Tuesday, June 18, 2024

ARTA denies Lyka’s request for approval of SEC registration

The Anti-Red Tape Authority (ARTA) has rejected the request filed by Lyka Philippines Solutions Inc. for the automatic approval of its application for company registration with the Securities and Exchange Commission (SEC).

In a notice of denial dated March 6, the ARTA denied Lyka’s request for registration with the SEC over the company’s failure to submit the complete documentary requirements.

Lyka president Michael Bryant T. Lim filed the request before the ARTA after noting that the SEC supposedly failed to act on its application for company registration, despite the submission of its Articles of Incorporation, By-laws, Application To Do Business, and the corresponding incorporation fee, among others.

Republic Act 9485, as amended by Republic Act 11032, or the Ease of Doing Business and Efficient Government Service Delivery Act of 2018, provides that an original application or request for issuance of license, clearance, permit, certification or authorization shall be deemed approved if the concerned government agency fails to approve the same.

The ARTA, however, affirmed the SEC’s position that the automatic approval mandated by law did not apply to Lyka, given that entities under investigation are not covered by the reglementary period provided in the Ease of Doing Business Act, and that automatic approval is only applicable upon submission of complete requirements.

Lyka and its proposed major stockholder, Things I Like Compony, Ltd., was issued a cease-and-desist order for violation Republic Act 1127, or the National Payment Systems Act, and is now suspended of possible money laundering, the SEC said.

In a previous interview with online tech show TECH SABADO, a representative of Lyka’s marketing arm in the Philippines said Lyka was expecting to have its permit restored so it can expand its operations in the country. Users of the app earn certain points in the form of G-iftcard in Electronic M-ode (GEMs), which the company said is the “first paperless, contactless, and seamless” social gift card in the world.

The SEC said the documents related to Lyka and its proposed major stockholder were indispensable in its evaluation of the feasibility and sustainability of the company’s operation in order to safeguard the investors and shareholders of the company.

Further, the agency said Lyka failed to comply with a directive from the SEC’s Enforcement and Investor Protection Department (EIPD) requiring it to submit proof as to how the company finances its operation, list of merchants, list of payables, and a document disclosing the owners of GRLIT Nominee Limited, which appeared as the founding member of Things I Like Company Ltd.

Clearance from the EIPD is one of the requirements for businesses engaged in the financial technology sector seeking to register with the SEC.

“However, [Lim] failed to show proof that it submitted a clearance from the [EIPD]. Accordingly, it cannot be said that there was submission of complete documentary requirements as stated in the Citizen’s Charter of SEC for Registration of Corporations through eSPARC,” the ARTA said in its resolution denying the request.

“Considering the foregoing, the requirements laid down under Section 10 of RA 9485, as amended, and its Implementing Rules and Regulations for Automatic Approval have not been met. Thus, Automatic Approval is not warranted in the instant application for registration of compony submitted by Lyka with the SEC,” the ARTA added.

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