Lending Company

 

Registration with SEC, BIR, LGU, SSS, Philhealth, Pagibig Corporate name requirement The words “Lending Company” or “Lending Investor” or any other word descriptive of its primary activity of granting loans to the public except words commonly used to identify financing companies shall always be included in the corporate and trade name.  What is the capital required for lending companies?  

The minimum paid in capital of any lending company established under the law is One Million Pesos (P1,000,000.00). Existing lending companies established established and in operation prior to the effectivity of this law shall comply with the required minimum capitalization within such time as may be prescribed by the SEC which time shall, in no case, be less than three years from the date of effectivity. The SEC may also prescribe a higher minimum capitalization if warranted by circumstances. Requirements for Securing an Authority   A lending company shall file with SEC four (4) copies of a duly accomplished application form to operate as a lending company, signed under oath by the President, together with the following documents in the prescribed form:

1. Information Sheet; 2. NBI clearance of each director/officer; 3. Foreign directors/officers, in addition to the NBI Clearance, shall submit a clearance from the Bureau of Immigration (BI), a photocopy of his passport showing a valid visa or stay in i n the Philippines, ACR i-card, i -card, and a work permit issued by the Department of Labor and Employment; 4. President’s Sworn Statement an d Undertaking that the corporation will not accept or solicit investments, other than loans, from more than 19 persons without SEC approval, and upon presentation of valid claims, it shall immediately indemnify or return the investments of persons from said unauthorized public solicitation of funds; Moreover, the sworn statement shall likewise contain an undertaking that the country or state of the foreign applicant allows Filipino citizens and corporations to do lending business therein.

5. For an existing lending investor applying for a Certificate of Authority, it shall submit an external auditor’s sworn statement and undertaking that based on his/her examination of the corporate books of accounts and other related records of the corporation, it has not accepted or solicited investments, other than loans, from more than 19 persons without prior compliance with Sections 8 and 12 of the Securities Regulation Code and its Amended Implementing Rules and Regulations.

6. Business plan including method of marketing its product and sources of the funds and maturities of credit; and 7. Statement of its compliance with Rule 17.1(2)(A)(i) and (ii) of the Amended Implementing Rules and Regulations of the Securities Regulation Code. Licensing Fees  1. Initial Application Fees shall be paid to SEC at the time of filing of application a) Head Office –  A fee of 1/10 of 1% of the paid-up capital of the lending company shall be paid for the issuance of a Certificate of Authority to Operate as a Lending Company. Annual fee  An annual fee shall be paid not later than forty five (45) days before the anniversary date of the CA. 1) Head Office – 1/8 of 1% of the required paid-up capital Commencement of Operations  A corporation/company that has been duly registered and granted a Certificate of Authority to Operate as a Lending Company shall commence operations within one hundred twenty (120) days from date of grant of

 

such authority. Failure to commence operations within said period shall be a ground for f or the suspension of its CA. Use of Funds  Lending Companies shall use at least 51% of their funds for direct lending purposes. Investment to net worth ratio  The total investment of a lending company in real estate and in shares of stock in a real estate development corporation and other real estate based projects shall not at any time exceed twenty-five (25%) percent of its networth.  Amount and Charges on Loans Loans 

A lending company may grant loans in such amounts and reasonable interest rates and charges as may be agreed upon between the lending company and the debtor, provided , that the agreement shall be in compliance with the provisions of Republic Act No. 3765, otherwise known as the “Truth in Lending Act” and Republic Act 7394, otherwise known as the “Consumer Act of the Philippines”:  Provided , further , That the Monetary Board, in consultation with the SEC and the industry, may prescribe such interest rate as may be warranted by prevailing economic and social conditions. In accordance with the Truth in i n Lending Act and prior to the consummation of the transaction, a lending company shall furnish each debtor a disclosure statement, setting forth, to the extent applicable, the following information: i. The principal amount of loan; ii. Rate of interest of the loan; iii. Service or processing fee, if any; iv. Amortization schedule; v. Any penalty charge for late amortization payment; vi. Collection fee, if any; vii. Notarial fee; viii. All other fees in connection with the loan transaction; ix. Description of the collection and lien enforcement procedures; and x. Method of calculating the total amount of obligation in case of default. Maintenance of Books of Accounts and Records   Every lending company shall maintain books of accounts and records as may be required by the SEC and prescribed by the Bureau of Internal Revenue and other government agencies. In case a lending company engages in other businesses, it shall maintain separate books of accounts for these businesses. The Manual of Accounts prescribed by the BSP for lending investors shall continue to be adopted by lending le nding companies for uniform recording and reporting of their operations, until a new Manual of Accounts shall have been prescribed by the Sec.

It shall issue the appropriate instruments and documents to the parties concerned to evidence its lending and borrowing transactions. What are the prescribed amount and charges on loans?   A lending company may grant loans in such amounts and reasonable interest rates and charges as may be agreed upon between the lending company and the debtor. However, the agreement shall be in compliance with the provisions of Republic Act No. 3765, otherwise known as the “Truth in Lending Act” and Republic Act 7394, otherwise known as the “Consumer Act of the Philippines”. The Monetary Board of the  Bangko Sentral ng Pilipinas, in consultation with the SEC and the industry, may prescribe such interest rate as may be warranted by prevailing economic and social conditions.