THE SECURITIES and Exchange Commission (SEC) has raised the asset and liability threshold for companies required to submit audited financial statements, easing compliance costs for micro, small, and medium enterprises (MSMEs).
“This reform recognizes the realities faced by micro enterprises, which often operate with very limited resources. By allowing the submission of certified financial statements in lieu of audited ones, we are making compliance more proportionate, allowing them to redirect their resources to growing their business,” SEC Chairperson Francisco Ed. Lim said in a statement on Wednesday.
“At the same time, the new threshold preserves accountability by requiring management to formally assume responsibility for the accuracy and integrity of their financial statements, ensuring that regulatory oversight remains firmly in place,” he added.
Memorandum Circular No. 4, Series of 2026 exempts both stock and nonstock corporations with total assets or liabilities not exceeding P3 million from submitting audited financial statements. Previously, only corporations below P600,000 were exempt.
Those below the new threshold must submit certified financial statements accompanied by a Statement of Management’s Responsibility (SMR).
The higher threshold applies to fiscal years ending on or after Dec. 31, 2025, while corporations with earlier fiscal year-ends continue to follow the previous threshold.
Stock and nonstock corporations must have SMRs signed under oath by the board chair, president or chief executive officer, and treasurer or chief financial officer, duly authorized by the board. One-person corporations must obtain signatures from the president and treasurer.
The SEC said that signatories bear full responsibility for the accuracy, completeness, and truthfulness of the submitted statements.
“Any incomplete, inaccurate, false, or misleading statements will be subject to penalties under the Securities Regulation Code (SRC) and the Revised Corporation Code (RCC), without prejudice to the Commission’s authority to require audited financial statements when necessary for investor protection, regulatory enforcement, or public interest,” the SEC said.
The new threshold excludes entities in Groups A, B, and C under Revised SRC Rule 68, as well as public interest corporations due to their regulatory duties and public significance.
Group A includes public companies with at least P50 million in assets and 200 or more shareholders holding at least 100 shares each, listed securities issuers, stock and securities exchanges, and self-regulatory organizations.
Group B covers issuers of registered timeshares and membership certificates, investment houses, brokers, dealers, government securities eligible dealers, and universal banks registered as securities underwriters.
Group C includes financing companies with over P10 million in prior-year assets, lending companies exceeding P5 million in prior-year assets, transfer agents, and non-stock non-profit corporations with fund balances above P25 million or receiving substantial annual donations.
Mr. Lim said the policy will ease business operations and reduce unnecessary compliance for micro entities, supporting the government’s inclusive economic development goals.
In October 2025, the SEC reported granting over P80 million in fee discounts across 40,157 transactions processed under three memorandum circulars issued from July to October, with more than half of the savings benefiting MSMEs. — Alexandria Grace C. Magno
