LYKA to Remain Suspended After the SEC Denies Its Company Registration Request

LYKA Philippines Solutions Inc., a social media platform that rose to prominence for allowing people to earn GEMs, has been denied its request for automatic approval for its application for registration with the Securities and Exchange Commission (SEC), a notice from ARTA confirms. The notice reveals that the company failed to submit the complete documentary requirements.

LYKA President Michael Bryant T. Lim filed the request before the ARTA after noting that the Commission supposedly failed to act on its application for company registration. This is in spite of the company's submission of its articles of incorporation, by-laws, application to do business, and the corresponding incorporation fee, among others.

Republic Act No. 9485, as amended by Republic Act No. 11032, or the Ease of Doing Business and Efficient Government Service Delivery Act of 2018, provides that 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.

ARTA also affirmed the Commission’s position that the automatic approval mandated by law did not apply to LYKA. Automatic approval only applies to companies that have submitted their complete requirements. This means that entities under investigation are not covered by the reglementary period provided in the Ease of Doing Business Act.

“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 said in its resolution denying the request.

Bangko Sentral ng Pilipinas suspended the use of tokens on the app as a method of payment in the country in 2021.

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Upon evaluation, the SEC questioned the feasibility and sustainability of the company’s operation. LYKA, together with proposed major stockholder, Things I Like Company, Ltd., was issued a cease and desist order, as well. It was found to have violated Republic Act No. 11127, or the National Payment Systems Act. The stockholder has now been suspended for possible money laundering.

Furthermore, LYKA also failed to comply with a directive from the SEC Enforcement and Investor Protection Department (EIPD). The said directive requires 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 GRL17 Nominee Limited. The enterprise is said to be the founding member of Things I Like Company, Ltd. Obtaining clearance from the EIPD is one of the requirements for businesses 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 added.

Just seven months after it gained a substantial following, LYKA's "gem economy" ended in July 2021. Bangko Sentral ng Pilipinas ordered LYKA at the time to suspend all transactions on the platform, saying that it hadn't been properly licensed as a payment service. The app had been plotting its comeback since. LYKA had even looked at a possible intercession from President Ferdinand "Bongbong" Marcos Jr. in 2022. Unfortunately, nothing came of it.

The latest news of its SEC denial will have it shut down for the foreseeable future.