The SEC’s procedural turn

On Feb. 11, the Securities and Exchange Commission (SEC) issued Memorandum Circular 08-2026, prescribing an updated set of procedural rules to be observed for adjudicative and administrative actions filed with the SEC. This new circular repealed its decade-old predecessor, the 2016 SEC Rules of Procedure, and became effective on Feb. 26, fifteen days after its publication.

For practitioners, filings before the SEC were often dictated by previous experience and informal guidance rather than direct reference to the 2016 Rules. Thus, it was quite easy to forget they were available.

The introduction of the updated version of the Rules, which are seemingly more streamlined and adaptable to current corporate realities, should address issues relating to applications or actions filed with the SEC itself, and also increase the general public’s awareness and attention to these rules.

STREAMLINING THE PROCESS
At first glance, the new Rules of Procedure are noticeably shorter. While the previous Rules spanned six parts with more than 40 pages of provisions dispersed over various sections, the current version consolidated the process to just seventeen rules of interrelated provisions. This restructured framework underscores the SEC’s shift to streamlining the previously fragmented process to focus on the speedy resolution of actions.    

One of the more consequential updates on this point is the removal of investigation proceedings as a separate phase of the process. Previously, investigation proceedings had a designated set of rules separate from the process involving actions filed with the Commission. Under the current Rules, this process appears to have been embedded in the process of both adjudicative and administrative actions. This effectively shortens the initial fact-finding phase, highlighting the SEC’s focus on resolving actions in a timely manner.

The current Rules also updated the SEC’s pleading practice, providing as a default rule that only Petitions and Answers are allowed pleadings, except those expressly directed by the Commission itself. This is a departure from the previous rule of allowing all types of pleadings save for those which are prohibited by the rules. Significantly, motions for reconsideration of decisions rendered by Operating Departments are no longer allowed except for motions directed against the decisions of the SEC En Banc.

Timelines under the current Rules are also more definite and stricter. Notably, decisions in adjudicative actions must be rendered in 45 working days from submission for decision. Moreover, while appeal periods are strictly enforced, appealable decisions are expanded to include not just final orders or decisions but also official acts of an Operating Department or Extension office reflecting the SEC’s institutional goal of ensuring not just a prompt but a complete resolution of actions.

While the current Rules provide that they should be construed liberally to ensure just and inexpensive determination of actions, the rules did not expressly provide if they automatically apply to pending proceedings filed before their effectivity.

JURISDICTIONAL CLARITY
Another key update pertains to a more comprehensive provision in the jurisdiction of the SEC’s Operating Departments and Extension Offices. The current Rules provide a more detailed enumeration of matters that fall under the jurisdiction of each department reflecting its specialization. Jurisdiction is no longer broad and generally worded but is now specific — ranging from actions like changing corporate names, revoking certificates of Approval of Increase in Authorized Capital Stock, beneficial ownership declarations, fintech-related violations and investor protection.

While some overlap in jurisdiction remains, this concern is also addressed by the current Rules with an updated and clearer set of rules for the creation and operation of Special Hearing Panels which may be constituted to hear and decide actions involving matters that are within the jurisdiction of multiple Operating Departments and Extension Offices.

DIGITALIZATION AS A DEFAULT
The SEC’s mandate to digitalize its transactions is also evident in the updates. While the previous rules also considered electronic service, this was only conditional at best and was not the default for filings and service. The current Rules, however, make electronic filing and service the primary mode with key updates including the mandatory use of designated SEC e-mail addresses, electronic service to corporate e-mail addresses under SEC MC No. 28-2020 and recognition of digitally-signed pleadings and electronic transmission as valid forms of filing and service.

The shift underscores the SEC’s willingness to adapt to the ever-changing corporate realities where companies largely operate now in electronic environments.

OTHER KEY UPDATES
Other notable changes pertain to Centralized Control on Settlement Offers and Penalty Reduction. Previously, the Operating Departments had wider discretion to approve settlements and reduce penalties as may be needed based on circumstantial merits. Based on the current rules, however, the SEC En Banc is now the designated authority for approving reductions of administrative penalties and settlement offers which must meet a minimum financial threshold. Moreover, the current Rules rationalized the Cease-and-Desist Order process, differentiating the procedure based on the law involved such as the Revised Corporation Code, The Securities Regulations Code and the Financial Products and Services Consumer Protection Act. Clearer periods for the issuance, lifting, extension and automatic permanence of these orders are now provided for more coherent enforcement of the regulations.

Overall, the changes brought about by the updates highlight the SEC’s willingness to amend its practices to align with our present necessity. This move to update the previous technical framework with one that is more streamlined enforces the SEC’s commitment to enhance efficiency. Admittedly, it remains to be seen if the consolidation of these rules will significantly impact proceedings before the SEC. Based on experience at least, the rule is only as effective as the one handling the process. Ultimately, I am optimistic that the current rules will prove more procedurally efficient and memorable for all practitioners, corporations and professionals, such that moving forward, the rules will serve not as mere detached concepts but a reliable guide for addressing the public’s modern regulatory concerns and issues.

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.

Maxencio Rios, Jr. is a manager at the Tax Services department of Isla Lipana & Co., the Philippine member firm of PricewaterhouseCoopers global network.

[email protected]