JK&C LIBRARYSEC Memorandum Circular No. 13, s. 2001

SEC MEMORANDUM CIRCULAR NO. 13

Series of 2001

In the absence of a specific law regulating lending investors and pursuant to Opinion No. 46, Series of 2001, dated September 17, 2001, of the Department of Justice, placing lending investors without quasi-banking functions under the regulatory power of the Securities and Exchange Commission, the following guidelines are hereby promulgated:

1. Compliance with the Financing Company Act

All registrant corporations which will engage in direct lending activities shall be required to comply with the requirements of Republic Act No. 8556, otherwise known as the Financing Company Act of 1998, its implementing rules and regulations, and circulars issued relative thereto.

2. Conversion into Corporations

All existing lending investors organized as partnerships or single proprietorships are hereby required to convert into corporations in accordance with Section 3(a) of Republic Act No. 8556, within one (1) year from the effectivity of this Circular. A Certificate of Authority to Operate as a Financing Company shall likewise be secured within the same period.

3. Minimum Paid-Up Capital

Converted entities shall comply with the following minimum paid-up capital requirements for financing companies:

Consequently, said entities shall be subject to the reportorial and other requirements for financing companies under Republic Act No. 8556, its implementing rules and regulations, and circulars issued relative thereto.

4. Registration of Securities and Quasi-Banking License

All securities such as, but not limited to, bonds, debentures, notes, investment contracts, and evidences of indebtedness issued by said lending investors to more than nineteen (19) persons shall be registered with the Securities and Exchange Commission pursuant to Sections 8 and 12 of the Securities Regulation Code, except those issued by entities with a quasi-banking license from the Bangko Sentral ng Pilipinas.

A disclosure statement shall be filed if such securities are issued to not more than nineteen (19) persons.

Should the company intend to borrow funds through the issuance, endorsement or assignment with recourse, or acceptance of deposit substitutes as defined in Section 95 of Republic Act No. 7653, for the purpose of relending or purchasing receivables and other obligations, it shall first secure a quasi-banking license from the Bangko Sentral ng Pilipinas. Upon obtaining such license, the company shall thereafter be under the supervision of the Bangko Sentral ng Pilipinas.

This Circular shall take effect fifteen (15) days following its publication in a newspaper of general circulation.

Issued this 11th day of October 2001 at EDSA, Greenhills, Mandaluyong City, Philippines.

LILIA R. BAUTISTA

Chairperson