SEC Revokes Corporate Registration of DNKC Corporation

​The Securities and Exchange Commission (SEC) has cancelled the corporate registration of DNKC Corporation for soliciting investments from the public without the necessary license from the Commission.

DNKC is doing business under the name and style of KC Skin Care, Goddess of Beauty-Beauty Lounge, JD’s CCTV Installation Services and Parts, JD’s Grill and Restaurant, DNKC Dental Spa, KC Aesthetic Clinic, JD’s Garage, Carwash, Detailing and Paint Job, DNKC Hypermash, DNKC Staykation, and DNKC Sports Club.

In an order dated May 13, the SEC Enforcement and Investor Protection Department (EIPD) revoked the certificate of incorporation of DNKC for violating Section 44 of Republic Act (RA) No. 11232, or the Revised Corporation Code of the Philippines (RCC), Sections 8.1, 26.1 and 28.1 of RA No. 8799, or the Securities Regulation Code, and Section 11 of RA No. 11765, or the Financial Products and Services Consumer Protection Act (FCPA).

The SEC also imposed a fine of P1 million against the company for offering securities to the public without prior registration and license from the Commission. The company and its incorporators were likewise directed to pay P1 million as administrative sanctions.

The RCC prohibits companies from possessing or exercising corporate powers beyond what is conferred on it by law or by its articles of incorporation (AOI).

Meanwhile, the SRC prohibits the selling or offering of securities without a registration statement duly filed with and approved by the SEC. The law also requires persons engaged in the buying and selling of securities, such as brokers, dealers, salesmen and associated persons, to be registered with the Commission.

Incorporated in May 2023, DNKC is primarily engaged in the wholesale/retail business, with a secondary purpose of operating restaurants, coffee shops, refreshment parlors, cocktail lounge and beauty and wellness businesses, among others, according to its AOI.

The company is expressly prohibited to operate an investment-taking scheme under its certificate of registration and AOI.

Upon investigation, the EIPD found the DNKC to be soliciting investments from the public for its “all-in-one business project” comprised of a rental business, dental spa, grill restaurant, and a beauty salon with a guaranteed interest rate of 4.5%.
Investors are also promised an additional 5% for every successful referral.

While DNKC is registered as a corporation with the SEC, it does not have the requisite license to solicit investments from the public, according to the EIPD.

“Hence, the act of [DNKC] in soliciting investments from the public without the necessary secondary license from the Commission is unauthorized,” the order read.

The investment-taking activity of DNKC Corporation without the necessary license also constitutes fraud which is prohibited under Section 11 of the FCPA.

“Considering that nowhere is it stated in its primary purpose that DNKC Corporation is authorized to engage in the selling or offering for sale of securities to the public, the activity of [company] of selling or offering for sale of investments is considered an ultra vires act and therefore constitute serious misrepresentation,” the order read.

As early as December 2023, the SEC already issued an advisory warning the public against investing in the scheme offered by DNKC.