SEC Circular No. 6 (Series of 2026): A Major Simplification in Capital Increase Requirements

Published: 24 January 2026

Effective: Immediately upon publication

Issued by: Securities and Exchange Commission (SEC), Philippines

The Securities and Exchange Commission (SEC) has issued SEC Memorandum Circular No. 6, Series of 2026, introducing a significant change that simplifies the process of increasing a corporation’s authorized capital stock (ACS) when the subscription is paid in cash.

This development is a welcome move for corporations, startups, and growing businesses seeking faster and less costly compliance with SEC requirements.

Below, we break down what changed, when it applies, and why this matters to your business.

What Changed Under SEC Memorandum Circular No. 6 (2026)?

1. Removal of the ₱50 Million Threshold

Previously, corporations were required to submit a Special Audit Report (SAR) when the cash subscription for an increase in authorized capital stock exceeded ₱50 million.

This ₱50 million threshold has now been removed.

Regardless of the amount, corporations may now submit a notarized Subscription Contract in lieu of a Special Audit Report, subject to specific exceptions.

2. Expanded Use of Notarized Subscription Contracts

Instead of a Special Audit Report, corporations increasing their authorized capital stock through cash subscription must now submit:

• A notarized Subscription Contract executed by:

  • The subscriber(s)

  • The President

  • The Treasurer

• The Subscription Contract must clearly state:

  • The number of additional shares subscribed

  • The amount paid for the shares

• If the President or Treasurer is unavailable:

  • A Board Resolution authorizing another officer or director to sign must be submitted

This change significantly reduces costs, processing time, and administrative burden.

Who Still Needs to Submit a Special Audit Report?

Despite the general relaxation, the SEC clarified that the following entities must still submit a Special Audit Report:

• Listed companies

• Public companies under the Securities Regulation Code

• Companies offering or selling securities to the public

• Companies with secondary licenses regulated by the SEC(e.g., financing companies, lending companies, investment houses)

The SEC also retains the authority to require a Special Audit Report in other cases, particularly to prevent fraud or abuse.

When Did This Take Effect?

Effectivity:The Circular took effect immediately upon completion of its publication in newspapers of general circulation — January 2026.

This means the new rules already apply to current and upcoming applications.

Our Take: Why This Matters for Businesses

From a legal and accounting standpoint, this Circular is a major pro-business reform.

Key Benefits

• Faster SEC approvals

• Lower compliance and audit costs

• Improved cash flow planning

• Easier capital restructuring for startups and SMEs

For growing companies, this change removes a long-standing bottleneck that often delayed funding rounds, shareholder infusions, and internal reorganizations.

However, proper documentation remains critical. Errors in subscription contracts, board approvals, or treasury certifications can still result in SEC delays or rejections.

Why You Should Consult Before Increasing Capital

While the process is now simpler, missteps can still be costly, especially when:

• Structuring shareholder subscriptions

• Coordinating tax implications

• Ensuring compliance with corporate law and accounting standards

• Determining whether your company falls under the exceptions requiring a Special Audit Report

A poorly drafted Subscription Contract or an improperly authorized signing officer can undo the benefits of this Circular.

How We Can Help

Our CPA–law firm provides end-to-end support for capital increases, including:

• Strategic advice on capital structuring

• Drafting and review of Subscription Contracts

• Board resolutions and SEC compliance documentation

• Coordination of legal, accounting, and tax considerations

• SEC filing and follow-through until approval

Planning to increase your authorized capital stock?Unsure whether your company still needs a Special Audit Report?

Talk to us before you file.Early guidance can save time, money, and unnecessary SEC back-and-forth.