SEC Memorandum Circular No. 13, s. 2001 – Guidelines for Lending Investors
SEC Memorandum Circular No. 13, s. 2001 prescribes guidelines for lending investors, requiring compliance with the Financing Company Act of 1998, conversion of existing lending investors into corporations, capitalization requirements, and securities registration rules.
SEC MEMORANDUM CIRCULARS
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SEC Memorandum Circular No. 13, s. 2001
Guidelines for Lending Investors
Document Number: SEC Memorandum Circular No. 13, s. 2001
Date Issued: October11, 2001
Issuing Agency: Securities and Exchange Commission (SEC)
Overview
SEC Memorandum Circular No. 13, s. 2001 establishes interim regulatory guidelines for lending investors following Department of Justice Opinion No. 46, Series of 2001, which placed lending investors without quasi-banking functions under the regulatory authority of the Securities and Exchange Commission. The circular requires lending investors engaging in direct lending activities to comply with the Financing Company Act of 1998, mandates the conversion of existing partnerships and sole proprietorships into corporations, prescribes minimum paid-up capital requirements, and clarifies securities registration and quasi-banking licensing requirements.
Full Text
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:
Location Minimum Paid-Up Capital Period of Compliance
Metro Manila and other First Class Cities ₱10,000,000 Within three (3) years from the effectivity of this Circular
Other Classes of Cities ₱5,000,000 Within two (2) years from the effectivity of this Circula
Municipalities ₱2,500,000 Within one (1) year from the effectivity of this Circular
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
Source
Official Source: Securities and Exchange Commission
Official URL:https://appointment.sec.gov.ph/mc-2001/sec-memorandum-circular-no-13-8/
Citation:
Securities and Exchange Commission. SEC Memorandum Circular No. 13, s. 2001, "Guidelines for Lending Investors," October 11, 2001.