Question & AnswerQ&A (SEC-CORPORATION FICE DEPARTMENT MEMORANDUM CIRCULAR NO. 003, S. 2001)
The purpose is to regulate the activities of financing and leasing companies, place their operations on a sound, competitive, and stable basis, and prevent prejudicial acts by ensuring full disclosure of the true cost of credit to borrowers.
A 'Disclosure Statement on Loan/Credit Transaction' is prescribed for use by Financing Companies.
The Disclosure Statement must be signed by the borrower and the duly authorized signatory/ies of the Financing Companies before the release of the loan.
The Disclosure Statement must be prepared in duplicate; one copy is kept at the company's premises available for SEC inspection, and the other copy is given to the borrower.
A first offense incurs a basic fine of P20,000.00 plus P100.00 for each day the violation continues.
The second offense carries a basic fine of P25,000.00 plus P100.00 for each day of continuing violation.
A third offense results in a basic fine of P30,000.00 plus P100.00 for each day the violation continues.
The fourth offense results in suspension or revocation of the certificate of authority to operate as a financing company.
The Circular took effect fifteen (15) days after its publication in a newspaper of general circulation.