Anti-Red Tape Authority Junks LYKA’s Request for Automatic SEC Registration

• LYKA Philippines Solutions Inc.’s application for automatic approval of company registration with the Securities and Exchange Commission (SEC) has been rejected by the Anti-Red Tape Authority (ARTA) due to failure to submit complete requirements.
• LYKA’s application was initially denied by the SEC for not complying with a directive from the SEC-Enforcement and Investor Protection Department, which required the submission of proof of finances, a list of merchants, a list of payables, and a document disclosing the owners of GRL17 Nominee Limited.
• ARTA, tasked with monitoring and ensuring compliance with national policy on anti-red tape and ease of doing business, sided with the SEC, stating that the requirements for automatic approval were not met. 

The Anti-Red Tape Authority (ARTA) has rejected the request of LYKA Philippines Solutions Inc. for the automatic approval of its application for company registration with the Securities and Exchange Commission (SEC).This, after failing to submit all the documents needed.

Timeline of LYKA’s Application 

According to SEC , LYKA was unable to comply with a directive from its Enforcement and Investor Protection Department (EIPD) that required the firm to submit proof that details the company finances its operation, a list of merchants, a list of payables, and a document disclosing the owners of GRL17 Nominee Limited, which appeared as the founding member of Things I Like Company, Ltd.

LYKA’s failure to comply resulted in an ungranted clearance from the department, which is one of the requirements for businesses engaged in the financial technology sector seeking to register with the Commission. 

SEC’s decision not to grant LYKA the registration was then challenged by LYKA President Michael Bryant Lim to ARTA, the government agency tasked with monitoring and ensuring compliance with the national policy on anti-red tape and ease of doing business in the country. Lim noted that the SEC failed to act on the documents it submitted for company registration.

Under Republic Act No. 9845 or the Ease of Doing Business and Efficient Government Service Delivery Act of 2018, a company can be automatically approved of their request, which in this case is for license application, if the concerned government agency is unable to act on it.

But ARTA sided with the SEC in a notice of denial dated March 6, 2023, clarifying that, “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 company submitted by LYKA to the SEC.”

Documents related to LYKA and its proposed major stockholder, Things I Like Company, Ltd., were also indispensable to the SEC’s evaluation of the feasibility and sustainability of the company’s operation in order to safeguard merchants, investors, and the company’s shareholders.

“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 company submitted by LYKA with the SEC,” the ARTA concluded. 

What Happened to LYKA in 2021?

It can be recalled that in July 2021, the Bangko Sentral ng Pilipinas (BSP) ordered the Hong kong-based firm to stop its operation and register with the Central Bank as prescribed under Republic Act 11127, or the National Payment Systems Act (NPSA), by sending LYKA and its proposed major stockholder a cease-and-desist order (CDO) for violation of the said act.

According to the BSP’s Monetary Board, LYKA’s scheme was qualified as an operator of payment systems (OPS), an entity that provides clearing or settlement services in a payment system or defines, prescribes, designs, controls, or maintains the operational framework for the system. 

LYKA used to allow its users to purchase, exchange, and use gift cards in electronic mode, or GEMs, as payment for goods and services.

BSP Orders Lyka to Stop Operating, Invites Registration

A month after the CDO, then-BSP Governor Benjamin Diokno then urged the social media and e-commerce platform to secure a payment operator license from the central bank “to keep things in order.”

Then, in October 2021, LYKA publicized its intention to register as an OPS in order to establish its own Philippine operations and staff them with “the crème de la crème when it comes to business operations and management.” 

The social media and e-commerce platform then received a positive response from the Central Bank. However, almost a year and a half after this commitment, LYKA is still currently an unregistered entity. 

This article is published on BitPinas: Anti-Red Tape Authority Junks LYKA’s Request to Secure Registration Under SEC

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