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The Philippines’ Anti-Red Tape Authority (ARTA) has turned down the request filed by Lyka Philippines Solutions seeking automatic approval by the Securities and Exchange Commission (SEC) for registration.
The popular social networking platform had previously applied with the SEC to register its Lyka Gem tokens, but failure to comply with the requirements led to a delay in the process. In response, Lyka President Michael Bryant Lim took the matter up to ARTA, accusing the SEC of refusing to act on its application for registration.
Domestic law allows foreign firms the perks of automatic approval as part of the newly introduced Ease of Doing Business Act which Lyka is hinging its argument. However, ARTA struck out the application on the grounds that Lyka did not satisfy the requirement for automatic approval by failing to submit the necessary documents.
“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,” ARTA’s statement read.
According to the SEC, Lyka failed to provide documents detailing pertinent information such as funding for the firm’s operation, a merchant list, and payables. The SEC specifically requested information regarding the directors of GRL 17 Nominee Ltd, a firm with links to another entity under investigation by the SEC, but Lyka failed to comply.
Lyka’s major shareholder, Things I Like Co. Ltd, was slammed with a cease-and-desist order by the SEC for violating the country’s money laundering laws, prompting a careful approach toward issuing licenses.
“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 a company submitted by Lyka with the SEC,” ARTA said.
Failure to obtain proper registration with the SEC could see Lyka liable for the offense of offering unregistered securities to the Filipino public.
A tough-tackling SEC
Building on a prolific 2021 marked by heightened enforcement action, the Philippines’ securities regulator has continued its stellar run against unlicensed activity in the digital currency industry. The SEC issued a barrage of advisory warnings against several firms involved in the offering of unregistered securities to the public.
Sternly-worded threats against brokers and promoters of the unlicensed schemes with the options of jail time, fines, or both accompany the warnings. In February, BKC Trading, Platinum Coin, and Meta Trade were slammed with such warnings as the securities watchdog likened their operations to Ponzi schemes.
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