It now has two subsystems: the Regular Processing, and the One-day Submission and E-registration of Companies (OneSEC) Processing.

The Regular Processing subsystem of eSPARC processes the company registration within the usual timeline. On the other hand, the newly added subsystem — OneSEC Processing — allows registrants to complete the registration process in only one day. This is available for domestic stock corporations, whether organized as a One Person Corporation (OPC) or otherwise.

According to the SEC’s slogan, this new subsystem aims to provide the following:

One – One-day approval of the registration application anytime, anywhere

S – Simple procedure to ensure that the data encoded are protected and secured

E – Efficient management of information

C – Completely seamless and fully automated

This initiative is the most awaited comeback and digitization of the previous “Green Lane Registration” of the SEC, which was a one-day registration process offered during the manual era.

To qualify for one-day processing, registrants applying for OneSEC Processing have to meet specific conditions. These conditions include, among others: a) the primary purpose or main activity must be predetermined/fixed and not subject to any modification/correction; b) the corporate term of existence is perpetual; c) the applicant corporation’s location is not in any of the economic zones; and d) the mode of payment for the subscription of shares is cash. Registrants who initially apply via OneSEC Processing but fail to meet the conditions will be redirected to the Regular Processing system.

Be mindful that failure to complete the application and to pay the assessed registration fees within one day from the Payment Assessment Form’s (PAF) issuance will cause the system to purge the entire application automatically. This includes the cancellation of the pre-approved name reservation.

For regular processing, the SEC promises to review the application within seven working days from submission. Once the application is pre-approved, the duly finalized documents must be uploaded to eSPARC by the registrants within 30 calendar days. If the uploaded documents are disapproved, the documents incorporating the corrections sought by the reviewing officer must be uploaded within 15 calendar days from disapproval. Once the PAF is issued, registration fees must be paid within 45 days from the date of the PAF.

The issuance of a digital CoI signals the inception of the SEC’s digital transformation, a precursor of more innovation yet to come. Notwithstanding the downloadable digital CoI, however, the hard copy CoI will be released only upon presentation and submission to the selected SEC office of the digital CoI, proof of payment of the assessed registration fees, along with four sets of complete registration requirements within 60 calendar days from the date stated in the digital CoI. 

eSPARC is now also integrated with the Philippine Business Hub (PBH), an online system that caters to post-SEC registrations with other government agencies such as the Bureau of Internal Revenue (BIR), the Local Government Unit, and social agencies (like the Social Security System, Philippine Health Insurance Corp., and Home Development Mutual Fund). At the end of the registration process in eSPARC, a link to the PBH will appear. For those who did not receive the link to the PBH website or who obtained their CoI or license outside eSPARC, they can still proceed to the PBH website at https://business.gov.ph. Upon logging in to the PHB, registrants may apply for a Tax Identification Number (TIN) and automatically obtain their employer numbers from the social agencies.

While the PBH is available, registrants may still personally visit the government offices to process the post-SEC registrations, if onsite processing is somehow preferred.

While the eSPARC-PBH integration appears to be a one-stop shop for the registration of companies, registrants must ensure that they complete the post-registration process. Even if registrants have obtained their TIN online through the PBH, they still need to go to the Revenue District Office of the BIR having jurisdiction over their registered business address to secure their certificate of registration, apply for an authority to print their receipts/invoices, and register their books of account.

The full implementation of a one-stop shop for online business registration in all government agencies has yet to be realized. Nevertheless, the foundation has been laid through the eSPARC-PBH’s convenient registration process. It is the SEC’s contribution to jumpstarting the economy post-pandemic. Let’s hope this digitization initiative will continue to run — “smooth like butter.”

The views or opinions expressed in this article are solely those of the author and do not necessarily represent those of Isla Lipana & Co. The content is for general information purposes only, and should not be used as a substitute for specific advice.

Cyril B. Pestilos manager at the Tax Services department of Isla Lipana & Co., the Philippine member firm of the PwC network.

+63 (2) 8845-2728

cyril.b.pestilos@pwc.com

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